Tanzania Considers "Super Tax"
Source: Reuters (6/8/11)
"Tanzania mulls super-profit minerals tax to fund its development plan."
Tanzania, one of Africa's top gold producers, is considering a "super profit" tax on earnings from minerals as one of the ways to fund its five-year development plan, according to documents seen by Reuters. The move follows similar steps in other producer countries that have sought to increase fiscal revenue from the mining industry and to take advantage of rising prices.
Big companies in the east African country said existing arrangements should shield their operations from any moves to impose higher taxes.
Australia was among the first to consider a hefty resource tax, but it had to climb down from initial proposals for a headline tax of 40% after pre-election talks with mining giants.
"Revenue from the mineral resources will be one of the important sources of financing the medium-term plan. Considering the increasing trend in mineral prices, it is optimal to introduce a super profit tax on the windfall earnings from the mineral sector," said the plan, which was launched by President Jakaya Kikwete late on Tuesday.
African Barrick Gold also said in a statement that mineral development agreements in place guaranteed a stable tax regime.
"All of our current operating mines are subject to Mineral Development Agreements which guarantee tax and fiscal stabilization for a long-term mining project by reference to the law in force at the effective date of the agreement."
Tanzania is set to unveil its 2011/12 budget on Wednesday.