[Mabadiliko] Fwd: Tanzania says Russia's ARMZ owes $206m in taxes

Friday, May 24, 2013


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----- Forwarded message -----
From: "Shaabani Nzori" <snzori777@gmail.com>
To: "Dr. Antipas T. S. Massawe" <massaweantipas@hotmail.com>
Cc: "Sospeter Prof Muhongo" <profmuhongo.sospeter@gmail.com>, "ELIAKIM C MASWI" <ecmaswi@yahoo.co.uk>, "Jaka Mgwabi" <jmmgwabi77@gmail.com>
Subject: Tanzania says Russia's ARMZ owes $206m in taxes
Date: Fri, May 24, 2013 6:25 am


Tanzania Makes $206M Atomic Tax
Claim<http://www.themoscowtimes.com/business/article/tanzania-makes-206m-atomic-tax-claim/480436.html>

24 May 2013 | Issue 5133

Reuters

The Moscow Times



Tanzania is demanding almost $206 million in taxes from Russian state
uranium company ARMZ, which has won a license to build the East African
country's first uranium mine, the energy minister said on Thursday.



Atomredmetzoloto, or ARMZ is the mining arm of Rosatom, which also builds
nuclear reactors.



Tanzania's tax claim relates to the Mkuju River project in southern
Tanzania, which is operated by Toronto-listed Uranium One but owned
by ARMZ, the Canadian uranium producer's majority shareholder.



"The Mkuju project … was sold in December 2010 to ARMZ of Russia after
acquiring shares from the parent company, Mantra Resources of Australia,"
Energy and Minerals Minister Sospeter Muhongo said in a newspaper
advertisement of his ministry's 2013/14 budget proposals, which were
discussed in parliament on Wednesday.



"Following this deal … the Tanzania Revenue Authority is claiming $205.80
million, of which $196 million was supposed to have been paid as capital
gains tax and $9.8 million as stamp duty."



Muhongo said the company had disputed the tax claim and the matter was now
awaiting a court ruling.



Read more:
http://www.themoscowtimes.com/business/article/tanzania-makes-206m-atomic-tax-claim/480436.html#ixzz2UCEbVdpL

The Moscow Times



*Read more related articles**
**HERE<https://www.google.com/webhp?source=search_app#output=search&sclient=psy-ab&q=Tanzania+Makes+%24206M+Atomic+Tax+Claim&oq=Tanzania+Makes+%24206M+Atomic+Tax+Claim&gs_l=hp.12...1736.1736.0.3228.1.1.0.0.0.0.77.77.1.1.0...0.0...1c.2.14.psy-ab.4UoSUDXh2rM&pbx=1&bav=on.2,or.r_qf.&bvm=bv.47008514,d.bGE&fp=2586a42623c3e43&biw=1280&bih=899>
*



*Tanzania says Russia's ARMZ owes $206m in
taxes<http://www.miningweekly.com/article/tanzania-says-russias-armz-owes-206m-in-taxes-2013-05-23>
*

By: Reuters <http://www.miningweekly.com/author.php?u_id=99>

23rd May 2013



DODOMA  - Tanzania is demanding almost $206-million in taxes from Russian
state uranium company JSC Atomredmetzoloto (ARMZ), which has won a licence
to build the east African country's first uranium mine, the energy minister
said on Thursday.

Russia's ARMZ is the mining arm of Russia's nuclear regulator, Rosatom,
which also built nuclear reactors.

Tanzania's tax claim related to the Mkuju River project in southern
Tanzania, which was operated by Toronto-listed Uranium One, but owned by
ARMZ, the Canadian uranium producer's majority shareholder.

"The Mkuju project ...was sold in December 2010 to ARMZ of Russia after
acquiring shares from the parent company, Mantra Resources of Australia,"
Energy and Minerals Minister *Sospeter Muhongo* said in a newspaper
advertisement of his ministry's 2013/14 budget proposals, which were tabled
in parliament on Wednesday.


"Following this deal ... the Tanzania Revenue Authority is claiming
$205.80-million, of which $196-million was supposed to have been paid as
capital gains tax and $9.8-million as stamp duty."

Muhongo said the company had disputed the tax claim and the matter was now
awaiting a court ruling.

Gaudiosus Ishengoma, a lawyer at FB Attorneys which was representing ARMZ
in the tax dispute, said the Russian company had successfully challenged
the government's tax demands in court. He said the case was now before the
Tax Appeals Tribunal of Tanzania.

Uranium One in 2011 revised upwards its mineral resource estimate for the
Mkuju project to about 45 900 tonnes of uranium.

The project was granted a mining licence by the Tanzanian government in
April.

*The minister also said the government planned to conclude a deal to buy a
50% stake in the Tanzanian unit of London-listed Richland Resources by July
30*.

The Aim-listed miner, which held the licence to the largest of four mining
blocks in the world's only tanzanite-producing area near Mount Kilimanjaro,
returned to profitability in 2010 after two years of losses.

Tanzania's Mining Act of 2010 stipulated that Tanzanians retain at least
50% control or shareholding in all gemstone mining operations.

*TanzaniteOne said a State-run mining company, STAMICO, was not expected to
pay cash but instead use part of the future dividends from mining
operations to pay for the acquisition*.

*"The value of the 50% stake to be acquired by STAMICO shall be determined
by a valuation that would be determined by an independent valuer,"
TanzaniteOne Chairman Ami Mpungwe told Reuters*.



Muhongo said Tanzania's mineral exports surged 16.3% t in 2012 to
$2.3-billion, buoyed by higher gold prices. Gold accounted for 94% of that,
he said.

The minister also said the government would enter into a joint venture with
Australian firm Manjaro Resources to revive an old gold mine in
northwestern Tanzania, which had tailings worth an estimated $70-million.

Edited by: Reuters

---------- Forwarded message ----------
From: Shaabani Nzori <snzori777@gmail.com>
Date: Sun, Apr 14, 2013 at 9:44 PM
Subject:* CONT'D: THE TANZANIAN GOVERNMENT MUST URGENTLY CORRECT ITS
MISTAKE ON THE MKUJU RIVER URANIUM PROJECT*
To: "Dr. Antipas T. S. Massawe" <massaweantipas@hotmail.com>


*CONT'D: **THE TANZANIAN GOVERNMENT MUST URGENTLY CORRECT ITS MISTAKE ON
THE MKUJU RIVER URANIUM PROJECT***


*Date: April 14th, 2013*

Moscow, Russia



*NB*: This letter can also be found
*HERE<https://docs.google.com/file/d/0ByW1C6wO7io_aTVROW15M0VudDg/edit>
*

* *

*Dear Massawe*,



Thanks for your response below even though I do not share your arguments as
to the reason why our respected Professor-Minister acted the way he acted.
I believe it is no justification for the poor decision he made even though
I must also add that the way the minister acted is a manifestation of a
serious systemic problem in the chain of command and structure of
governance and decision-making in the current Tanzanian government, where
one ministry or government structure can make decisions affecting the whole
government and country without first consulting and coordinating that
decision with other related state organs on that particular subject, say,
between the Ministry of Energy and Minerals and the Tanzania Revenue
Authority (TRA), the latter which is having a pending *tax
case*<http://ippmedia.com/frontend/index.php?l=53520>for payment of
the
CGT <http://en.wikipedia.org/wiki/Capital_gains_tax> and Stamp
Duty<http://en.wikipedia.org/wiki/Stamp_duty>with Mantra Resources
and/or
ARMZ <http://en.wikipedia.org/wiki/ARMZ_Uranium_Holding>. I saw and
anticipated occurrence of this and similar systemic problems involving our
mineral, oil and gas resources long time ago and wrote about it in the l*etter
to President Kikwete*<https://docs.google.com/document/edit?id=1RHw2E6TiKawDwTW5_zuEHZqAZG7epBb70zjSIhPz0zY&pli=1>in
Feb. 26
th, 2008 (together with the *letter to Judge
Bomani*<https://docs.google.com/document/edit?id=11BtVHJiSIGFpEhALR20vU0mXV0Cmn2j249n6GCop1S0&pli=1>)
and advised then that it would be proper if the President will institute
the position of a vice-premier with responsibilities cutting across several
ministries and different state organs in one way of the other directly or
indirectly involved or related with oversight and supervision of the smooth
workings of the extractive industries – both minerals as well as oil and
gas sectors. Read an excerpt from that letter specifically explaining this
here <https://docs.google.com/file/d/0ByW1C6wO7io_V29uV2hQbVFjVms/edit>.



I also wrote in that same letter that in order to mitigate, even preclude
any problems arising from poor oversight and bad decisions on our natural
resources, as well as to give the president a full, clear and constant
picture of what is happening in these spheres on a weekly, even daily basis
since this is the sector which has the utmost potential to economically
empower the country within a very short time – Tanzania does not have any
other such potentially huge capital generating spheres at the moment other
than the mineral, oil and gas sectors – I then advised the President to
nominate a person (I called him a Sherpa or viceroy for these sectors
- read<https://docs.google.com/file/d/0ByW1C6wO7io_RjUxejFFNFkxTUk/edit>)
to sit in the State House (in his office at Ikulu), who will be
coordinating different state organs and ministries involved as well as be
that person overseeing the work of that vice-premier mentioned above (even
though his duties expand well beyond those of the vice-premier as the
presidential adviser/Sherpa/viceroy will be, among others, overseeing,
coordinating and accumulating ALL data from ALL revenue-generating
industries in the country and also ALL State assets and advising the
President accordingly) hence enabling the President at any given point in
time to know what exactly is the situation in the extractive and other
capital-generating industries, which will enable and allow the president
know what and which tools he has in hand at any particular time to properly
make any political, economic, foreign policy or defense decisions when he
will be supposed to do so. Currently our president is lacking this
information since there is no coordinated governance system and a smoothly
working government structure to enable him see the WHOLE picture of what
he, as president, is having at any given point in time – THIS IS A SYSTEMIC
PROBLEM! In order to reduce and mitigate cases where the country's vital
mineral assets are offloaded for the cheap like what has just happened with
our Mkuju River uranium deposits, I advise that the final decisions on
issuance of exploration, mining and production licenses for strategic
minerals and deposits be shifted from the Ministry of Energy and Minerals
to Ikulu (to the Sherpa, who will advise the President accordingly before
the President finally gives his endorsement and go ahead on such
transactions), just like what we saw in Russia , where such strategic
decisions are taken by President Vladimir Putin himself – read these
articles <https://docs.google.com/file/d/0ByW1C6wO7io_bURlbGZMdk9CNG8/edit>–
pay particular attention to the colour-shaded parts!



Secondly, I would like to make a small correction in the letter I sent you
yesterday <https://docs.google.com/file/d/0ByW1C6wO7io_eVVweDNQUFB4TVk/edit>in
which instead of attaching the letters I cited to have written on the
tax case between our TRA and Mantra Resources/ARMZ, I attached articles
from Tanzania newspapers
(*csc1<http://dailynews.co.tz/index.php/local-news/2607-uranium-firm-taxation-appeal-starts>
, **csc2 <http://www.ippmedia.com/frontend/index.php?l=39338>**,
**csc3<http://www.ippmedia.com/frontend/index.php?l=39581>
*) writing about the case. So please find
*here<https://docs.google.com/document/d/1owbn0vme-rrqvEiHAewts9Z5GAh1GoG5Ao0uWZSUmVg/edit>
** **&** **here<https://docs.google.com/document/d/11deLy4pdMX5xXRysIyoNh2tc99xIuBVivryp3AfWfbI/edit>
* the mentioned letters as well as my amended yesterday-letter in which I
made the necessary corrections and some few amendments – read it
here<https://docs.google.com/file/d/0ByW1C6wO7io_VEJjRjFrZ1Y0Mlk/edit>
..



Thirdly, I thought I would also need to advise what the president should do
in this bungled case of our Mkuju River uranium deal and the planned
issuance of the uranium mining license. I would advise the following:

*i.              **The President, if Prof. Muhongo will not be able to
rescind or retract his decision to issue the mining license to Mantra
Resources/ARMZ, should overrule the minister's decision and order that the
mining license issuance process be stopped;*

*ii.            **The President should instruct TRA to expeditiously run
and finish the tax case to recover the Capital Gains Tax and Stamp duty
from Mantra Resources/ARMZ. If TRA is having a problem with qualified
lawyers to formulate and defend its claims, it should not hesitate to
contract such qualified lawyers from abroad as I earlier advised;*

*iii.           **The President should issue two (2) decrees to the
following effect:*

*a.     **To stop the Mkuju River Uranium deal till conclusion of the tax
case above as well as till we have a law mitigating such cases with our
mineral resources in the future as what happened with our uranium deposits
at Mkuju River;*

*b.     **To declare a moratorium/ban with immediate effect on issuance of
new exploration and production licenses on our oil and gas deposits till we
change the current Petroleum Act (to explicitly declare State helm in
share/equity ownership as well as ownership of exploration and mining
licenses) and the National Gas Policy – THIS MUST BE DONE lest we lose, as
a country, majority ownership of our minerals hence also the wealth
(monetary and financial) which comes with it as I have been explaining in
all my letters.*



In addition to what I have advised above, I recommend that let the uranium
mining license be issued to STAMICO or NDC, not to foreign companies, with
the foreign companies being allowed to partner with our State companies,
but the mining license MUST remain in Tanzanian hands – THIS IS VERY
IMPORTANT for both LEGAL as well as WEALTH-CREATING reasons and purposes I
will expound in the letters you'll receive this April. I know foreign
companies will balk at such a govt. decision but at the end of the day, if
our government will play hardball as explained below, the foreign companies
will finally come to toe the
line<http://en.wikipedia.org/wiki/Toe_the_line>as they did in both
Russia (read
here <https://docs.google.com/file/d/0ByW1C6wO7io_NE5mUDQ0R2lFSHc/edit>,
here<https://docs.google.com/file/d/0ByW1C6wO7io_emZtQ0hJX3pETVE/edit?pli=1>&
here <https://docs.google.com/file/d/0ByW1C6wO7io_SFZqOXk2VUIyd2s/edit>)
and Venezuela (read
here<https://docs.google.com/file/d/0ByW1C6wO7io_WEVaSzVTM1dpQ00/edit>,
here<https://docs.google.com/document/d/1VwlaL95Mxia6ElydtRmXf_RvMS5DFMRLZUQj9rApOOQ/edit?pli=1>,
here <http://en.beta.rian.ru/business/20100402/158415361.html>,
here<http://www.nytimes.com/2010/04/03/world/americas/03venez.html?_r=0>&
here <https://docs.google.com/file/d/0ByW1C6wO7io_VzlaVEc5YXFxOGM/edit>),
for example.

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