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Wednesday, December 19th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Will Tanzania Introduce “Super Tax” On Minerals?

Tanzania is considering ways in which to fund its five-year development plan, including a “super profit” tax on earnings from minerals, Reuters Africa reports.

Tanzania is one of the top gold producers in Africa and the latest move is similar to those seen in other gold producing countries as part of initiatives to increase the fiscal revenue from the mining industry and as a means of taking advantage of increasing prices.

Tanzanian President Jakaya Kikwete said about the plan that was launched late on Tusday: “Revenue from the mineral resources will be one of the important sources of financing the medium-term plan. Considering the increasing trend in mineral prices, it is optimal to introduce a super profit tax on the windfall earnings from the mineral sector.”

On Wednesday, concern over the tax dragged down shares of miners operating in the country. Shares in AngoGold Ashanti fell by 2.6 percent.

Another miner, African Barrick Gold, which runs four gold mines in the country saw its shares trading at 414 pence at 13:01 GMT, down 8 percent.

The company released a statement in response to the announcement by the Tanzanian president: “African Barrick Gold (ABG) is not aware of any such plans and has not been involved in any discussions or consultation in relation to this, either as ABG or through the Tanzanian Chamber of Minerals and Energy.”

It added: “All of our current operating mines are subject to Mineral Development Agreements which guarantee tax and fiscal stabilisation for a long-term mining project by reference to the law in force at the effective date of the agreement.”

One of the first countries to consider one of these hefty resources taxes was Australia, who found itself having to step down from early proposals of implementing a headline tax of 40 percent, following pre-election talks with mining giants including BHP Billiton and Rio Tinto.

Tanzania is due to present its 2011/12 budget on Wednesday.

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