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By Patty Magubira, The Citizen Reporter
Arusha. Tanzania has been losing $248 million annually, equivalent to 7.4 per cent of its gross domestic product, to trade mis-invoicing, a taxation researcher reported here at the weekend.
Ms Rhiannon McCluskey said most of the loss was from over-invoicing on fuel imports on which mining firms were exempt from paying duties.
“This suggests that mining companies are inflating their import costs to shift profits out of Tanzania and in the process, decrease their tax liability,” she said.
Ms McCluskey was presenting findings of a research on constructing Capacity to Confront Complex Tax Evasion in Africa with case studies from Tanzania and Sierra Leone.
The taxation researcher cited $705.8 million worth of over-declared capital allowances and operating expenditures the Tanzania Minerals Audit Agency TMAA) found out in 2010 when it audited 12 mining companies.
The mining firms, which were allowed to deduct their accumulated losses from their profits, had deprived Tanzania of about $176 million by declaring losses for many years before they were liable to pay corporate tax, she said.
“While revenues are increasing, it is important that TRA ensures firms don’t over-declare their costs and losses in order to delay the start of tax payment,” she suggested.
About 60 researchers on taxation from in and outside Africa convened here at the weekend for a three-day Annual Meeting of the International Centre for Tax and Development (ICTD).
The TRA commissioner general, Mr Rished Bade, said the researchers were analysing various reports during the meeting with a view of improving taxation systems on the continent.
“We will iron out shortfalls the taxation researchers point out,” vowed Mr Bade, adding that the TRA personnel would, as a result of the reports, be trained in filling in the gaps to be identified.
The ICTD chief executive officer, Prof Mick Moore, said all researches whose findings were reported during the centre’s annual meetings were conducted in Africa by Africans.
They mostly covered taxation on the emerging extractive sector and, to a small extent, local government which ought to provide citizens with value-for-money social services.
ICTD -- a global research network devoted to improving the quality of tax policy and administration in developing countries with a special focus on sub-Saharan Africa -- has organised the meeting which is expected to wind up today.
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