Tanzanian Govt Orders Mining Firms to Open Local Bank Accounts to Control Illegal Financial Flows
The Tanzanian government has ordered firms in the mining industry to open local bank accounts for easy inspection of their finances.
In 2014, a Global Financial Integrity report indicated that Tanzania lost nearly $8.9 billion in forty years through the illicit transfer of money abroad.
The order is part of the new mining laws that were implemented in February 2018 to control the revenue losses from the mining sector to other countries. The firms affected by these new laws are supposed to comply immediately.
Charles Kichere the commissioner general Tanzania Revenue Authority (TRA) said the changes in the mining industry will increase revenue collection and decrease illegal financial flows outside the country.
“With accounts inside the country, it will be easier to track all their transactions and know their true worth, which was previously not easy to get a hold of […] that’s why the country suffered transfer pricing, tax avoidance,” he said adding that TRA officials are currently working with international tax experts so as to comprehend how Illicit Financial Flows (IFFs) work and how to control them.
In July last year, the country’s legislative arm passed three laws that now make imperative changes to the legal and institutional framework guiding mineral, oil, and gas extraction. The three laws are the Natural Wealth and Resources (Revenue and Re-Negotiation of Unconscionable Terms) Act 2017, Written Laws (Miscellaneous Amendments) Act 2017, and the Natural Wealth and Resources (Permanent Sovereignty) Act 2017.
Another 2016 study by the Natural Resources Governance Institute indicates that the country “may have foregone $1.07 billion in revenue in recent years due to tax incentives, illicit financial flows, inflated claims for expenditure, misreporting of sales, losses and so on.”
Tanzania, one of the new countries attracting interest in oil and gas exploration, is likely to record positive growth in the mining sector with the regulation changes.