13 mining giants haven’t paid corporate taxes, says report

Dar es Salaam. Thirteen giant mining companies have not paid corporation taxes due to non-declaration of profits in their accounts books, a report by the Tanzania Extractive Industries Transparency Initiative (Teiti) has revealed.

They are Bulyanhulu Gold Mine Limited owned by the defunct African Barrick Gold (ABG), North Mara Gold Mine owned by the former ABG, ARM (T) Ltd, Mantra Tanzania Limited, Midwest Minerals Processor Limited and Maweni Limestone Limited.

Others are Pangea Minerals Limited, Shanta Mining Company, State Mining Corporation (Stamico), TADC 2000, Tanzania China Inter Minerals, Williamson Diamonds Ltd and Establishment Mauren et Prom.

According to the Teiti report of 2014 covering 2012/13 financial year, availed by a consultant of BDO East Africa, Mr Juvenal Betumbini, 20 companies were subjected for tracking their disclosure of revenues generated from mining businesses, but only seven had submitted the amount of money paid to the government as corporation taxes.

“In other words the companies that have not paid corporation taxes did not declare profits as they had accumulated losses. The companies have declared accumulated losses that have eaten up profits. This is an issue for further dialogue because the law allows them to declare accumulated losses in their books of accounts,” said Mr Betumbini.

He also said there was a need to conduct more dialogue, because companies were still enjoying tax exemption of 0.3 per cent under mining development agreements and they also have allowance of carrying over declared losses.

According to Teiti, the seven companies that have declared profits to pay corporation taxes are led by Geita Gold Mine with tax payment of Sh108 billion followed by Resolute Tanzania Limited with tax payment of Sh30 billion.

Resolute Tanzania Limited which opened its Golden Pride mines in Nzega, Tabora, closed them in 2013. Other companies which declaring profits with corporation taxes in brackets are PanAfrican Energy Tanzania (Sh27 billion), Portland Cement Company (Sh24 billion), Tanga Cement Company (Sh15 billion), Songas (Sh 6 billion) and Mbeya Cement Company (Sh5 billion).

Arusha Regional Mining Association chairman Alfred Mwaswema says the report has exposed loopholes in the 2010 Mining Act because it was still possible for mining companies to avoid paying corporation tax. “There is a provision under the mining law for companies to accumulate losses and insert into their books of accounts that the profits have been offset by the losses accumulated over the years.”

According to him, there is still a loophole for tax exemptions which must be curbed to enable the government to collect more revenue from the mining sector.

But Mr Godvictor Lyimo, a tax manager for Geita Gold Mine, maintains that the capital allowance which is the right of investor at any point in time when calculated in the production costs normally offsets amount of taxes.

“Accumulated losses tend to offset the payment of corporate taxes. Under the special mining development agreement, TRA audits mining companies every year, hence there is no room for tax evasion,” he says.