Mine Operators to Pay Tax in Tanzania

July 30, 2012 Taxation in Tanzania

Gold mine taxation in TanzaniaDODOMA – The government of Tanzania is beginning a crack down on gold mine operators which take unfair advantage of current tax rules in an effort to avoid paying any corporate income taxes in Tanzania.

On July 27th the Minister of Energy and Minerals of Tanzania Sospeter Muhongo stated that the government is aiming to stamp out tax evasion carried out by gold mine operators in Tanzania, saying “…I am instructing all mining companies that have been in operation for more than five years to start paying corporate tax without any excuses.”

He went on, saying that any mining companies which claim they do no not make profits and cannot contribute to the national economy “…should shut down their mines and leave because minerals do not rot.”

The Minister’s statement was aimed at gold mine operators in Tanzania who are allegedly abusing current tax rules which grant new mining operators a holiday from corporate income taxes until the initial investments into the mine are recovered. Once companies see enough revenues to cover their starting outlays, they will face a tax of 30 percent on their profits. The Minister claimed that too many businesses are taking advantage of the holiday rule and are understating their incomes in order not to pay taxes.

According Sospeter Muhongo, in an initial effort to determine which companies are intentionally misleading tax authorities about their profits, the government has ordered tax audits to be performed on all of the large-scale mining operators currently in Tanzania,

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