Zitto Kabwe: How we lost USD 308m as Tax Revenue from sale of Zain Africa Assets in TZ to Airtel

[BAK]

By PIUS RUGONZIBWA, 25th March 2011

THE Parliamentary Parastatal Organizations Accounts Committee (POAC) has demanded legal provisions to enable the government to charge capital gains tax and thus recover the billions of shillings it is currently losing due to the absence of the law.

Capital Gains Tax (CGT) is charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price.

Members of the committee observed in Dar es Salaam on Friday that because of the serious omission the government lost 308 million US dollars (about 470bn/-) in CGT in just one incident of Airtel takeover of Zain.

Airtel announced the takeover of Zain last year with an investment value of 150 million US Dollars (about 220bn/- then) following long talks with the government over the deal.

The committee gave relevant government authorities one month to review the existing Income Tax Act and propose appropriate amendments to that effect.

POAC Chairman Mr Zitto Kabwe asked the Deputy Permanent Secretary General of the Treasury, Dr Servasius Likwelile, to hurriedly complete the evaluation exercise of the Tax Laws so that the suggestions can be accommodated in the new Finance Act due for amendment in June this year.

"It appears that the legislation we have at present has many loopholes that lead to tax evasions by Communication Companies. We have noted this with concern and we call for amendments by June," he said.

TRA Commissioner General Harry Kitilya, said the process to review the Act had started and was progressing including holding consultations with the International Monetary Fund (IFM) which oversees global business trends like that of Airtel takeover of Zain Tanzania.

MPs were furious over Mr Kitilya's response. They ordered him to deploy a team of tax experts to Nigeria where due to their taxation system the country benefited from AIRTEL investment.

MPs demanded that Tanzanian experts study what Nigeria, Zambia and India did to benefit from Airtel instead of only complaining that it was impossible for the country to emulate them.

They also directed the government to make sure that part of its 40 per cent shares in Zain Tanzania are floated at the Dar es Salaam Stock Exchange so that the company's business trend and market value can be monitored and assessed.

Dr Likwelile confirmed that the Consolidated Holding Corporation has already started the process of floating some of the shares and listing the Company at DSE.

The MPs also advised TRA to investigate the recent development whereby mobile phone companies have reportedly been contracting maintenance of their towers to private firms.

The Treasury assured the MPs that it would take their cautious advice on the matter and work hard to see to it that the Income Tax Act is amended to suit the pressing needs.

 

[Tundapori]

Shamba la bibi hiloooo. Mivichwa ya wajinga.

 

[niweze]

This is how Tanzania is rule, ccm don't want anyone to know what they are doing na tutaendelea kuibiwa mpaka wananchi tuamke na kuwachapa vibiko wakina kikwete na mafisadi wao. Unataka kuniambia kikwete alikuwa hajui hili? Ndulu na Mnkulo hawajui haya? These are ccm strategies to run the country under the dark cloud so wapate kuiba na kujinufaisha. Vitu ni vingi sana na kama hata hii katiba tunataka kikwete na ccm waandike tena, tutaona finger print zao kila mahali.

Wananchi tunajua jinsi gani ccm wanawa honga baadhi ya watanzania ili waendelee kuiba kura na kukaa bungeni, serikalini, justice system na Ikulu, njia ni TRA na Hazina. Wanawahonga Watanzania period, nothing else kutumia hizi pesa za chini ya kitanda.​

 

[Tutafika]

By PIUS RUGONZIBWA, 25th March 2011<br />
<br />
THE Parliamentary Parastatal Organizations Accounts Committee (POAC) has demanded legal provisions to enable the government to charge capital gains tax and thus recover the billions of shillings it is currently losing due to the absence of the law. <br />
<br />
Capital Gains Tax (CGT) is charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. <br />
<br />
<b>Members of the committee observed in Dar es Salaam on Friday that because of the serious omission the <font color="red">government lost 308 million US dollars (about 470bn/-) in CGT in just one incident</font> of Airtel takeover of Zain. <br />
<br />
</b>Airtel announced the takeover of Zain last year with an investment value of 150 million US Dollars (about 220bn/- then) following long talks with the government over the deal. <br />
<br />
The committee gave relevant government authorities one month to review the existing Income Tax Act and propose appropriate amendments to that effect. <br />
<br />
<b>POAC Chairman Mr Zitto Kabwe asked the Deputy Permanent Secretary General of the Treasury, Dr Servasius Likwelile, to hurriedly complete the evaluation exercise of the Tax Laws so that the suggestions can be accommodated in the new Finance Act due for amendment in June this year. <br />
<br />
</b>&quot;It appears that the legislation we have at present has many loopholes that lead to tax evasions by Communication Companies. We have noted this with concern and we call for amendments by June,&quot; he said. <br />
<br />
<font color="red"><b>TRA Commissioner General Harry Kitilya, said the process to review the Act had started and was progressing including holding consultations with the International Monetary Fund (IFM) which oversees global business trends like that of Airtel takeover of Zain Tanzania.</b> <br />
<br />
</font><b>MPs were furious over Mr Kitilya's response. They ordered him to deploy a team of tax experts to Nigeria where due to their taxation system the country benefited from AIRTEL investment. <br />
<br />
<font color="red">MPs demanded that Tanzanian experts study what Nigeria, Zambia and India did to benefit from Airtel instead of only complaining that it was impossible for the country to emulate them. <br />
<br />
</font></b>They also directed the government to make sure that part of its 40 per cent shares in Zain Tanzania are floated at the Dar es Salaam Stock Exchange so that the company's business trend and market value can be monitored and assessed. <br />
<br />
Dr Likwelile confirmed that the Consolidated Holding Corporation has already started the process of floating some of the shares and listing the Company at DSE. <br />
<br />
The MPs also advised TRA to investigate the recent development whereby mobile phone companies have reportedly been contracting maintenance of their towers to private firms. <br />
<br />
The Treasury assured the MPs that it would take their cautious advice on the matter and work hard to see to it that the Income Tax Act is amended to suit the pressing needs.

<br />
<br />

Dogo (zitto) amemaliza fedha alizopewa na makampuni ya madini sasa anatafuta nyingine huko! Anajifanya hajui kama vodacom ya rostam na lowasa haijawahi kulipa hata cent 1 tangu imeanzishwa? Hajui kama TRA inaogopa kuwadai makampuni ya wanasiasa?, kwani hajui kuwa misamaha ya kodi ya hovyo kwa wakoloni (wawekezaji) iliwekwa na IMF?, yaani nikifikiria nchi inavyoenda naona libya walipata bahati kuwa na kiongozi imara sasa wanaichezea! Hatuna viongozi tz tuna wahuni tu!

 

[BAK]

Shamba la bibi hilo! Wache wavune tu mpaka wamalize kila kitu. Walio madarakani wala kushtuka hawashtuki! lakini hawakawii kwenda kuomba omba na kibakuli chao katika nchi za wafadhili!

 

[Crystal]

Big up Zitto!m proud of u!keep it up hadi kieleweke!

 

[Godwine]

kwani hisa za serikali kwenye celtel zilienda wapi? na kati ya celtel na zain kulikuwa na mkataba gani? pia zain na airtel kuna mkataba gani? na ikiwezekana wenye data za ulipaji wa kodi wa makampuni haya yawekwe ubaoni ili tujaribu kufikiri ni kiasi gani wanakwepa kodi kuanzia MAPATO, VAT na zinginezo

 

[Ikimita]

Tengeneza cv, ili ukihamia NCCR. Uhame na wapambe wengi. Ulikuwa wapi wakati wa biashara inafanyika? Toka celtel to zain, tulipata mapato? Zitto ulikuwa wapi? leo kuwa airtel ndio unasituka! Ok VODACOM pia wanalipa mapato!? O kwakuwa ya RA huongei?

Whether he’s on move or not, it doesn’t really matter.

The question is, why now? How long does it take to uncover all these things? The reason why I ask is that, in our country, every time there is a takeover the government stands to loose. Why? - inadequate legislation. This has been going on for years. Did government learn at all or just decided to keep mum and let the time to fix it? Look at the following few mega deals, how much did they let go?

MTC Kuwait (Zain) / Celtel, 2005
Millicom (Tigo) / Mobitel, 2007
AMGM / Placerdome, 2003
Placerdome / Barrick, 2005
Petra Diamonds / De Beers, 2007

During all that time Kitillya was the man at TRA and Zito was probably chairing the same committee. The loopholes are known for many years, the decision not to act (TRA and Parliament) is deliberate.

 

[NURFUS]

Unajua bwana siku zote anayejiita ana akili huishia pabaya sana na hasa inapofika suala la nchi. Sasa hawa jamaa kiukweli watu wamekuwa wanalalamika kila siku kubadili wamiliki kuna kitu wanaficha na hicho ndio wanachotuona kuwa sie hatunaakili kabisaa, me nafikiri hao jamaa waamuriwe walipe na sio kwa hiari yao na kisha wasepe hapa kwetu kabisa ama la mzogo utaifishwe, kwani daima inajulikana ukicheka na kima mwishowe unakula mabua, sasa tusisubiri kula mabua banaaa, kwa kuwa tumeshajua tuchukue chetu kwa nguvu na jamaa watatute pa kukaa sio tena hapa kwetu. Zamani china unauwawa kwa kuhujumu uchumi hawa jamaa wangekuwa kule tayari ni marehemu siku mingi sana.

 

[Kobello]

The only member of the parliament that is really operating efficiently is Zitto so far,he recognised the game and he is working from the inside.This will bring him a multipartisan support,plus independents.
He is more like Sokoine meets Mtei,but I think he should rethink the General tyre issue.

 

[lasix]

+credit to zitto

 

[Kang]

Bogus, you cant lose what you never had.

 

[Kobello]

Bogus, you cant lose what you never had.

Shallow

 

[nngu007]

Dar loses 500bn/- in Zain sale

Tanzania has lost 500bn/- over the sale of Zain Africa to Bharti Airtel of India through tax avoidance.

The whopping sum was lost as a result of existing loopholes in the Income Tax Act of 2004 which does not cater for transactions similar to those carried out by the Zain proprietor.

The transaction which was conducted between Zain Africa, a multinational Corporation and Bharti Airtel saw the 60 percent shares held in Zain Tanzania by Zain Africa directly or through a subsidiary being transferred to Bharti Airtel directly or through an undisclosed subsidiary.

The big question is, how could the Tanzania Revenue Authority (TRA) Director General, Harry Kitilya, say Tanzanian assets did not change hands to necessitate taxation?, Why has it taken TRA so long to determine that Tanzania Income Act is weak compared to Nigerian, yet the said 60 percent shares have shifted hands several times?

As rightly noted by the Kigoma North MP (Chadema), Mr Zitto Kabwe, there is a ghost company between Zain Africa and Zain Tanzania that is responsible for keeping the 60 percent shares in what was Zain Tanzania.

According to Lusaka Times, a Zambian electronic news platform, the government of Tanzania announced in June 2010 that it would receive 11.2m US dollars from the sale of Zain Africa to Bharti Airtel while it maintains its 40 percent shares in Zain Tanzania.

In fact this assertion was confirmed by the then Minister for Higher Education, Science and Technology, Professor Peter Msolla when he addressed the National Assembly in Dodoma in July 2010.

The minister disclosed that the government was holding discussions with Bharti Airtel on the sale of Zain.

Presently nothing is known about the end result of the reported discussions between the government and the Indian company and what became of the 11.2m US dollars.

And to make matters worse, the Permanent Secretary for the Ministry of Finance and Economic Affairs, Mr Ramadhan Khijjah was sometime back quoted complaining that Zain Tanzania did not fully inform relevant government authorities of the sale.

Mr Kijjah’s position differs with that of Professor Msolla on the same issue and appears to be in line with the recent statement by Mr Kitilya who is quoted to have said that the Zain transaction were conducted in the Netherlands.

This implies that somebody somewhere wanted to keep the Tanzanian government out of the loop as far as the transactions
were concerned.

Such contradictory statements from different, but very important players in the government does not only show that the left hand does not know what the right hand is doing, but also raises very serious questions over the ability and credibility of Tanzanian leaders.

The question is, is it true that no one in the Tanzanian government was aware of the sale of the Zain to the Indian company?
And if one is to believe on the foregoing, then what is the work of institutions that include the mother ministry, the ministry of foreign affairs and international cooperation which supervises Tanzanian embassies abroad and of course, the Tanzania Intelligence and Security Service (TISS)?

When President Jakaya Kikwete first came to power early in 2006, one of his first acts was to direct officials of Tanzanian embassies abroad to help the country economically by serving as a link between their homeland’s economic institutions (individuals and companies) and their respective stations abroad.

Unfortunately six years later, a major transaction takes place abroad in a country where Tanzania has an embassy and the best those Tanzanian officials can do is to help in keeping their own country out of the loop!

While a glance at what is unfolding may simply be interpreted as stemming perhaps from lack of knowledge and experience on the part of Tanzania government officials.

However, there is a school of thought that has recently been making rounds in the country to the effect that given the increased number of such incidents, Tanzanian government officials involved in such murky deals may after all not be so doom as the nation may want to believe!

That such murky transactions/contracts are a result of well worked out deals that ensure such Tanzanian government officials fat pay packets!

The telephone companies’ mother ministry recently noted that it was easy to conduct the Zain transactions at international level, hence behind Tanzania’s back because the East African country does not have local laws that cover such transactions.

While the foregoing argument makes sense, but the question is when Tanzania decided to go international by inviting foreign investors, were government officials not aware of the existence of such problems?

Unfortunately this is not the first transaction that has left Tanzania once again on the losing end.
One of earlier transactions involved the sale of Celtel Africa to Zain Africa, and like the latest transaction, there is no evidence to show that Tanzania benefited from the transaction in terms of taxation.

The present argument over the country’s loses in the course of transaction was raised during the period by a section of Tanzanians who have the interest of their country at heart.

One had then hoped that government officials vested with the task of playing oversight role, as far as foreign mobile phone companies are concerned, would have taken measures to plug the loopholes.

Other transactions that raise similar questions include the recent sale of majority Vodacom shares to Vodafone, the sale of other telecom companies and government owned hotels to multinational hospitality gurus.

Another controversy unearthed by the Parastal Organizations Accounts Committee, POAC, is the non submission of the share certificate of the government shares in AIRTEL.

This as they say, makes it difficult for one to prove not only what the government has in that corporation, but also what it gets every year as dividends from its shares.

As all this goes on, it should be noted that it’s just recently, in 23rd March 2011, that President Kikwete in his visit to the Ministry of Communication, Science and Technology directed that the 35 percent of AirTel shares in TTCL should be bought so as to make TTCL a 100 percent government corporation.

The President however, cautioned that the government’s 40 percent shares in Airtel should not be exchanged with the 35 percent Airtel shares as they differed in value.

POAC reached the 308m US dollars Loss figure following the sale of four million Tanzania subscribers at 252 US dollars each.

It was expected that at least 30 percent of the whole amount would go to the government as a holder of 40 percent shares in the company.

It is therefore high time that the government, through its ministries, agencies and authorities become proactive and act on loopholes in the laws and policies that cost the nation.

It is foolhardy on the part of the government to continue to wait for assistance of Parliamentary Committees and the CAG to come and tell them things that they already know.

Otherwise we will be forced to believe that their inactiveness is caused by bribes they receive from private companies that benefit from such loopholes.

The Income Tax Act of 2004 has been cited several times as providing loopholes for those who have ill designs for our nation.

Therefore the POAC’s directives on the dire need for the government to amend the law should be implemented immediately.

The committee that the Deputy Minister for Communications, Science and Technology promised its establishment to review the Act should include people from different sectors so as to make sure that all shortfalls are captured and amended.

Written by Tanzania Corruption Tracker

 

[Wacha1]

Huu ndio tunaita umburu Kenge shika hao Airtel kama hawataki kulipa hiyo pesa hakuna kufanya Biashara hii nchi imekuwa to polite and too slow. Loop hole my ***!

Anyway M k w e r e mwenyewe fisadi unategemea nini?

 

[VIKWAZO]

masikini tanzania, sijui hali hii itakoma lini/ na wasomi tunaona kila siku kwenda semina ulaya, lakini watu wanatuibia kwa njia za mikataba na kukwepa kodi kila siku

 

[Kaka Mpendwa]

The question is, is it true that no one in the Tanzanian government was aware of the sale of the Zain to the Indian company?
And if one is to believe on the foregoing, then what is the work of institutions that include the mother ministry, the ministry of foreign affairs and international cooperation which supervises Tanzanian embassies abroad and of course, the Tanzania Intelligence and Security Service (TISS)?


Unfortunately this is not the first transaction that has left Tanzania once again on the losing end.
One of earlier transactions involved the sale of Celtel Africa to Zain Africa, and like the latest transaction, there is no evidence to show that Tanzania benefited from the transaction in terms of taxation.

Hapo kwenye RED, msaada wao kwenye mambo kama haya ni mdogo au ni non-existent at all,

Wanajua tu kufuatilia siasa za CDM, CUF, NCCR, n.k..
kuna haja ya hicho chombo kuimarishwa katika kila idara na sio ulinzi peke yake.

Hizi Pesa ni nyingi sana, ukizangitia hali yetu ya uchumi kama nchi.. Wasipofanya hima ,hawa jamaa watabadilisha jina na kukimbia zao.

hapo kwenye BLUE, sijui kwa nini hatutaki kujifunza??

 

[BAK]

Haya ndio matokeo ya kuwa na kiongozi mwenye uwezo finyu katika kutetea maslahi ya nchi. Si ajabu mafisadi wa Chama Cha Mafisadi wameneemeka katika mauzo ya haya kwa kupatiwa shares nyingi katika hiyo kampuni Bharti Airtel

 

[nngu007]

The challenge of leadership is to be strong, but not rude; be kind, but not weak; be bold, but not bully; be thoughtful, but not lazy; be humble, but not timid; be proud, but not arrogant; have humor, but without folly...

Where is Kikwete??

 

[vassil]

<p>

<font size="3">The challenge of leadership is to be strong, but not rude; be kind, but not weak; be bold, but not bully; be thoughtful, but not lazy; be humble, but not timid; be proud, but not arrogant; have humor, but without folly...<
jk is listening to music,justin bieber you know our president loves music
<p><font size="3">Where is Kikwete??</font>

</p>
<p>&nbsp;</p>