Tanzania Court Upholds $41m Barrick Gold Tax Bill

By James Magai

Dar es Salaam — The Court of Appeal on August 31 dismissed an appeal case filed by African Barrick Gold PLC (ABG) against Tanzania Revenue Authority (TRA) over a tax demand amounting

to $41,250,426 (equal to over Sh95 billion) which the company owed the taxman.

It is the third appeal against the tax bill the gold mining company has lost.

The African Barrick Gold PLC (ABG) which later changed its name to Acacia Mining Ltd in 2018 filed the appeal case at the Court of Appeal opposing the judgment issued by Tax Revenue Appeal Tribunal (TRAT) which demanded the gold company to pay the tax (Sh95 billion) it owed the taxman.

This judgment was also approved by Tax Revenue Appeal board (TRAB).

(Acacia has since folded with its operations in Tanzania now under Twiga Minerals Corporation).

In its appeal, among other things, the African Barrick Gold PLC (ABG) claimed it was not established in Tanzania and had no existence in the country, hence it was not required by the Law to pay taxes.

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However, the recent judgment issued by the Court of Appeal under supervision of Chief Justice Prof Ibrahim Juma, assisted by Judge Stella Mugasha and Judge Dr Gerald Ndika supported the decision issued by both TRAT and TRAB and demanded the gold company to settle the tax dispute with the taxman.

In its recent judgment, the Court of Appeal stated that despite the fact that ABG was not established in Tanzania, the gold company was already issued with a BRELA Certificate of Compliance, and hence became eligible to pay tax.

"With regard to the fact that the appellant's (ABG) sources of income were the mines in Tanzania, both TRAT and TRAB were correct to demand the appellant to pay the tax," said the Court of Appeal in its judgment.

According to TRA, the tax in question (Sh95 billion) was an accumulation of unpaid taxes for four years from 2010 to 2013.

The taxman imposed the tax demand after it conducted a thorough investigation and later found out that ABG whose headquarters are in the UK--the operator of three gold mining companies in Tanzania had escaped paying taxes for four months in a row on the grounds that it failed to make profits.

The mining companies operated by ABG include; Bulyanhulu Gold Mining Ltd, North Mara Mining Ltd and Pangea Minerals Ltd.

The TRA also found out that ABG in those years had issued dividends to its shareholders but failed to pay taxes to the government as required by the Law. Furthermore, the taxman in its investigation had found out that ABG in those four years had managed to make profits amounting to $818,431,285 and hence demanded the company to pay the tax (Sh95 billion) to the government, but ABG opposed to doing so and decided to appeal to the TRAB.

But, TRAB later learned from the TRA advocate Mr Noah Tito who told the Board that the gold company had registered offices in Tanzania which supervised the three mining companies.

It was due to this, TRAB demanded the gold company-ABG to pay the tax it owed the taxman. But ABG opposed the judgment and appealed to TRAT. However, TRAT under Dr Fauz Twaib supported the judgment issued by the TRAB in favour of the TRA's tax demand.

Seeking further legal assistance, ABG in 2018 filed an appeal case at the Court of Appeal, and for the third time, its appeal was dismissed and ordered to pay the tax it owed the TRA.