Dar es Salaam, Tanzania — MININGREVIEW.COM — 04 January 2010 – The government of Tanzania has bowed to pressure from foreign mining companies to review the sector’s current taxation regime.
Minister of energy and minerals William Ngeleja announced here that the government would sit down with the sector’s stakeholders and agree on fair tax rates.
Mining firms operating in Tanzania have been pressing the government to reduce taxes that they consider to be very high and to be eating deeper into their profits. The minister told a workshop to discuss the new Mining Act that there was a need to review the tax rates not only in the mining sector but in other sectors as well.
“There is a need to determine new tax rates in Tanzania, but at this stage I could not say which ones in the mining sector would be reviewed,” he said. He added that the government was keen to work closely with the mining firms on how various taxes could be brought down.
Ngeleja stressed, however, that taxation was a way of generating revenues for the government, and that the authorities were keen to work with other parties for fair tax rates that would benefit everyone.
The proposed fiscal regime in the mineral sector under the new Mining Act includes immediate scrapping of taxes on exploration expenditures
It has been proposed that income tax rates for mining profits should be taxed at a variable corporate tax rate depending on profitability, provided that the tax rate does not fall below 30%.
The proposed rates for mineral royalties are uranium 5%, raw gemstones, including diamonds 5%, value added gemstones 1%, precious metals (gold, silver and platinum) 4%, and other minerals and salt 3%.