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TANZANIA CHAMBER OF MINERALS AND ENERGY: PRESS STATEMENT THE MINING INDUSTRY AND TAXES

Mining industry equipment 

TANZANIA Chamber of Minerals and Energy (TCME) notes with concern the false allegations that Mining Companies have not been paying taxes in Tanzania. The Chamber represents member companies in the formal mining sector, from junior explorers to large-scale producers as well as medium scale miners. 

The Chamber and its members support a well-regulated local industry and place great emphasis on compliance with all relevant local and international laws and rules, including tax codes governing its members. 

Mining companies in Tanzania are highly regulated and remain to be significant contributors to the economy of the country in many ways, among them being through tax payments and employment creation. Between 2009 and 2015, the Tanzania Minerals Audit Agency, an arm of the Ministry of Energy and Minerals, reported that these companies collectively paid over USD390 Million (TZS 870 Billion) in Royalties, and USD 305 Million (TZS680 Billion) in Corporation Taxes, along with other significant taxes. In 2015 alone, the five major gold mines and one diamond mine paid a total of USD65.5 Million (TZS 146 Billion) in royalties to Tanzania’s coffers, and over USD 170 Million (TZS380 Billion) in other taxes. 

These amounts are expected to have increased in 2016. Concerns have been raised about Mining Companies incorrectly benefitting by getting VAT refunds. This is simply not true. As Mining Companies export all that they produce, they, like any other exporting industry, are categorized as zero rated under the VAT Laws and are therefore eligible to get refund of input VAT incurred on their purchases.
It should however, be noted that Mining companies still pay VAT on specific categories not allowable to be claimed under the VAT law. For example, mining companies have continued to pay VAT on catering services, on purchase of spares parts or repairs and maintenance services for light vehicles categorized as passenger vehicles under the VAT Act, 2014 which form large part of the Mining companies fleet. 

It should be noted that the VAT regime under which mining companies are operating is the same as for any other exporting company in other sectors. In addition, the formal mining sectors employs 7,355 people directly and more than 3,000 people indirectly, in support industries. Given that each of these people in formal jobs supports roughly 11 people, the industry provides a direct livelihood to an estimated 114,000 people. The taxes paid provide funding for among other things, construction of crucial infrastructure required for the development of the country.