TANGAZO
In a statement emailed to The Citizen, Mr Kabwe, who is also the Kigoma North MP, said the blame for the huge loss lies squarely on TRA lawyers and the Energy ministry officials who “looked the other way as the law on tax was being broken.”
Dar es Salaam. Public Accounts Committee chairman Zitto Kabwe wants Tanzania Revenue Authority (TRA) officials and those from the Ministry of Minerals and Energy to be taken to task over failure to recover Sh340 billion in capital gain tax arising from a uranium mining deal.
Mr Kabwe said he was shocked by reports that TRA lost a court case in which it was seeking to recover the said amount from Mantra Resources which had sold its uranium mining operations to a Russian company.
In a statement emailed to The Citizen, Mr Kabwe, who is also the Kigoma North MP, said the blame for the huge loss lies squarely on TRA lawyers and the Energy ministry officials who “looked the other way as the law on tax was being broken.”
The MP said laws on mandatory payment of income tax are in place, including capital gain tax by foreign mining firms that change ownership, to ensure the country benefits fully from its natural resources.
“I am therefore shocked that Mantra Resources sold its operations to JSC Atomredmetzoloto (ARMZ) of Russia without paying the prerequisite tax. Ministry officials should also explain why they gave an approval for the change in ownership without ensuring the firms involved fulfilled the tax law requirements,” said Mr Kabwe.
The MP noted that the matter should not be swept under the carpet and action must be taken against the culpable.
“Tanzanians should know that there wasn’t any legal loopholes which the firm used to avoid taxes; it was sheer sloppiness on the part of our officials,” he charged. He noted that loopholes in the law that would allow foreign firms to dodge taxes were removed in 2012 through amendments of the Finance Act.
The Kigoma MP said the changes removed conflicting sections of the law that gave mining firms and crooked State officials an opening for avoiding tax enforcement. “The current law, for example, does not allow such firms to transfer shares or operations before due tax was fully paid for.”
Relevant ministers were supposed to enforce such discipline, he said, recalling that in 2013, he had personally clashed with energy minister Sospeter Muhongo over Mantra Resources. “Prof Muhongo told Parliament that the tax money that this firm owed TRA would be paid. I am thus at a loss over what might have happened.”
According to Mr Kabwe, it would be vital that TRA and any other oversight bodies quoted the relevant sections of the income tax law to protect the country from such huge losses to foreign investors or local collaborators.
Official documents show that TRA lost a case it filed in 2011 with the Tax Revenue Appeals Board for a claim of Sh340bn from ARMZ of Russia that has assumed uranium mining operations formerly held by Mantra Resources. The amount was 20 per cent of capital gain that TRA argued is stipulated in Section 90 (1) of the Income Tax Act.
ARMZ reportedly bought the operations for $980 million. TRA thus filed a claim for $196 million plus $9.8 million in stamp duty.
TANGAZO
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