Rogue mining executives could now spend a long time in jail

19Sep 2018
By Financial Times Reporter
DAR ES SALAAM
Financial Times
Rogue mining executives could now spend a long time in jail
  • TOUGH NEW RULES The recently-released integrity pledge regulations target errant executives of mining companies, contractors and sub-contractors who deny the government revenue collection from the country’s natural resource wealth

MINING executives convicted of breaching a mandatory integrity pledge that commits them to conduct ethical business practices and good corporate governance in Tanzania,

now face severe penalties, including the possibility of spending more than 10 years in prison, under tough new government regulations aimed at tackling tax evasion, corruption, transfer pricing and other malpractices.

"A holder of a mineral right shall not engage in any malpractices including tax evasion, double taxation, under or overpricing, transfer pricing and corruption," read part of the new rules.

"Any person who contravenes the provisions ... commits an offence and shall be liable upon conviction, to a fine of not less than 100 million/- or to an imprisonment for a term of not less than 10 years or to both fine and imprisonment."

Transfer pricing is a method of pricing goods and services transferred within a multinational or trans-national company in order to reduce tax burdens.

The Tanzania Revenue Authority (TRA) has been struggling to tackle claims of rampant transfer pricing among some multinational companies alleged to be dodging payment of corporate tax by fraudulently inflating their operating costs, hence allowing them to declare losses.

The Mining (Integrity Pledge) Regulations, which were approved in July this year, require miners to comply with the new rules effectively from next month.

"Within three months after these regulations come into force, a holder of mineral rights who undertakes prospecting or mining activities, shall make arrangements to the satisfaction of the (Mining) Commission as are necessary in order to comply with the provisions of these regulations," according to the regulations.

 

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