Tanzania has been losing $248 million annually, equivalent to 7.4 per cent of its gross domestic product, to trade mis-invoicing, a taxation researcher reported here at the weekend.
Ms Rhiannon McCluskey said most of the loss was from over-invoicing on fuel imports on which mining firms were exempt from paying duties.
“This suggests that mining companies are inflating their import costs to shift profits out of Tanzania and in the process, decrease their tax liability,” she said.
Ms McCluskey was presenting findings of a research on constructing Capacity to Confront Complex Tax Evasion in Africa with case studies from Tanzania and Sierra Leone.
The taxation researcher cited $705.8 million worth of over-declared capital allowances and operating expenditures the Tanzania Minerals Audit Agency TMAA) found out in 2010 when it audited 12 mining companies.
The mining firms, which were allowed to deduct their accumulated losses from their profits, had deprived Tanzania of about $176 million by declaring losses for many years before they were liable to pay corporate tax, she said.