Tanzania: Top tax-payers list faulted
Politicians and economists have raised eyebrows on household companies that did not feature on the top 15 taxpayers’ list announced by Prime Minister Mizengo Pinda in Dodoma last week.
They expressed concerns in separate interviews with the ‘Daily News’ on Saturday, that some known big companies did not appear in the list.
“A public debate on the matter is needed,” the Deputy Leader of the Official opposition in the National Assembly, Mr Zitto Kabwe (Kigoma North-CHADEMA), charged.
Mr Zitto, who is also the Chairman of the Parliamentary Public Organisations Accounts Committee (POAC), was not amused with the list.
He said the fact that only one mining company, Resolute Tanzania and one telecom company, Airtel Tanzania, appeared on the list was shocking to him.
The outspoken politician said household names that he expected to feature on the list included giants like Vodacom Tanzania, Barrick Gold Tanzania, Kwanza Bottlers (Coca Cola) and SBC Tanzania (Pepsi).
Others are Mohamed Enterprises, IPP, Bakhresa Group, Serengeti Breweries Limited (SBL) and AngloGold Ashanti.
“One can conclude that, TBL (Tanzania Breweries Limited) is the most profitable company in Tanzania while NMB (National Microfinance Bank) is the most profitable Bank,” Mr Zitto said.
On the list announced by the Premier while adjourning the House session last Friday, TBL was the leading taxpayer in the country between 2005 and this year, having coughed up some 165.4bn/-.
NMB (108.6bn/-) came second on the list, followed by Tanzania Cigarette Company (TCC) which paid 92.1bn/-.
The Finance Minister, Mustafa Mkulo, told the ‘Daily News’ in a telephone interview that companies pay tax according to their turnover.
“There are about 12,000 and 14,000 taxable companies in the country. The list included only the biggest taxpayers in Tanzania,” he explained.
Minister Mkulo argued that by not featuring on the list it did not mean that they do not pay required taxes.
“I want this to be clear that all other known companies pay tax as required. Before one questions why they did not appear on the list he/she must know the turnover of the respective company,” the minister said.
His views were echoed by Tanzania Revenue Authority (TRA) Director of Taxpayer Services and Education, Mr Protas Mmanda, who argued that being a known big company does not necessarily mean it is a big taxpayer.
He said the companies declare net profit for taxation to the TRA, stressing that all companies that appeared on the list were the leading taxpayers in Tanzania.
However, Wawi MP, Mr Hamad Rashid Mohamed (CUF) said even the companies said to be the leading taxpayers were paying only 45 per cent of due taxes.
“The government should hire an independent team of experts from developed nations such as Norway or Sweden to enable it to collect taxes effectively,” recommended the former Leader of the Official Opposition.
He listed three factors which he said were responsible for non-compliance in paying tax.
“One is because it is very risky to do business in Tanzania, second is inefficiency by the tax collector and third is unwillingness by large firms to pay tax,” Mr Mohamed said.
The Executive Director of Economic and Social Research Foundation (ESRF), Dr Bohela Lunogelo, said in general terms some of the factors, which could cause less taxable surplus for the big companies include higher operational costs relative to generated income.
“Speculatively, it can be due to over employment of personnel, over investment in marketing and infrastructure and donations to corporate social responsibility projects.
“Enhanced gearing in further capital or business investment expansion and related cost of capital for such investments, speculatively one could think of further investments in new plants or machinery, including opening up branches within or outside Tanzania (the case of Bakhresa) — such expenses qualify for tax allowance,” said the economist.
He also attributed little taxes to loan/credit servicing burden for companies that might have borrowed heavily to finance their market establishment and penetration. And other more reasons.
“The bottom line is which companies have the highest impact in terms of jobs creation and market development for production factors and products.
“In other words we shouldn’t rush to downplay the role of companies simply because they seem to pay less tax. For example, the impact of TBL starts at the farm level in barley or sorghum production to get the beer people enjoy the sip,” Dr Lunogelo said.
The National Bank of Commerce (NBC) and CRDB Bank Tanzania were fourth and fifth respectively, injecting into the treasury coffers 89.9bn/- and 79.2bn/- accordingly.
Sixth to 10th positioned were Tanzania Ports Authority (76.8bn/-), Tanzania Portland Cement (73.4bn/-), Airtel Tanzania (63.6bn/-), Tanga Cement Company Ltd. (43.6bn/-) and Standard Chartered Bank Tanzania (40.0bn/-).
Citibank Tanzania (35.7bn/-), Resolute (T) Ltd. (32.1bn/-), Tanzania International Container Terminal Services (25.9bn) as well as Tanzania Distillers Ltd. (13.4bn/-) and Group Five International (PTY) Ltd. (9.5bn/-), followed.
In his speech, Mr Pinda underscored the importance of paying tax to enable the government to fund its current and development expenditures.
Source Tanzania Daily News
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