Tanzania proposes tax amnesty, cuts corporate income tax to boost investment
A gold processing plant in Tanzania. Acacia Mining reported a near 50 per cent fall in first quarter earnings on Thursday . FILE PHOTO | NMG
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The change could have big implications for the nation’s largest gold miner, Acacia, which has been hit hard by sweeping changes to the tax regime for mining firms.
“The proposed 100 per cent amnesty on interest and penalties will exist for six months
Tanzania will raise spending by a slim 2.4 per cent in the 2018/19 fiscal year, most of it earmarked for infrastructure, education and water projects.
Tanzania aims to amend its tax bill to grant amnesty on interest and penalties for the next six months, hoping to improve compliance and ultimately boost revenues, Finance Minister Philip Mpango told parliament in his budget speech on Thursday.
The change could have big implications for the East African nation’s largest gold miner, Acacia,
The new laws have slowed fresh investment in what has long been seen as one of Africa’s brightest mining prospects as companies assess the consequences of government efforts to claim a bigger slice of the pie.
“The proposed 100 per cent amnesty on interest and penalties will exist for six months, starting from 1st July 2018 up to 31st December 2018,” Mpango said.
“This measure is expected to improve tax compliance by 10 per cent and hence enable the Government to collect the outstanding principal amount.”
It was not immediately clear, however, exactly how much impact the amnesty would have on the government’s dispute with London-listed Acacia, which is majority owned by Barrick Gold.
The government says Acacia owes $190 billion in tax, penalties and interest for the period between 2000 and 2017. But miners say it would be impossible for listed and independently audited companies to hide billions of dollars in extra revenue.
Reuters could not immediately reach Acacia for comment on Friday, which is a public holiday in Tanzania.
Revenue collection for the 2017/2018 fiscal year that ends this month is at 21.9 trillion Tanzanian shillings ($9.65 billion), just below 70 percent of the target, Mpango said.
In another move the minister said is intended to boost investment, the government will cut corporate income tax from 30 to 20 percent for new investors in the pharmaceutical and leather industries for five years, starting from the new fiscal year that begins in July.
“The measure is expected to promote investment in the manufacturing of pharmaceutical and leather products, create employment opportunities and increase government revenue,” he said.
Tanzania will raise spending by a slim 2.4 per cent in the 2018/19 fiscal year, most of it earmarked for infrastructure, education and water projects.
The minister forecast economic growth to increase to 7.2 percent in the year from 7.1 percent in 2017.
Another priority for the next fiscal year, he added, was moving the main functions of the government from Dar es Salaam to Dodoma, the country’s official capital since 1974.
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