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Phone firms to list at Dar bourse from January 2017

Friday June 24 2016
firms pic

CCM legislators discuss Budget-related issues in parliament in Dodoma yesterday. From left: Mr Steven Ngonyani (Korogwe), Ms Martha Mlata (Special Seats), Mr Venance Mwamoto (Kilolo) and Mr Jason Rweikiza (Bukoba Rural). PHOTO|EDWIN MJWAHUZI

Dodoma. It is now official. 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.

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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.Dodoma. It is now official. 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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