HomeBase MetalsMining tax and royalty increase in Tanzania

Mining tax and royalty increase in Tanzania

The pit at Barrick’s
Tulawaka gold mine –
one of the major mining
operations in Tanzania
Dar es Salaam, Tanzania — MININGREVIEW.COM — 03 June 2008 – Tanzania should increase royalties and grant fewer tax exemptions for new investors, in the opinion of the panel reviewing the east African country’s mining industry.

The 12-member panel has completed an assessment it started in November to determine how Tanzania can increase income from the mining of gold, diamonds, tanzanite and other minerals.

“I think if the recommendations are accepted and acted upon it would definitely improve the benefits to government revenue and the economy,’” said panel chairman Mark Bomani in an interview with Bloomberg News here today.  

Tanzania – Africa’s third-biggest gold producer after South Africa and Ghana – wants to benefit from record metal prices by boosting government revenue from mining to pay for schools and hospitals, according to a statement last month by Finance Minister Mustafa Mkulo. “Most mining companies operating in the country are currently exempted from payments, including a 30 % corporate tax and customs duties,” he said.

“Our committee studied mining industries in other African nations and made recommendations to put Tanzania on a par with these,” said Bomani. “The panel found that Tanzanian royalties on the value of gold and diamond exports were half those in Ghana and Botswana.

The report contains nothing new. “Everything in the report is already being implemented in one or other African country,’” Bomani claimed. “The report also recommends timely and fair compensation for communities displaced by mining, as well as procedures for repairing environmental damage,” he added.

“Other proposals may result in amendments to current rules that allow duty-free equipment imports, fuel-levy relief and other tax concessions,” Bomani continued, “but the committee rejected a windfall tax on company profits, as this would be difficult to implement.
Bloomberg reports that Tanzanian energy and minerals minister Williams Ngeleja is expected to gives his views on the report next week.