Country Rankings - Tanzania
Aug 02, 2017 Tanzania: disharmonyFor my final point this week, I return to the topic of resource nationalism. And as the news sprites would have it, just when I thought things had gone a bit quiet in this area, the mother of all cases has emerged, in the form of Tanzania's spectacular claim for USD190bn in unpaid taxes from the mining company Acacia. And no, that's not an error. It really is USD190 billion, not USD190 million. To put that figure into context, it's more than the gross domestic product of Tanzania itself, which was estimated at USD150.6bn last year, according to the CIA World Factbook. It's also 190 times Acacia's 2016 revenue. Wimbledon fortnight may have come and gone, but, surely, Tanzania, come on now, "you cannot be serious!" If this were a tennis match, while the initial shot may or may not have been on the line, the Tanzania Revenue Service has smashed the return into another dimension, and is claiming the ball is in. This might render even John McEnroe speechless. There has long been an emotive ethical debate about large multinational companies' involvement in poor countries, especially in the mining sector. Studies show that developing economies suffer disproportionately at the hands of BEPS - base erosion and profit shifting - with companies often accused of avoiding large sums of tax in the countries that can least afford it, primarily because they can't afford the systems to police the tax regime that are commonplace in the developed world. But then developing and emerging economies don't help themselves with their track record of shifting the tax goal posts on a whim, and issuing punitive and arbitrary tax assessments. And in this case, punitive is putting it mildly. One suspects that somewhere in the middle, harmony lies. Tanzania appears to be in a far from harmonious mood though where the mining industry is concerned. And as investors all over the world watch on, its Government is unlikely to be doing the economy any favors.