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A Call to Action

In this communiqué, the undersigned Non-State Actors (civil society,pastoralist, research, private, farmers’ unions and other stakeholders) champion a call to action and outline recommendations on livestock policy advocacy strategies that take into consideration the unique conditions and opportunities of the livestock sector development in Tanzania. To read more click here.

                                   Outgoing Board Members

Policy Forum elected its new Board of Directors during its 2017 Annual General Meeting held in Dar es Salaam on the 17th of March. The outgoing board members are Donati Senzia-PELUM, Charles Meshack -Tanzania Forest Conservation Group (TFCG), Dr. Aichi Joseph Kitalyi - Tanzania Association of Women Leaders in Agriculture and Environment (TAWLAE) who retired during this AGM leaving behind Josephat Mshigati-ActionAid-Tanzania, Hebron Mwakagenda-Leadership Forum, Nemence Iriya/Asia Lembariti-Manyara Region Civil Society Organizations Network (MACSNET) and Bakari Bakari- KEPA to stay on for another year so that there is a balance between replacement and continuity on the Board.

In their parting speech they thanked PF members for giving them the opportunity to serve on the Board and for their cooperation during their tenure and wished the new Board of Directors all the best in carrying on the good work of the network and leading the Secretariat. Hence, the new line up is as follows:

New Board Members

1. Amani Mustafa - Hakimadini

2. James Mlali - Human Promotion Tanzania (HDT)

Board Members staying on for another year

3.Yaekob Metena-ActionAid Tanzania

4. Hebron Mwakagenda-Leadership Forum

5. Nemence Iriya/Asia Lembariti-Manyara Region Civil Society Organizations Network (MACSNET)

6. Bakari Bakari- KEPA

Stakeholders have commended the government for enacting the The Tanzania Extractive Industries (Transparency and Accountability) Act of 2015 and have called upon it to address some of the challenges such as the law properly addressing the issue of transfer pricing in the extractive sector and mentioning the kinds of sanctions to be given to companies involved in transfer pricing abuses.

They also advised that the law should have provisions for extractives companies to disclose all their affiliated companies. They also noted that the TEITA Act 2015 is silent on the explicit role of local authorities in the sector and the issue of corporate social responsibility. These were some of he issue raised during a breakfast debate organized by Policy Forum in collaboration with HakiRasilimali at New Africa Hotel on 24th February 2017.

Moreover, stakeholders recommended for a revenue tracking mechanism to be put in place that ensures that all income generated from the extractive sector benefits Tanzanians and information relating to the sector such as reports should be popularized in a friendly manner for the accessibility of ordinary citizens.

Ms. Alice Swai, a representative from Tanzania Extractive Industry Transparency Initiative (TEITI) Secretariat, said Tanzania is among the  countries which have legislated the Extractive Industry Transparency Initiative (EITI), a renowned extractive industry standard in the world geared towards promoting material information disclosure on the legal payments that extractive companies contribute to the government’s revenues.

In the discussion, Ms. Swai mentioned some of the objectives of the law as being  legislating  the EITI and  provide legal mandate for  TEITA Committee as an independent government entity, to improve transparency in the management of extractive sector, to strengthen the level of accountability in extractive companies and government entities and  to ensure compliance from reporting entities and adherence to EITI Standard.

During its one year of implementation among other things, she said the Act has managed to enhance reliability of data for extractive sector regarding payment, revenues, production, legal and fiscal regime, disclosure of names and shareholders who owns shares in mining, oil and gas companies, accessibility and reliability of data through the website, preparation to disclosure of contracts (MDAs and PSAs), increase of public debate and reporting in conformity to the global EITI Standard.

The Executive Director of Lawyers Environmental Action Team (LEAT), Dr. Rugemeleza Nshala,  however, challenged how the Act was passed by the members of parliament under the Certificate of Urgency which he said denied enough time for stakeholders to input in the law. Commenting on this, Hon. Cosato Chumi (MP) said as MPs they require a lot of information from stakeholders so that they come up with laws that are favorable to the public.

Mr. Simon Shayo, the Vice President of Geita Gold Mine said that in its one year of implementation, the law has created an obligatory environment under which companies, the government and other stakeholders are to report on their revenues to the public.

Policy Forum holds the People and Policy Debates on the last Friday of the month to broaden public understanding and debate on a topical policy issue. Issues chosen for the breakfast debates are wide-ranging and speakers are drawn from the public sector, academia, civil society, donor agencies and the private sector, and the talks are open to the public and attended by interested individuals and professionals.

 

 

 

We, representatives of over 450 members of faith-based organisations, civil society organisations, community based organisations, Pan African networks and organisations, labour movements, women movements, human rights activists, media, students from African countries and our international partners met on February 6–8, 2017 in Cape Town to share experience, lessons and deliberate on the role and the impacts of extractives on communities, national economies, the environment and society at large. To read more click here.

Stakeholders have called upon the government to resort to the creation of agro-processing businesses and rural  agro -based  industries as a means of increasing revenues and reducing import bills through value addition. This call was made during the Policy Forum breakfast debate held on 27th January 2017, Dar es Salaam

Presenting a topic entitled “Revenues from the Agricultural Sector: How much is Tanzania Losing from the Sector?”, Mr. Audax Rukonge, the Executive Director of ANSAF said that most of the crops in the country are marketed in their raw  forms,  losing   opportunities    for   higher   earnings   and   employment creation. He said, Tanzanian processing capacity has remained very low, compared to its neighboring countries – such as Mozambique and Kenya because the country has not invested much in the sector in terms of production and productivity.

Rukonge said an average of 85% of cashew nuts produced in the country is exported as raw materials denying the country huge amount of revenue and other benefits because of its contribution to episodes of global supply shortages and strong swings in prices. Export from the sector contributes to an average annual loss of over USD 110 million, which could have been directed to building enough cashew nut factories to process the entire Tanzania cashew crops.

Tanzania loses a lot of its other revenues through the sugarcane, sunflower, hides and skin and livestock industry, Rukonge added. He therefore highlighted some key recommendations to address this as maintaining the checks and balances between the imports and exports of various commodities and supporting  both farmers and processors access to credit, equipping them with management skills and technical expertise to enhance production and productivity.

Mr. Godfrey Kirenga, CEO of Southern Agricultural Growth Corridor of Tanzania (SAGCOT) called on  the government to develop an industry that is competitive in the world market through supporting local agricultural industries/farmers.

Related to this call, the Executive Director of Tanzania Private Sector Foundation (TPSF) - Godfrey Simbeye pointed out that in order to ensure value addition so that agricultural products generate more income to the nation, the government should opt to address the issue of Value Added Tax (VAT) on the products locally produced.

During the plenary participants were of the view that resorting to agro processing will also mean supporting President Dr. John Pombe Magufuli in his industrialization agenda  and the Second Five  Year  Development  Plan  2016/17-  2020/21 which has the theme entitled  “Nurturing  Industrialization  for  Economic  Transformation  and  Human  Development” with  the  main  objective  of  enhancing  the  pace  of  progress  towards  the  Tanzania  Development  Vision  2025.

The debate offered opportunity to revisit the government’s Agricultural Marketing Policy that was issued through the Ministry of Industry, Trade and Marketing in 2008 to promote value addition in agricultural produce and address the challenges of crops in the country being marketed in their raw forms. The systemic issues highlighted during the event are expected to feature in future stakeholder dialogues to ensure the potential of agro processing to increase earnings through value addition is realized and that rural communities are offered moe employment opportunities.

Policy Forum holds the People and Policy Debates on the last Friday of the month to broaden public understanding and debate on a topical policy issue. Issues chosen for the breakfast debates are wide-ranging and speakers are drawn from the public sector, academia, civil society, donor agencies and the private sector, and the talks are open to the public and attended by interested individuals and professionals.

The 2016/2017 edition of the Citizens’ Budget intends to provide a simple and clear overview of 2016/17 Government Budget in a more transparent manner, as it was for the previous editions1. Essentially, Government Budget is the annual estimates of revenue and expenses prepared by Government. It is a fundamental tool that the Government uses to translate its policy decisions into actions politically, socially and economically. Furthermore, it is a document that reveals how the government plans to collect revenues through different sources and spend the collected revenues basing on priorities in that particular financial year. To read more please click here.

Kindly be informed that Policy Forum Secretariat office will be closed for Christmas and New Year Holiday from 21st  December 2016 to 9th January 2017.

The office will be opened and resume its regular activities and operations on Monday 9th January 2016.               

We apologize in advance for any inconvenience that this may cause.                         

We encourage you all to send us any pressing/urgent matters to the PF Secretariat Office by end day today (Tuesday evening) by email (info@policyforum.or.tz), phone:  +255 22 2780200

All other matters will be addressed when our office will be re-opened.

We would like to wish a Happy Holiday Season to you all.

Tax avoidance is one of the biggest economic issues of our time. According to International Monetary Fund (IMF), developing countries currently lose $ 100- $ 300 billion of tax revenue through tax avoidance. One among many reasons for such a problem is inefficient taxation of extractive activities and the inability to fight abuses of transfer pricing by multinational enterprises. This was said in Dar es Salaam in the last breakfast debate of Policy Forum (PF) slated for November 25, 2016.

The debate focused on the presentation titled The Implementation of Transfer Pricing Rules in the Extractive Industry in Tanzania: Highlights from 2015 Natural Resource Governance Institute (NRGI) study presented by Thomas Scurfield.

According to Scurfield, transfer pricing is the price of a transaction between two entities that are part of the same group of companies. For example, a South Africa-based company might sell mining equipment and machinery to its Ghana-based subsidiary. The price agreed is the “transfer price.” The process for setting it is referred to as “transfer pricing.” The difficulty in monitoring and taxing such transactions is that they do not take place on an open market.

A commercial transaction between two independent companies in a competitive market should reflect the best option for both companies; two affiliated companies are more likely to make transactions in the best interest of their global parent corporation.

Presenting the results of the qualitative study on the challenges to implementation of transfer pricing rules in the extractive sector done in Ghana, Tanzania, Guinea, Zambia, and Sierra Leone, Scurfield explained that 75 interviews with government officials, companies, civil societies (CSOs) and non-governmental organizations (NGOs) were conducted.

Statistics of the report shows that governments in Africa depend much on goods and services as its tax revenue source which accounted for 33% followed by corporate income tax with 30%. Personal income tax indicates 20% and 10% of tax revenue is collected from international trade. Tax revenue collection from other sources is only 7%.

The study found numerous weaknesses/challenges in transfer pricing enforcement in Tanzania extractive sector. The challenges were grouped in three categories as: Legal Framework, Administrative Arrangements and knowledge and skills.

Legal framework challenges

  1. Weak transfer pricing regulations

The presenter recommended Ministry of Finance to amend the transfer pricing regulations to state whether Organization for Economic Cooperation and Development (OECD) or UN guidance should be followed where inconsistencies arise regarding interpretation of the regulations.

  1. Hedging losses

The Ministry of Finance was recommended to introduce separate tax treatment of hedging to limit the risk that extractive companies engage in abusive hedging to offset income.

  1. Cost of debt is not subject to limitation

The Ministry of Finance was recommended to introduce a rule to limit deductibility as a function of company’s earnings.

Administrative Arrangements

  1. Poor coordination between Tanzania Petroleum Development Corporation (TPDC) and Tanzania Revenue Authority (TRA)

The government was recommended to improve cooperation between the extractive industry regulators and the TRA by establishing a formal inter-agency coordination mechanism to oversee tax and revenue collection.

  1. No integrated, automatically accessible database for all extractive industry information

The Ministry of Finance and Ministry of energy and Mineral Development were recommended to develop an online information-sharing platform where all information concerning exploration, development and production of mineral and petroleum resources is made automatically available to TRA.

Knowledge and Skills

  1. Limited industry expertise

The presenter emphasized that limited extractive industry expertise may be used as a reason to avoid investigating taxpayers. Scurfield recommended the government and international partners to ensure that TRA officials especially from International Tax Unit (ITU) receives specialized training on transfer pricing as it relates to the extractive sector, as well as further capacity building on taxation of extractive industries generally. This will equip the ITU with the expertise and confidence to conduct transfer pricing audits in the extractive industry.

Conclusively, the presenter explained that the government of Tanzania has made considerable progress towards establishing a robust transfer pricing regime. Since the introduction of transfer pricing regulations in 2014, the ITU has completed five transfer pricing audits amounting to TZS232 billion in tax adjustments. Consequently, the ITU is in high demand not just from the Large Tax payers Office (LTO) but the rest of the TRA to investigate transfer pricing issues in relation to a range of taxpayers.

The mining industry in Tanzania has failed to deliver on its promises to transform the economy and develop the country. This is largely due to generous tax incentives and weak governance structures, often reinforced by political corruption.

Discussing the presentation, Ted Frank Silkiluwasha a Principal Tax Investigation Officer from TRA gave experience on how multinational companies are conducting transfer pricing. He further explained that some policies in the country are limiting TRA to stretch its arms to collect essential tax revenue related information. For instance some of the contacts are confidential.

Some policies are also limiting the locals to benefit from international companies. For instance some companies are importing materials/goods from abroad instead of buying materials/goods from the country.

He insisted the CSOs to pressurize the government to change or improve the rules and policies since they give loopholes which multinational companies use to avoid tax and also conduct transfer pricing.

 

 

 

 

 

 

 

 

 

 

 

Kindly be informed that Policy Forum offices will be closed from Monday November 5th to Thursday  8th December for our Annual Retreat 2016.

The office will be opened and resume its regular activities and operations on Tuesday,13th December 2016.

We apologize in advance for any inconvenience that this may cause.

We encourage you all to send us any pressing/urgent matters to the PF Secretariat Office via +255 782 317434. All other matters will be addressed when our offices re-open on 13 December, 2016

Mafinga member of Parliament, Hon. Cosato Chumi, has called upon actors to collaborate in addressing challenges that are faced by Local Government Authorities (LGAs). Opening a training workshop on the roles and responsibilities of Councilors held on the 22nd to 26th November 2016, he said that the government cannot address all these challenges alone and it needs efforts from non-state actors such as civil society organisations (CSOs).

Hon. Chumi thanked Policy Forum for coordinating trainings on Social Accountability Monitoring (SAM) to councilors in various parts of Tanzania. Hon. Jamhuri David William, District Commissioner in Mafinga admitted that previously, councilors were trained by PO-RALG on their roles and responsibilities but due to scarce resources most of these trainings have not taken place leaving most councilors unaware of their roles. He further urged councilors to practice what they learned during the training so that they can efficiently and effectively perform their oversight functions in serving their communities.

During the training, councilors pointed out that one of the challenges that they face when performing their oversight role is that they do not have access to SAM related documents such as the Strategic Plan, the Medium Term Expenditure Framework.

Hon. Zakaria Vang’ota, Mafinga Council Chairperson, said that access to the budget documents is a big challenge in most Councils. “These budget documents are confidential, we are told,” said Hon. Vang’ota. He called upon the government to make these documents accessible and simplify them so that they can be easily understood by the councilors.

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