Genesis and Background of the Case

This case involves a second appeal filed by African Barrick Gold Plc, a UK-incorporated holding company, against the Tanzania Revenue Authority (TRA). The central issue was whether the issuance of a Certificate of Compliance under Section 435 of the Companies Act, 2002 (Cap. 212) rendered the company as being “formed” under Tanzanian law, and thereby subject to income tax as a resident under Section 66(4)(a) of the Income Tax Act, 2004 (ITA 2004).

The dispute arose after TRA issued tax assessments in 2013, demanding withholding tax on dividends totalling USD 81,843,127 (later reduced to USD 41,250,426) for the years 2010–2013, among other taxes. African Barrick contended that it was not a resident company and did not operate in Tanzania directly. The TRA argued that the Certificate of Compliance and the company’s business ties, including dividend extraction from Tanzanian mining entities, made it taxable in Tanzania.

Background of the Case – Key Points

1. Company Structure: African Barrick Gold Plc is a UK-incorporated holding company with interests in Bulyanhulu, North Mara, and Pangea (Buzwagi and Tulawaka mines).
2. TRA Investigations: In 2012, TRA conducted a tax audit and issued TIN and VAT registration numbers in October 2013, treating the company as a Tanzanian resident.
3. Tax Demand: TRA demanded withholding tax on dividends paid by Tanzanian entities to the parent, along with PAYE, SDL, and stamp duty on related instruments.
4. Appeals Path: The appeal progressed from the Tax Revenue Appeals Board (dismissed), then to the Tribunal (also dismissed), and finally to the Court of Appeal.

Appellant’s Submissions (African Barrick Gold Plc)

1. Non-Resident Status: Claimed it was incorporated and “formed” in the UK, and that a Certificate of Compliance does not equate to formation under Tanzanian law.
2. Purpose of Registration: The Certificate was only for cross-listing on the DSE and to facilitate local investor participation—not for business operations.
3. Literal Interpretation: Insisted that “formed” should not include compliance registration; called for strict construction of tax statutes.
4. Dividend Source Dispute: Asserted that dividends were from capital, not profits sourced from Tanzania, and thus not subject to withholding tax.
5. No Tax Evasion: Protested Tribunal’s suggestion of tax evasion without trial or factual basis; cited lack of formal accusation or conviction.
6. Improper Withholding Liability: Argued that as a non-resident, it could not be liable for withholding tax on dividends paid to its own shareholders.
7. Illegality of Registration: Objected to being forcibly registered with TIN and VAT numbers under Sections 133 of ITA 2004 and Section 19(4) of the VAT Act, 1997.

Respondent’s Submissions (Tanzania Revenue Authority)

1. Resident Status via Compliance: Argued that the Certificate of Compliance under the Companies Act grants legal status to operate, thus qualifying the company as “formed” under Tanzanian law.
2. Purposive Interpretation: Advocated for a broad, purposive reading of Section 66(4)(a) ITA 2004, in line with anti-tax avoidance objectives.
3. Business Presence Confirmed: Cited physical registration at BRELA, Dar es Salaam office, statutory declarations, and shareholding in active mining entities.
4. Dividend Source Is Tanzanian: Provided financial statements showing dividends paid to foreign shareholders were generated from Tanzanian mining income.
5. Failure to Withhold: Asserted that African Barrick failed to withhold 10% tax as required by Section 54(1)(a) and was liable under Sections 82 and 84(3) ITA 2004.
6. Not a Criminal Finding: Clarified that the Tribunal noted tax avoidance concerns but did not make any criminal findings.
7. TIN and VAT Justified: Stated that issuance of TIN and VAT numbers followed legal process under the ITA and VAT Acts once business presence was confirmed.

Court of Appeal Decision – Key Points

1. Certificate = Formation: Held that issuance of a Certificate of Compliance qualifies a company as “formed” under Tanzanian law per Section 66(4)(a) ITA 2004.
2. Resident for Tax Purposes: Affirmed that the appellant was a resident for taxation once the Certificate of Compliance was issued on 11 March 2010.
3. Dividend Withholding Tax Valid: Found that dividends were sourced from Tanzania; failure to withhold 10% tax was a breach of Section 54(1)(a).
4. TIN and VAT Registration Proper: Confirmed legal justification for assigning TIN and VAT numbers under Sections 133 ITA 2004 and 19(4) VAT Act.
5. Tax Avoidance vs Evasion: Recognized the Tribunal’s concerns about avoidance; found no actionable criminal accusation.
6. Appeal Dismissed: All four grounds of appeal were dismissed for lack of merit.
7. Costs: Awarded to TRA.