African Barrick Gold (ABG) is negotiating with the government to recover a whopping US$ 65 million (about 107.9bn/) as Value Added Tax (VAT) refunds accumulated over years due to overly bureaucratic procedures for refunding.
The firm enjoys special VAT relief as part of various tax incentives and exemptions extended to investors in the mining sector. ABG is Tanzania’s largest gold producer and one of the five largest gold producers in Africa.
It currently operates three producing mines in the country — Bulyanhulu, Buzwagi and North Mara, as well as several exploration projects at various stages of development in Tanzania and Kenya.
The company listed on the London Stock Exchange and Dar es Salaam Stock Exchange (DSE) and is a constituent of the FTSE 250 Index. ABG is a unit of Barrick Gold Corporation, the largest gold mining company in the world, with its headquarters in Toronto, Ontario, Canada.
Tanzania is currently the fourth largest gold producer after South Africa, Ghana and Mali. The ABG Chief Executive Officer, Brad Gordon said they were in negotiations with the government to address the problem that is making procurement of local supplies expensive.
“The amount accumulated is very high and it seems its recovery would take long time. As it stands it makes it expensive to procure our supplies locally,” he told reporters in Dar es Salaam last week at a presentation of ABG’s economic and tax contribution to Tanzania in 2013.
ABG which contributed about 1.4tr/- (US$ 855 million) to the economy last year, equivalent to about three per cent of the total economy, enjoys special VAT relief as part of various tax incentives and exemptions extended to investors in the mining sector.
The special VAT relief, includes exemption from VAT on imports and local supplies of goods and services to mining companies and their subcontractors The ABG Chief Financial Officer, Andrew Wray said the mining finds it expensive to procure locally due to overly bureaucratic procedures to recover value added tax refunds.
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