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Tanzania: Pan African Energy Refutes Tax Evasion Claims

17 July 2011 (Source: Tanzania Daily News)

A WAVE of multinational corporations using tax havens to avoid paying taxes in Tanzania has now included PanAfrican Energy Tanzania Limited which an ActionAid Sweden report last week indicated that it had denied Treasury 65 million US dollars (about 97.5bn/-) in taxes between 2004 to date.

PAT also came under fire in the National Assembly last week when lawmakers questioned its gas extraction deal from Songo Songo islands which charges hiked prices on state owned Tanzania Electric Supply Company (TANESCO) despite numerous tax exemptions.

But the company which is a subsidiary of British Virgin Island based Orca Exploration Group Incorporation refuted any wrongdoing saying it abides by the rules and regulations in the country and in Canada where it is listed at the stock exchange.

"PanAfrican Energy Tanzania Limited complies with all applicable laws and regulations in conducting our business in Tanzania in line with international practice.

In addition I can confirm PAT pays all due taxes and are regularly audited by TRA and independent auditors as per Tanzanian laws and Canadian stock exchange rules," said Mr Mwinshehe Said, the company's Financial Controller.

In a statement responding to 'Daily News' questions last Friday, Mr Said who was responding on behalf of Chief Executive Officer, Mr David Lyons and Chief Operating Officer, Mr Dale Rollins did not however respond to several issues raised by the ActionAid report on use of tax havens in Mauritius, Seychelles and Virgin Islands to stash out profits made from Songo Songo gas wells.

ActionAid Sweden censured Swedish International Development Agency for investing in PAT using Swedish taxpayers' money despite the fact that the company is denying the government billions of shillings in taxes which affects budget allocation to key social sectors including education.

"PanAfrican Energy has escaped taxes totaling US$65 million in Tanzania since 2004. US$65 million would allow 175,000 girls to attend school in Tanzania," the international activist group which also fights for equal opportunity to education among girls and boys in poor countries, said in its report.

Accusing SIDA of using Swedfund money to invest in companies such as PAT which are avoiding tax payment in the country, ActionAid Sweden wants the agency which is used by the Swedish government to channel aid aimed at sustainable development in poor countries such as Tanzania, to withdraw its investment.

The ActionAid report said with changing Swedish government aid policy which now focuses on channeling such funds through the business community which will help in creating economic growth and jobs, PAT's actions backpedal on such goals.

A senior TRA official said the tax body which has already launched investigations against another multinational accused of tax avoidance using tax havens abroad, SABMiller which owns Tanzania Breweries Limited, will launch another investigation against PAT.

- Finnigan Wa Simbeye