Tax incentives in tanzania s mining sector
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TAX INCENTIVES IN TANZANIA’S MINING SECTOR PowerPoint PPT Presentation


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TAX INCENTIVES IN TANZANIA’S MINING SECTOR. NGOWI, HONEST PROSPER SENIOR LECTURER IN ECONOMICS MZUMBE UNIVERSITY, DAR ES SALAAM CAMPUS COLLEGE. [email protected] ; +255 754 653 740 P. O. BOX 20266 DAR ES SALAAM, TANZANIA. 1. BASIS OF THE PAPER: 1 BILLION $ QUESTION REPORT.

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TAX INCENTIVES IN TANZANIA’S MINING SECTOR

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Tax incentives in tanzania s mining sector

TAX INCENTIVES IN TANZANIA’S MINING SECTOR


Ngowi honest prosper senior lecturer in economics mzumbe university dar es salaam campus college

NGOWI, HONEST PROSPER SENIOR LECTURER IN ECONOMICS MZUMBE UNIVERSITY, DAR ES SALAAM CAMPUS COLLEGE

[email protected];

+255 754 653 740

P. O. BOX 20266 DAR ES SALAAM, TANZANIA

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Basis of the paper 1 billion question report

BASIS OF THE PAPER: 1 BILLION $ QUESTION REPORT

  • LEGAL FRAMEWORK FOR TAX EXEMPTION IN TANZANIA

    • SECTION 17 OF 1997 INVESTMENT ACT

    • 2010 MINING ACT: ONLY FOR NEW MINING PROJECTS

    • PRE-2010 MINING INVESTORS HAVE INDIVIDUAL (SECRET) AGREEMENTS WITH THE GOVERNMENT


Incentives open to mining sector

INCENTIVES OPEN TO MINING SECTOR

  • HOLDERS OF TIC CERTIFICATE OF INCENTIVES

    • IMPORT DUTY EXEMPTION ON CAPITAL GOODS

    • 0% VAT ON IMPORTS

    • CARRY OVER LOSSES FOR 5 YEARS AGAINST FUTURE PROFIT

  • EXEMPTIONS FOR INVESTORS IN SEZs & EPZs

    • CORPORATE INCOME TAX FOR 1ST 10 YEARS

    • WHT ON RENT, DIVIDENDS & INTEREST RATE FOR 1ST 10 YRS

    • VAT ON UTILITIES ; ALL LGAs TAXES FOR 1ST 10 YEARS

    • UNLIMITED REPATRIATION OF PROFIT

    • INDIVIDUAL FISCAL AGREEMENT WITH GOVT


Specific tax incentives for mining sector

SPECIFIC TAX INCENTIVES FOR MINING SECTOR

  • ZERO IMPORT DUTY ON FUEL (STD IS TSHS 2000 PER LITRE)

  • ZERO IMPORT DUTY ON EQUIPMENT UP TO END OF 1ST YEAR OF OPERATION, THEN PAY 5%

  • NO CAPITAL GAIN TAX (OTHER SECTORS PAY)

  • NO VAT ON LOCAL SUPPLIES AND THEIR SUBCONTRACTORS

  • REDUCED STAMP DUTY AT 0.3%; NORMAL RATE IS 4%

  • MAX PAY OF LGAs TAXES UP TO $200,000 P.A … LOWER THAN 0.3% OF TUROVER REQUIRED BY LAW


Govt revenue lost in mining sector in selected years erosion of tax base

GOVT REVENUE LOST IN MINING SECTOR IN SELECTED YEARS: EROSION OF TAX BASE

  • INCENTIVES/EXEMPTIONS: TSHS 72.6B P.A

  • ONLY SMALLEST COY WAS AMONG 15 MAJOR TAX PAYERS IN 2011

  • TMAA AUDIT QUERIES: UP TO $176M P.A ALLEGED OVERCLAIMS

  • FUEL LEVY EXEMPTION: TSHS 39.8B (2006/7); TSHS 58B IN 2007/08; COYS CLAIMED $274M IN 2011

  • IMF: NO MATERIAL TAX PAID IN MINING SECTOR

  • GOLD XPORT: FROM $500M TO $1.5B, BUT GOVT REVENUE CONSTANT AT $ 100M P.A


Breakdown of taxes paid by large scale mining coys in 2008

BREAKDOWN OF TAXES PAID BY LARGE SCALE MINING COYS IN 2008

  • 65.4% IS PAYE: PAID BY EMPLOYEES NOT COYS

  • 11.2% IS SDL

  • 8.3% IS WITHHOLDING TAX

  • 6.0% (ONLY) IS CORPORATE/INCOME TAX

  • 5.9% IS VAT

  • 3.1% IS ‘OTHER TAXES’

  • ... SEE THE PIE

  • SOURCE: TMAA, ANNUAL REPORT 2010, P.31


Emerging issues

EMERGING ISSUES

  • 1997 INVESTMENT ACT TOO OLD (15 YEARS)

  • ARE ALL INCENTIVES NECESSARY?

  • TOO GENEROUS INCENTIVES IN TANZANIA

  • REASONS FOR INCENTIVES INVALID THEN AND NOW

  • CONDITIONAL INCENCTIVE: EMPLOYMENT; TECH-TRANSFER; INTERLINKAGE WITH LOCAL ECONOMY

  • LOST IN MINING, CAN TZ WIN IN GAS AND OIL?

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Mange takk

MANGE TAKK


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