Trade mis-invoicing has cost Tanzania $2.48 billion in the past decade.

Companies and their agents who deliberately altered prices of their exports and imports in order to justify moving money out of, or into the country illicitly, include some in the mining sector, who inflated fuel import costs to shift taxable income out of Tanzania.

An international taxation researcher, Rhiannon McCluskey, estimates that on average $248 million worth of capital has been lost each year over the past decade. This means that over-invoicing on fuel imports, on which mining firms were exempted from paying duties in Tanzania, has been denying the country revenues equivalent to 7.4 per cent of GDP.

Ms McCluskey was speaking at the three-day annual meeting of the International Centre for Tax and Development in Arusha. She said that in 2010, the Tanzania Mineral Audit Agency unearthed $705.8 million over-declared capital allowances and operating expenditures when it audited 12 mining firms.

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2012 discrepancies

In 2012, there were reported discrepancies in import duties declared in the Tanzania Revenue Authority and Geita Gold Mine reports.

Ms McCluskey said taking advantage of the incentive that enables them to deduct their accumulated losses from their profits, the mining firms had deprived the government of nearly $176 million by declaring losses for many years before they were liable to pay corporate tax.

“The Tanzania Revenue Authority must be vigilant in order to ensure that companies do not over-declare their costs and losses in order to delay paying taxes,” she said.

Fuel imports in Tanzania are done through the bulk procurement system administered by the Energy and Water Utilities Regulatory Authority and the Petroleum Importation Corporation.

Mark Bomani, chairman of the Tanzania Extractive Industries Transparency Initiative Multi-Stakeholders Working Group, said that the mining firms have reported paying Tsh44 billion ($27 million) to the government while the latter reports having received Tsh39.1 billion ($24 million). He said that Geita Gold Mine paid Tsh35 billion ($22 million) and the other companies Tsh9 billion ($5 million).

TRA Commissioner General Rished Bade, said that tax personnel would be trained with a view of improving taxation systems.