The chief executive of Dar es Salaam Stock Exchange Mr. Moremi Marwa,
Mobile
phone companies will be required to start listing their shares on the
Dar es Salaam Stock Exchange (DSE) on January 1, 2017 as the government
seeks to ensure that Tanzania is reaping maximum benefits from the
firms’ proceeds.
Apart
from helping Tanzanians to earn stakes in the lucrative mobile phone
industry, the move will also help the government to ascertain the actual
revenues that the companies collect so they can be able to pay the
right amount of taxes, the Finance and Planning minister, Dr Phillip
Mpango, said yesterday.
Presenting
the Finance Bill – whose passing will authorize the government to start
implementing the tax measures that are highlighted in the Sh29.5
trillion 2016/2017 budget – in parliament yesterday, Dr Mpango proposed
to amend the Electronic and Postal Communications Act, (Cap. 306), to
compel mobile phone firms to offload 25 per cent of their shares to
Tanzanians via the stock market.
“With
this move, existing mobile phone firms will be duty-bound to list their
shares on the stock market in a period of six months from July 1,
2016…..Similarly, companies that will be registered in the country after
July 1, 2016 will have to list on the stock market after two years of
their operating in the country,” Dr Mpango said.
Whether President John Magufuli will succeed where his predecessor, Mr Jakaya Kikwete failed, remains everybody’s guess.
What
is vivid however is the fact that mandatory listing of mobile phone
firms has been a thorny issue since the Parliament first endorsed the
Electronic and Postal Communications (EPOC) Act in 2010.
The
Mobile Operators Association of Tanzania (Moat) – which brings together
all the mobile phone operators – resisted the move, claiming that
forcing them to list at the DSE was contrary to other laws such as the
Companies Act, the Capital Markets and Securities Act, and even the
Constitution as regards private ownership of property.
It
was also on record during that time that the then chairperson of the
DSE governing council, Mr Peter Machunde, has resigned over what
appeared to be pressure over his opposition to the Bill which former
President Kikwete however went ahead to sign into Law.
Mr
Machunde is on record as having written to the former Head of State
arguing that mandatory listing requirement would discourage potential
long-term investors in capital intensive sectors.
On
the contrary, the Law received full support from Tanzania Stockbrokers
Association (TSBA), with the then TSBA chairman, Leandri Tairo-Urassa
saying Moat was unhappy because listing would require mobile phone
companies to operate transparently by revealing their finances.
What
was apparent yesterday was that the issue had already attracted varied
opinions from lawmakers, with Mr Hussein Bashe (CCM – Nzega Urban)
saying forcing mobile phone firms to list on the DSE is bad for it will
discourage investors. He also believes that the DSE’s liquidity is not
good enough to accommodate an abrupt entry of all domestically owned
shares of mobile phone companies.
But
presenting the views of the 28-member Parliamentary Budget Committee,
the chairperson of the committee, Ms Hawa Ghasia, said they support the
move, noting however that there was a need to rethink on the six months’
ultimatum to avoid encountering challenges during the implementation
phase.
Deep
into the Finance Bill, 2016, it becomes apparent that the government is
also targeting an increased chunk of revenues from the extractive
industry which is also believed to be one of the areas where lack of
transparency is affecting tax collection targets.
The
government has introduced a new division within the Income Tax law with
a view to initiate a new system of calculating tax and other forms of
revenues to be paid by mining and oil and natural gas companies.
Under
the proposed changes, a company which has several operations in the
country’s mineral, natural gas and oil sectors will not be allowed to
(ring fence) combine the operational costs or losses from its various
tasks.
The
measure is aimed at making sure that the government collects tax from
any of the company’s profit making entities even as there could be some
subsidiaries of the very same outfit which are incurring losses at the
same time.
Similarly,
when a company is engaged in both mining and processing of minerals,
the two undertakings will be considered as one and tax will be paid as
from a single entity.
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