Tanzania Mining Taxes Highest in the World, Analysis Estimate

The Natural Resource Governance Institute (NRGI), an independent nonprofit organization dedicated to improving countries’ governance over their natural resources to promote sustainable and inclusive development, has estimated Tanzania’a average effective tax rate at 74%.

In an article titled “Magufuli Seeks the Right Balance for Tanzania’s Mining Fiscal Regime“, the authors analyze the current fiscal regime for Tanzania’s mining sector that was introduced in 2017.

In that year, Tanzania passed new laws for its mining sector to greater benefit from its mineral and gas deposits. Among other significant changes, these laws increased taxation of the mining sector.

Using an Excel-based economic model that they developed for this analysis, the authors evaluated the impact of the fiscal regime on a number of hypothetical large-scale gold projects.

The result is that on a gold project with development costs of USD 420 million, per unit operating costs of USD 600 per ounce and a gold price of USD 1,300 per ounce, the average effective tax rate would be 74%.

This makes Tanzania the most taxed mining sector in the world, followed by Guinea (61%), South Africa (59%), Ghana (58%) and Chile (48%), Peru and Western Australia (45%), Zambia (44%), And Kyrgyzstan (39%).

By using the same model, under the previous fiscal regime in place until 2017, Tanzania’s average effective tax rate was 51%.

The authors conclude that the current fiscal regime in place in Tanzania is likely to limit mining sector activity and ultimately constrain government revenues.