Tax paradox: When beer is worth more than gold

The Tanzania Breweries Limited (TBL) company paid more government revenues last year than the country’s six major gold mines combined in the latest sign of a hard-to-explain tax rate disparity amid allegations of large-scale tax dodging by the mining firms.







Big companies are the government’s main source of tax revenue despite the presence of a huge informal economy that nonetheless does not generate a proportionate amount of income for the state.

But according to a new report by the state-run Tanzania Minerals Audit Agency (TMAA), the total taxes paid by the top companies dealing in gold mining in 2015 was 355.33 billion/-; a measly sum compared to the 476bn/- paid by TBL as tax during the same year.

In other words, last year the country’s top beer producer alone paid 34 per cent more tax than the entire large-scale gold mining industry, despite the lattyer beuing one of the country’s key economic sectors.

Similarly, while the total value of minerals sold by major gold mines in Tanzania last year was worth $1.63 billion (3.56 trillion/-), the total tax paid by the mining firms represents less than 10 percent of their revenues.

On the other hand, TBL said in its 2015 annual report that it posted total sales of 1.07 trillion/- last year, with the total taxes paid to the government in 2015 representing 44.5 percent of its revenues.

The entire taxation system has been subjected to fresh scrutiny since President John Magufuli’s directive last year for the Tanzania Revenue Authority (TRA) to crack down on tax evasion by big business.

The taxation of the mining sector has recently come under the microscope after the Tax Revenue Appeals Tribunal issued a ruling accusing Tanzania's biggest gold miner, Acacia Mining plc (formerly known as African Barrick Gold) of being engaged in a “sophisticated scheme of tax evasion” to dodge $41.25-million (over 90 billion-) in taxes to the Tanzanian government.

Acacia, which owns three gold-producing mines in Tanzania -- Bulyanhulu, North Mara and Buzwagi -- has vigorously denied the tribunal's tax dodging allegations and said it would appeal against the ruling by Fauz Twaib, a Tanzanian High Court judge.

Other major gold mines in Tanzania are Geita Gold Mine, which is owned by AngloGold Ashanti, New Luika Gold Mine and the Stamigold Biraharamulo Mine.

Mining companies have long been accused by politicians and activists of being tax cheats in Tanzania, causing the government to get less than its fair share of revenues from the sector.

TBL, which is the country's biggest beer manufacturer, has also recently faced tax dodging allegations from reports published by a local tabloid.

The beer firm, which is majority owned by SABMiller plc, said in a statement last month it has trebled its tax payments to the Tanzanian government over the last 5 years. "Our total tax payments amounted to 476 billion/- in 2015. TBL has also consistently been recognised as the country's most compliant and largest tax payer for five consecutive years," the company said in a statement.

TBL owns four breweries in the country - Dar es Salaam, Arusha, Mwanza and Mbeya. 'COMPARING APPLES WITH ORANGES' According to the TMAA 2015 report released last week, gold production -- which includes gold bars and copper concentrate products -- by major gold mines in 2015 increased by 7.1 percent from 1.27 million troy ounces in 2014 to 1.36 million troy ounces.

Total mineral exports by the six major gold mines last year comprised of 1.37 million troy ounces of gold, 13.8 million pounds of copper and 497,152 troy ounces of silver. The total value of these mineral exports was $1.63 billion.

Ambassador Ami Mpungwe, the chairman of the Tanzania Chamber of Energy and Minerals (TCME), told The Guardian that the fact that one beer maker pays more taxes than the country's entire mining industry was nothing surprising.

"Indeed, TBL is the largest tax payer in the country, more than any other combined industry, not only the mining industry and there are clear reasons for that," he said.

"You need to compare apple for apple but in this case, you are comparing two different industries. Without taking away anything from the beer industry, in this case however, you seem to be comparing the impact of a rapper artist in a crowded stadium and an orchestra performance at a concert hall.

" Mpungwe said TBL as a company in the beverage industry, has a different cost base, just as its products are also different compared to the mining sector.

"In this regard, the initial investment for a beer factory is much smaller compared to mining and it is also one off, save for the normal maintenance, upgrade and expansion costs," he explained.

"Mining risk profile begins at the exploratory phase and requires heavy initial and progressive investments through mining development. Commodity prices are also erratic and the industry does not have any control or room for manoeuvre.

" Mpungwe said it was wrong to just focus on government taxes paid by mining companies, without taking into account the multiplier effect from the mining industry and its broader economic benefits to the nation.

"As a matter of fact, if you take the life of a mine average evaluation distribution model, you will find that taxes and royalties in the mining industry only constitute 15 percent; loans and interests 10 percent; capital reinvestment 5 percent and shareholders get 13 percent, but production cost constitutes 57 percent," he said.

"You need to have a long term view, in order to properly appreciate the contribution of the mining industry, not only to tax revenue but to the greater economy as a whole.

" TRA scrapped plans in 2014 to review mining and gas contracts, after its previous announcement of the move rattled investors in the country's rich gold and natural gas resources.

The tax authority had announced that it was seeking technical assistance to renegotiate mining development agreements (MDAs) and natural gas production sharing agreements (PSAs).

This threatened to duplicate work by the Energy and Minerals Ministry, which also said it was in talks with miners and energy firms to alter deals to give the state more revenue. Investors in Tanzania, Africa's fourth biggest gold miner which has plans to develop huge new gas finds, have complained of shifting goal posts in contracts with the state.

In the tender advertisement posted on its website in 2014, the TRA said the main objective of the contract review was "to secure for the country an enhanced and fair share from the extraction of non-renewable natural resource.

" Mining and energy companies in Tanzania said they have come under increased regulatory pressure in the past few years as the government seeks to increase its share of revenues.

Experts say the government is under popular pressure to spread wealth swiftly from mining and recent gas finds made in the poor country, even though it remains years away from big gas exports. (Don't miss the full Q&A interview with Ambassador Mpungwe in The Guardian tomorrow in the Smart Money business pullo

State promises to support girls to become scientists

THE government has vowed to continue encouraging school girls to pursue science subjects and eventually specialise in information and communication technology (ICT).

Girls in ICT program

Measures currently being undertaken include introduction of competitions involving Form Three students from all over the country. The annual science competition under the Universal Communication Service Access Fund (UCSAF) has for the first time been implemented this year.
It involved a total of 240 secondary girls selected from various schools in the country. It is part of celebrations to mark the International ICT day organised by the International Telecommunication Union (ITU) and celebrated every fourth Thursday of April.
Deputy Permanent Secretary in the Ministry of Transport, Communication and Works, Dr Maria Sasabo said that it is the government’s aim to ensure the country has more women scientists. She said some students misconstrue science subjects as difficult and complicated but they are just like any others.
She was speaking in the city on Wednesday during a ceremony to award certificates to 30 girls who emerged winners of the competition. UCSAF will also provide all the girls with text books for their Form IV studies next year.
Dr Sasabo noted that Tanzania is among the countries with a small number of science students. She said in last year’s Form Four final examinations, only 25 percent of students scored between grade I and III.
“We are committed to support girl students to undertake science subjects. We need as many women scientists to fill the existing shortage in future,” she said.
Earlier, UCSAF chief executive officer, Eng Peter Ulanga said the competition is strictly for government owned schools in both Tanzania mainland and Zanzibar.

Sudan's Bashir to step down in 2020

AFP

Khartoum - Sudanese President Omar al-Bashir has said that he will step down in 2020 after his current term in office ends.

"In 2020, there will be a new president and I will be an ex-president," Bashir said in an interview with the BBC broadcast on Thursday.

Bashir, who is wanted by the International Criminal Court on war crimes charges, seized power in a 1989 coup.

The 72-year-old career soldier won a new term last April in elections marred by international criticism, poor turnout and an opposition boycott.

Bashir had previously said he would not run in the 2015 elections.

He told the BBC his job was "exhausting" and that he would not stand in elections slated for 2020.

Bashir was indicted by the ICC over alleged war crimes, crimes against humanity and genocide charges related to the Darfur conflict.

Ethnic minority insurgents rebelled against him in 2003 saying the western region was being marginalised and Bashir unleased a campaign to crush them using troops, militia and jet planes.

The United Nations says some 300 000 people have been killed in the conflict and there are more than 2.5 million displaced people in the region, but Khartoum gives much lower figures.

Fierce fighting in Darfur's Jebel Marra area since January has forced at least 100 000 people to flee their homes, according to the UN.

In his BBC interview, Bashir denied reports his forces had carried out abuses in Jebel Marra.

Source:  news24.com

President Kenyatta says the clean-up on banking sector was long - overdue

President Uhuru Kenyatta expressed confidence in the overall health of the banking and financial sector in Kenya, and said that what the country is going through is a long-overdue cleanup of the sector. The President added that what remains important is the protection of depositors. He was speaking as he wound up his European tour, which took him on official visits to France and Germany. Midsize lender Chase Bank was placed under receivership, locking in billions of shillings in deposits.

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EU – Africa: A common future

As we face the challenges of the 21st century there is more that unites Africa and Europe than divides us. We share a common history of thousands of years. Today more than ever we need to work together to build our common future and to work jointly on the defining global issues of our age.

We both have a shared view of the benefits of cooperation on our continents. Europe’s journey from the devastation of 1945 to a Union of more than half a billion citizens based on shared values and designed to create peace and prosperity is well known. So too is Africa’s liberation from colonial rule to independence and greater integration through the creation of the African Union (AU). Our journeys towards integration are far from over but by working together we can help each other forging stronger ties, learning the lessons from each other’s experiences and building sustainable growth that will benefit our citizens. Our two institutions, the African Union Commission and the European Commission work jointly to help drive this process forward.

Sustainable and inclusive growth and development for both Africa and Europe must benefit us all. This was well recognised by the leaders of Africa and Europe at the last EU-Africa Summit when they put Human Development at the heart of our cooperation. Africa’s population is growing fast. By 2035, the number of young African men and women entering the job market will exceed that of the rest of the world. The full and equal participation of women is essential. As the African Union’s Agenda 2063 recognises, no society can reach its full potential unless it empowers women and removes all obstacles to women’s full participation in all areas of human endeavour. To fully benefit from the demographic dividend, Africa needs to implement the policies spelt out in Agenda 2063 and these need to be implemented fast.

We know that sustainable development can only occur in stable and secure societies. We know, too, that security will be undermined if equal access to the benefits of sustainable development is not assured. This is becoming even more evident in times when terrorist groups are targeting disenchanted and often unemployed youth groups that seek to spread violent sectarian ideologies to destroy the pluralism of our societies. We must guarantee that all citizens, in particular the youth, find a place in society and be fully empowered to reach their potential.

Security cannot exist without justice, democracy, the rule of law, good governance and the effective respect for human rights of all individuals and communities. 2016 is the African Year of Human Rights with particular focus on the Rights of Women. The European Union (EU) has also designated 2016 as a year of human rights activism and global campaigning. This is an opportunity for all of us to team up, strengthen our work together in support of the African Governance Architecture, as well as in support of universally agreed human rights. Africa can be proud of having one of strongest human rights’ frameworks in the world: by the end of 2016 we should ensure that all our Member States have ratified all human rights treaties.

The African Peace and Security Architecture is designed to enable Africa to manage its own peace and security. This is in our common interest and the European Union is ready to continue supporting this goal. The work that has been done in countries like Somalia, the Central African Republic and Mali bears testimony to this. The African Peace Facility has pioneered a shared EU-Africa commitment by giving Africa the means to develop and use its own capacity to carry out essential mediation work, to prevent conflicts and to secure peace. In light of the connectivity of global threats and major regional crises, a strong and resilient African Union is essential.

Today’s migration crisis, partly rooted in violent conflicts, also makes a compelling case for closer cooperation. Europe is confronted by an unprecedented flow of refugees and asylum seekers. In Africa, too, people are on the move – from villages to cities, to neighbouring countries and sometimes towards Europe. Those moves are mainly motivated by fear and hope. Fear of conflict and poverty, hope for peace, security and opportunities. We must address both the fears and the hopes. If we want to ensure integration, we must manage human mobility. Our two Commissions will continue to work together on migration and mobility. We will work together to address the root causes of illegal migration, support mobility and labour migration, reduce the cost of remittances, strength international protection, facilitate return and to combat human trafficking.

There is optimism about Africa’s future, and rightly so. For more than a decade, Africa has enjoyed sustained economic growth. Africa is an increasingly attractive place to do business. Trade with the EU has increased by 50% since 2007. Around 40% of Africa’s exports are made up of processed products, with a consistent trade surplus in Africa’s favour. The EU remains Africa’s main trading partner. Investments by European companies and their subsidiaries in Africa total over EUR 200 billion annually, making the EU Africa’s leading investment partner. Trade and investment relations between Africa and the EU can be improved further through closer cooperation, policy coordination and the conclusion of WTO negotiations. Europe also remains Africa’s main development partner with more than €20 billion official development assistance (ODA) per year.

But continued growth cannot be taken for granted. Decreasing price of oil and other commodities as well as reduced demand from China and other emerging economies will have negative impacts. Africa’s reliance on raw material exports makes it vulnerable to downturns in demand in overseas markets, hence the need for value addition through industrialisation.

Our two Commissions are working together to promote industrialisation, diversification and increasing value added. We are working together to promote investments in African infrastructure, facilitate technology transfer and intensify joint research and development. Last but not least, we are working together to boost agriculture to promote sustainable and inclusive economic growth. This is why creating a Continental Free Trade Area which promotes free and fair trade is so important.

Our Unions, our two continents face common challenges From climate change, migration, ensuring sustainable economic growth to the fight against terrorism and violent extremism; those are challenges that we have to face together. We know well that we are stronger when we are working together. We are starting preparations for the 5th EU-Africa Summit to be held in Africa in 2017 with these objectives well in mind.

By Jean-Claude Juncker and Nkosazana Dlamini-Zuma

Study reveals cost of unsafe abortions in Tanzania

A new medical study has revealed that undercover abortion in Tanzania is common and is a major contributor to maternal death and injury in the country.

According to the study, unsafe abortions pose a major health problem in Tanzania, with lake zone regions recording the highest numbers of unintended pregnancies in the country largely due to low contraceptive use.
Researchers said Tanzania's average national abortion rate was 36 abortions per 1,000 women of reproductive age, which is higher than the abortion rates in Ethiopia (23), Rwanda (25) and Malawi (24).
However, Tanzania's abortion rate is lower than some of its east African neighbours, including Kenya (48 per 1,000) and Uganda’s (37).
Women obtained approximately 405,000 induced abortions in Tanzania in 2013, according to a study conducted by researchers at the US-based Guttmacher Institute and Tanzania’s National Institute for Medical Research (NIMR) and the Muhimbili University of Health and Allied Sciences (MUHAS).
"Zanzibar has the lowest abortion rate at 10.7 per 1,000 women. The Lake zone has by far the highest abortion rate of 51 abortions per 1,000 women," said part of the study titled "Incidence of Induced Abortion and Post-Abortion Care in Tanzania."
"In the Lake zone, the high abortion rate is most likely a consequence of low contraceptive use (lowest in the country) and high unmet need, which are also responsible for the highest unintended pregnancy rate in the country."
Women with unmet needs are described as those capable of producing offspring and sexually active but are not using any method of contraception, and report not wanting any more children or wanting to delay the next child.
The concept of unmet need points to the gap between women's reproductive intentions and their contraceptive behaviour.
The pregnancy rate for Tanzania is 245 per 1,000 women of reproductive age, while the unintended pregnancy rate is somewhat lower at 92.7 per 1,000 women of reproductive age.
The study uncovered that the vast majority of abortions in the country are clandestine procedures that put women’s well-being at risk because of an abortion law that is both highly restrictive and ambiguous.
The researchers, who conducted surveys of health facilities and health professionals and reviewed population and fertility data, estimate that 66,600 women received post-abortion care in health facilities for complications resulting from unsafe abortions in 2013.
However, almost 100,000 women who experienced complications did not receive the medical attention they needed.
The researchers hope that these findings will help inform Tanzania’s ongoing efforts to decrease its maternal mortality ratios, which remain among the highest in the world.
Unfortunately this is an all too common theme across Africa where it is estimated that 1.7 million women are hospitalised due to unsafe procedures, and 29,000 maternal deaths occur each year.
There are only three countries in Africa where abortion is permitted without restriction -- Cape Verde, South Africa, Tunisia.
Even though over 6.4 million abortions happen on the continent every year, only 3% of these happen under safe conditions because of the limitations imposed by legislation. W
omen, particularly those who are underage or unmarried, are more likely to look for a cheaper rate in a dodgy backstreet clinic or visit a “traditional doctor” to assist them in the termination of the pregnancy.
In 2008 the WHO estimated that 14 percent of all maternal deaths on the continent - approximately 29,000 women - were due to unsafe abortion.
For those who survive, there can be complications afterwards - the WHO estimates that about 1.7 million women in Africa are hospitalised annually for complications of unsafe abortion.
Restrictive laws have also meant that hospitals are not properly equipped to provide post-abortion care, common shortcomings include, delays in treatment, shortages of trained health workers and medical supplies, use of inappropriate procedures and judgmental attitudes among clinic and hospital staff towards the patient.

SOURCE: The Guardian