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Tanzania TP regulations
Key ingredients
Presence of Multinational enterprises
Royalties
Management fees
Thin capitalisation
Miss-invoicing
Tax heavens
Thin capitalisation
Tanzania lost US$830 millions from 2001-2007 -(Bomani
Mining Review Report, 2008 and Masha Mining Review Report,
2006).
Examples of ratios of debts to equities of 3 main gold mines in
Tanzania during the year ending December 2007 are
Geita Gold mine Bulyanhulu Gold mine Resolute Gold
mine
12,597,000 % 791 % 5088%
D/E of Geita Gold Mine was at 125,970:1, The company
which started to produce gold in 1999 as the largest gold mine
in sub Saharan Africa excluding Ghana and South African
mines, paid its first corporation tax in 2012.
The thin 70:30 cap. Rule was introduced in 2011
Mr. Luckson Kataraihya, NBAA Annual Conf. Dec. 2014, Arusha.
Cross- borders TP case studies
22
Miss-invoicing
Cashew exports where India reported imports of 120,000 tons
from Tanzania in 2011 and Tanzania reported export of
80,000 tons.
This exports under invoicing aims to evade
export taxes
Thin capitalization
Finance local operations from a related
party located in tax heaven.
Developing
country profits
Profit Split Method splits total profits from transactions among the
parties based on the level of contribution
traditional methods
Transactional Profit Methods, be used only when
traditional transactional methods cannot be applied
reliably
Mr. Luckson Kataraihya, NBAA Annual Conf. Dec. 2014, Arusha.
..TP Methods - comparability
39
Availability of information on
comparables
Subjectivity of the assumptions
Or
Thirty day from the demand notice from
commissioner
Non exclusion
Local and cross border
Company size/turnover
Unreasonable fixed penalty (TZS50m) irrespective
Thank you