Former commissioner for minerals, who is currently an independent mining consultant and analyst, Dr Peter Kafumu, told The Citizen: “Refunding will be tough because the government has no money…it received billions as VAT and excise duty, but it has failed to refund these companies for some years now"
Dar es Salaam. Major foreign-owned gold mining
firms operating in Tanzania, including South African-based Anglogold
Ashanti, are seeking arbitration at the International Chamber of
Commerce (ICC) to recover over $410 million (Sh676billion) tax refund,
The Citizen has learnt.
Another company that has also threatened to sue is
Resolute Mining Tanzania Ltd, which closed its business last year in
Nzega after its mine lifespan ended.
An officer with Resolute who spoke to The Citizen
yesterday under conditions of anonymity because he isn’t an authorised
spokesperson said: “We’ve made it clear that we’re taking this matter to
the ICC because all other options have failed and we aren’t alone...”
The officer noted that the contract signed between
miners and the government has a clause that allows an aggrieved party
to seek redress at the ICC.
The government was a few years ago taken to the
ICC by Dowans Ltd in which the latter finally got a reward of $115
million, sparking a strong public outcry.
“The MDA signed between the firms and the
government has a provision for arbitration in case of disputes.
Negotiations seem to be stalled due to the government’s unwillingness to
accept the miner’s proposals, fearing that it could set a precedent for
other firms in other sectors... Besides, the government is in financial
difficulties, thus it’s unlikely to pay,” the government source said.
The revelation comes amid a major fall of global
gold prices, which may lead to the companies cutting down on
investments, thus impacting heavily on service providers. Investments in
mining exploration have also dropped by 20 per cent since 2012.
But African Barrik Gold (ABG) a company with over
$1bn in revenue and a market capitalisation of over $900m, said it has
opted for a direct negotiations with the government.
For instance ABG’s monthly pending tax refund is
$10million(Sh16.5billion), while it gets a refund of $2 million after
every three months from the government, which the company says isn’t
enough considering the financial crisis currently facing the industry
following the plunge in gold price at the world market.
The refund, which has been accumulated for about
five years now, is VAT and excise duty, paid by the mining firms in
their export and import transactions.
Details gathered by The Citizen show that a big
chunk of this money is VAT paid on gold exports which, according to the
Mineral Development Agreement (MDA) signed between miners and the
government, is refundable.
Tanzania tax laws state clearly that firms
producing goods for export don’t pay VAT, but according to reliable
sources within the mining sector, major gold producers have been paying
18 per cent tax in every single ounce of gold they export. Tanzanite and
diamond exporters too have been paying 18 per cent VAT. The Citizen
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