The pit at Barrick’s
Tulawaka gold mine
in Tanzania
 
Dar es Salaam, Tanzania — MININGREVIEW.COM — 19 May 2008 – Tanzania is the latest African country to review royalties, taxes and the general tax structure relating to its bustling mining industry.

Bloomberg News reports that Tanzanian Foreign Minister Mustafa Mkulo will probably make an announcement in his budget next month on likely revisions to the country’s tax structure for mining companies.

A panel appointed by President Jakaya Kikwete last year to review royalties and taxes in the mining industry submitted its report last month, according to Mkulo, and the review will probably be made public by July, he added.

The minister said that Tanzania – Africa’s third-biggest gold producer – wanted to benefit from record metal prices by boosting government revenue from mining in order to fund badly needed new schools and hospitals. “The government needs to change the current framework, in which most mining companies operating in the country are exempted from payments, including a 30% corporate tax and customs duties,” he pointed out.

“We can increase revenue from mining companies ten-fold if they all pay taxes,” Mkulo said. “The companies agree that there are anomalies, and they are working with us. We are not going to chase any company away.”

Gold mining companies pay royalties of 3% on profit, while a 5% tax is levied on diamonds and gemstones. Companies operating in Tanzania include Barrick Gold Corporation – the world’s largest gold producer – and Tanzanite One – the only major miner of the rare blue tanzanite gemstone.

Last month the Zambian government increased mineral royalties from 0.6% to 3%, while corporate tax on the miners rose from 25% to 30%. Zambia also introduced a 15 percent variable profit tax on taxable income above 8 percent, and a minimum 25 percent windfall profit tax has been enacted.

And in the Democratic Republic of Congo (DRC) the government commissioned a review of the 60-odd mining contracts entered into between foreign companies and State mining firms during the country’s civil war to determine the legality of the deals, and to renegotiate those seen as unfair to the government. The completed review has been submitted, and the review process is underway.