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Tanzania orders audit of mining companies' earnings over taxes
Tanzania's President elect John Pombe Magufuli addresses members of the ruling Chama Cha Mapinduzi Party (CCM) at the party's sub-head office on Lumumba road in Dar es Salaam, October 30, 2015. PHOTO BY REUTERS/Sadi Said
29/03/2017
DAR ES SALAAM (Reuters) - Tanzania's President John Magufuli has ordered a special audit of mining companies to determine if they pay their fair share of taxes to the East African country.
Mining contributes 3.5 percent of the gross domestic product (GDP) in Tanzania, Africa's fourth-largest gold producer, but the government wants the sector to pay more taxes.
The order for an audit follows an abrupt ban on exports of gold and copper concentrates.
"The government wants to verify if the relevant taxes are actually being paid," Tanzanian Prime Minister Kassim Majaliwa said in a statement late on Tuesday.
Since coming to power in November 2015, Magufuli has promised to root out tax evasion, corruption and mismanagement, but some foreign investors have been rattled by his policies.
Tanzania's biggest mining firm, Acacia Mining, is in talks with the government after being hit hard by the ban on exports, with the miner saying it is incurring a daily loss of $1 million due to the stoppage.
Magufuli has also ordered hundreds of export-bound shipping containers of mineral concentrate to be placed under 24-hour police watch until a thorough inspection was done to verify if the cargo was properly declared.
A video recording of the president making an unannounced visit to the Dar es Salaam port on March 23 to personally inspect containers of mineral concentrate showed a vividly angry Magufuli talking to port workers.
The president said he has instructed officials to impound over 250 shipping containers of gold and copper concentrate owned by Acacia Mining at Dar es Salaam pending a tax probe.
He disputed claims by companies which say they cannot build furnaces to smelt copper locally.
"The (mineral) separation method is very simple chemistry," said Magufuli, who holds a PhD in chemistry.
Acacia said it pays all local taxes on its gold and copper concentrate before exporting the shipment and follows all government procedure.
"The concentrate revenue is also included in our royalty payment declarations and income tax returns to the TRA (Tanzania Revenue Authority)," it said in a statement on Tuesday.
(Reporting by Fumbuka Ng'wanakilala, editing by David Evans)
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