Miner should keep record to avoid misunderstanding with TRA

 Tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is punishable by law. It holds the principal of giving back to society what you earned from profit. It should be mutual understanding between investors and government in mining industry. This will reduce the misunderstandings which usually occur.

Larger scale miners are well aware and informed with tax that is why they keep good and proper records of their expenditure projects.

Small and medium miners operate with little knowledge on how tax is calculated, when TRA approach them for tax, it becomes a cry. This is because they don't keep operations record.
Recently the Machimbo explorer visited Namungo gold mine in Ruangwa, Lindi region and met with mine manager Mr Fred kimbi .He was complaining that the revenue authority has slapped with 300mill tax bill.

On his side the District TRA manager Mr.Severine explained that it is difficult to access the mines tax without proper records which sometimes lead to over taxation or under taxation.
'' Our estimation of tax ,if there is no operation cost records  base on the production records of the mine but this ignore the cost and sometimes a miner run a mine in loss and this can be only proved by records'' Said

He added that taxation is a science and should be paid only from profit and not capital and this is possible if the production and revenue records kept properly.
To understand the science taxation small and medium scale must know what records are kept for tax calculation.

 Cash flow calculation   
 Gross Revenue
-Royalty
-Operating Cost
-Developments Cost
-Depreciation
-Amortization
-Interest


 Income before depletion
-Depletion(20-30%)   
 Taxable Icome
-tax (30% of profit)   
 Net Income
+Depreciation
+Amortization
+Depletion
-Capital cost   
 CASH FLOW  

Royalty is ranging from 3-6% depending of the type of mineral mined of all produced revenue. But operation cost are all cost involving in production of commodities, these are food, salaries, blasting materials, fuel for cars, compressor and all other cost related to production.

Developments cost are cost involving in the preparation of shaft, house camp, plant construction and all other infrastructure and facility  for mining preparation.
Amortization are all cost involving for ore body alignment ,searching and assaying  during mining and all experts consulting to the mine like lawyer, accountant and more
Depreciation is money that taken back for preparation for buying new equipment like car, ball mill, jaw crusher, plants and and more.

This money are taken back in the way of considering the life time of equipment but also in small scale and medium sometimes this money paid back per work done like ball mill paid Tsh10000/= per milling 100kg of ore body in case of gold and plant for some times are hired.

Interest cost come only when a miner using to invest from loan money. As we know loan money is returned with profit from the loaner.

Depletion income is the income taken by mining licence owner in which most case of small to medium mine they take 20 to 30% of the product revenue before tax. But for large scale consider the value of acquisition of the property or exploration cost of the property.
From this point of view miners must put into consideration or must activate their mind to put mining operations records for avoiding misunderstanding with the TRA.