Tanzania tax16 Mar 2018 13:35
Is the Tanzania Govt taking the ****. Extract from RNS and not liking this part at all:
Tanzania tax:
Capital Drilling (T) Ltd is party to a payroll tax claim made by the Tanzanian Revenue Authority (TRA) for the tax years 2009-2015. During the financial year ended 31 December 2016, the company received an immediate demand notice from the (TRA) for Tanzanian Shillings of 18,598,361,197 (US$ 8,374,660), inclusive of penalties and interest. Management objected to the assessment raised by the TRA and requested the calculations of the notice. In order to object, according to Tanzanian Tax Law Sections 51(1) and (5) of the TAA 2015, a taxpayer is required to pay the tax amount not in dispute or one third of the assessed tax whichever is greater. It is prudent to note that the Finance Act in 2016 added a further subsection (9) in Section 51 regarding tax objections and assessments. The said amendment provides: "Where the taxpayer fails to pay the amount stated under subsection (5) within the time provided therein, the assessed tax decision shall be confirmed as final tax assessment in terms of section 15(1)(a) of the Tax Revenue Appeals Act." In accordance with the above-mentioned legislation, management reached an agreement with the TRA to pay Tanzanian Shillings of 1,500,000,000 (US$0.7 million) in lieu of the one third of the assessed value. This amount was fully provided for in the 2016 Annual Financial Statements. In June 2017 the TRA provided their workings to Capital Drilling (T) Ltd. Capital Drilling (T) Ltd identified differences with the TRA on both the specific merits and methodology used to determine the value. Capital Drilling (T) Ltd has maintained an engaging relationship with the TRA to find closure and resolution to this matter. In order to continue the discussions and negotiations with the TRA, Capital Drilling (T) Ltd has, at the request of the TRA, provided an additional amount of Tanzanian Shillings of 1,500,000,000 (US$0.7 million) as at 31 December 2017. This is in line with the aforementioned Tanzanian Tax Law. Refer to Note 14.
The TRA also raised a Withholding Tax liability of TZS 2,244,907,829 (US$1,024,268) inclusive of interest and penalties. This pertains to the misinterpretation of the facts by the TRA for assets that were purchased by Capital Drilling (T) Ltd and not leased. The TRA interpreted these assets as a rental agreement for these assets rather than permanent acquisition of these assets, which results in no Withholding Tax liability. Management lodged an objection on 14 November 2016 and paid an upfront payment of TZS 170,000,000 (US$77,564) in order to have the objection validated and acknowledged, as is required per subsection (9) in Section 51 of the Income Tax Act of Tanzania. Based on above, management assessed no further liability with regards to this assessment. As at 31 December 2017, this objection is still pending with the TRA and no resolution has been reached as yet.
Sign In
Follow the stocks
