Acacia Mining Hit with $190 Billion Tax Reassessment

By Alicia Bertrand, Thomson Reuters Tax & Accounting Canada

Acacia Mining has been reassessed by the Tanzania Revenue Authority for US$190 billion on alleged unpaid taxes, penalties, and interest.

Acacia Mining, specifically Bulyanhulu Gold Mine Limited and Pangea Minerals Limited, the owners and operators of the Bulyanhulu and Buzwagi mines in Tanzania, received Notices of Adjusted Assessment that stated approximately US$40 billion of alleged unpaid taxes and approximately US$150 billion of penalties and interest owing.[1] Acacia Mining disputes the reassessments and states that the company has “fully declared all revenues.”[2]

After two auditing Presidential Committees completed in May and June 2017, it was alleged that Acacia Mining had under-declared export revenues and quantities of exported gold/copper concentrate, and allegedly operated illegally in Tanzania after legislative changes in March 2017.

Legislative Changes

On March 3, 2017, legislation was passed to prevent the export of gold/copper concentrate from Tanzania.[3] It was a devastating blow to the mining industry in the country. Acacia Mining stated that “At Bulyanhulu and Buzwagi [mines] the combined direct impact of the current directive is the average daily loss of revenues of more than US$1 million per day.”[4]

The Impact on Canada’s Mining Corporations

This conflict caused Acacia Mining, majority owned by Canada’s Barrick Gold, to file international arbitration notices for the two mines to protect Barrick Gold’s shareholders. Barrick Gold is the world’s largest gold producer, and holds a 63.9% equity interest in Acacia Mining.[5]

The audits and accusations against Acacia Mining had impacted Canadian markets in the mining sector in March 2017 when Canadian gold miner Endeavour Mining Corporation ended discussions with Acacia Mining regarding a potential merger.[6]