The mining fiscal regime in Tanzania is characterized by the fact that the Government is the owner of the
resource with sovereign authority to impose taxes, fees and rents on all persons and companies operating in its jurisdiction. For that matter, the Government of Tanzania (GoT) imposes a combination of
resource-based levies such as royalties on won minerals; rental fees on exploration or mining ground and application and registration fees for different categories of mineral rights licenses; nominal taxes, that is to say, land rent, land use fee, application fees, preparation fee, share of dividends (current 16%); corporate income tax, stamp duties, export duties, Value Added Tax, withholding tax, excise duty, fuel levy, import duty, and service levies. These taxes and levies charged at different levels of the mining projects (from prospecting to production stages), among others.

The mining fiscal regime in Tanzania is characterized by the fact that the Government is the owner of the
resource with sovereign authority to impose taxes, fees and rents on all persons and companies operating in its jurisdiction. For that matter, the Government of Tanzania (GoT) imposes a combination of
resource-based levies such as royalties on won minerals; rental fees on exploration or mining ground and application and registration fees for different categories of mineral rights licenses; nominal taxes, that is to say, land rent, land use fee, application fees, preparation fee, share of dividends (current 16%); corporate income tax, stamp duties, export duties, Value Added Tax, withholding tax, excise duty, fuel levy, import duty, and service levies. These taxes and levies charged at different levels of the mining projects (from prospecting to production stages), among others.

The regime has made a significant contribution to the economic growth and development, and thus
earmarked by the Tanzania Development Vision, 2025 as catalyst to stimulate and facilitate realization of
Tanzania Industrial Economy by 2025. The contribution of the sector has so far been mainly through
Foreign Direct Investment (FDI) which have increased by 5% to USD. 1.1 billion in 2019 compared to USD.864 million in 2018; GDP contribution to 5.2% in 2019; mineral exports earnings to more than 40% in 2020 from 1% as recorded in 1997; government revenue contribution from Tzs.168 billion in 2014/2015 to Tzs. 528.24 billion in 2019/2020; country’s GDP from 1% in 1997 to 5.2% in 2020. The mining sector has as well contributed through employment with 7,355 people directly employed in the formal mining sector and more than 3,000 in the informal sector, while the ASM sub-sector reported to engage more than 600,000 people. The contribution of the sector is also witnessed through performance on local content as a means to linkages for economic growth, with the mining sector reported to have a value of TZS. 2.4 trillion through locally and foreign procured goods and services etc.

The frequent and unpredictable changing of rules and regulations; complex mining fiscal regime and related mining laws; the multitude of regulators charging exorbitant fees; limited disclosure, the stringent local content and CSR regulations, etc. altogether have made the regime to be complex and less attractive to not only large-scale mineral explorers but also to large scale investors in the country.

The Report puts forth the following recommendations among others: the need to adhere to the principles of disclosure; Strengthening of the Tax management systems; Legal stability and enforcement, the enactment of the Mineral Revenue Management legislation is also very critical to institutionalize the creation of the Mining Fund intended for intergenerational saving; Fast-trucking the implementation of the Blue-Print on regulatory for improving business environment; Continuous dialogue and consultation to enhance local participation for a sustainable mining sector in Tanzania.

Read more: The Implication of Extractive Sector Fiscal Regime to the Economy

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