A ruling by the Tax Revenues Appeals Tribunal in Dar es Salaam last week asserted that Acacia Mining Plc (previously known as African Barrick Gold or ABG) was carrying out a "sophisticated scheme of tax evasion” that allowed it to dodge paying over $41.25 million (an estimated 90 billion/-) as withholding tax to the Tanzania Revenue Authority (TRA) over a period of four years.
Acacia, which is Tanzania’s biggest gold mining firm, has moved to quickly deny the accusation and said it intended to lodge an appeal against the tribunal ruling.
Multinational mining enterprises in Tanzania have for years been suspected of engaging in substantial tax dodging, causing the government to get less than its fair share of revenues from the lucrative sector.
In an interview with The Guardian, the chairman of the Tanzania Chamber of Minerals and Energy (TCME), Ambassador Ami Mpungwe, yesterday defended the mining firms by saying the long-standing tax-related allegations against them were baseless.
"They are nonsensical allegations that make whoever raises them feel extremely patriotic and the rest of us involved in the industry look like cheats and greatest sellouts," Mpungwe said.
"None of our (chamber) members, over the years, has been brought to book or found guilty of the allegations that are regularly raised against our individual member companies and the industry as a whole," he added.
He noted that mining was one of the country’s most rigorously-audited industries, routinely under the microscopes of TRA, the government's Controller and Auditor General (CAG), Tanzania Minerals Audit Agency (TMAA), Tanzania Extractive Industry Transparency Initiative (TEITI), the local media, activists and politicians.
"Unless you consider our (chamber member) companies, and the industry as a whole, to be genius(es) in the art of tax cheating, I find these repeated and baseless allegations more of an insult to the likes of TRA, CAG, TMAA, TEITI and the government as a whole, than a proof of guilt on the part of our member companies and our industry," Mpungwe stated.
His statement came on the back of the tribunal’s March 31 ruling which endorsed an outstanding $41.25m withholding tax debt which Acacia Mining owes TRA, being 10 per cent of over $412.5 million (901bn/-) doled out to its shareholders as regular dividends from 2010 to 2013 alone.
Acacia has claimed that it could not pay the tax because all its three gold-producing mines in the country -— Bulyanhulu, North Mara and Buzwagi -— were making losses.
The case was first brought before the Tax Revenue Appeals Board, which sided with TRA's debt claim, leading Acacia Mining to seek reprieve from the Tax Revenue Appeals Tribunal.
In its ruling last week, seen by The Guardian, the tribunal confirmed the board’s findings and ordered Acacia Mining to pay the tax.
“The fact that none of ABG’s (Acacia) subsidiaries is declaring any profit that could provide its holding company with (funds) sufficient to distribute to its shareholders (as dividends) four years in a row is what in our respectful opinion constitutes the evidence of a sophisticated scheme of tax evasion,” tribunal chairman Dr Fauz Twaib said in the ruling.
In a response statement delivered on Monday, Acacia Mining’s London-based management described the tribunal's decision as being “fundamentally flawed” and vowed to take their case to the Court of Appeal.
"Acacia and its subsidiaries fully comply with all international and domestic tax legislation and have not and never will undertake any form of tax evasion or tax avoidance schemes," the company statement said.
Mpungwe also maintained in his interview with The Guardian that the operations of all major mining firms in the country were transparent and above board.
"The fact of the matter is that our books of accounts are (more) intensely and persistently audited than those of any other companies or industries in Tanzania," the TCME chairman said.
"Most of our companies are listed on various capital markets and, therefore, subjected to rigorous scrutiny and disclosure requirements, based on international best practices of corporate governance," he added.
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