Statoil Tanzania AS vs Commissioner General Tanzania Revenue Authority (Civil Appeal No. 372 of 2020) [2022] TZCA 3057 (24 October 2022)

STATEOIL TANZANIA AS (CURRENTLY KNOWN AS EQUINOR TANZANIA AS) V. COMMISSIONER GENERAL TANZANIA REVENUE AUTHORITY (TRA) COURT OF APPEAL OF TANZANIA AT DAR ES SALAAM (CORAM: MKUYE, KENTE, KIHWELO, JJ.A.) CIVIL APPEAL NO. 372 OF 2020 (From the Decision of the Tax Revenue Appeals Tribunal at Dar es Salaam dated the 21 st day of April, 2021 in Tax Appeal No. 20 of 2020) Tax Law- Stamp duty- instrument executed outside Mainland Tanzania in relation to any property in Tanzania-whether is chargeable with stamp Tax Law- stamp duty- chargeable instrument executed outside Mainland Tanzania- time within which stamp duty is to be paid. Tax Law-stamp duty- exemption by the Minister to pay stamp duty- How to effect exemption. Tax Law-dispute on assessment of Tax before the Board and the Tribunal- proof that the assessment is excessive- who has the onus of proof. This appeal was brought by Statoil Tanzania AS (now Equinor Tanzania AS) against the judgment and decree of the Tax Revenue Appeals Tribunal (“the Tribunal”) dated 21 April 2021 in Tax Appeal No. 27 of 2020. The appellant, a company engaged in oil and gas exploration in Tanzania since 2007, operated in Block 2 within Tanzania’s Exclusive Economic Zone. It executed a Farm-Out Agreement with ExxonMobil Exploration and Production Tanzania Limited, assigning petroleum rights under the Production Sharing Agreement (PSA). Following a tax audit on 19 August 2013 covering the 2011 income year, the respondent assessed the appellant for stamp duty of TZS 170,414,448 arising from the Farm-Out Agreement and issued a demand notice. The appellant’s objection was unsuccessful, and the disputed amount was reportedly deducted from VAT refunds due to the appellant. The appellant then appealed to the Tax

Revenue Appeals Board, which ruled in its favor, holding that stamp duty was not payable on the Farm-Out Agreement executed outside Tanzania. The respondent challenged the Board’s decision before the Tribunal, which quashed and reversed the Board’s decision, holding that the appellant was liable to pay stamp duty. Dissatisfied, the appellant filed the present appeal to the Court of Appeal, seeking to overturn the Tribunal’s decision and uphold the Board’s earlier finding that the stamp duty should not have been imposed on an agreement executed outside Mainland Tanzania. Held: (i). Any instrument executed outside Mainland Tanzania in relation to any property in Tanzania is chargeable with stamp. (ii) Every chargeable instrument executed outside Mainland Tanzania shall be stamped within thirty days of its first arrival in Mainland Tanzania. (iii). The Minister has discretion to exempt any chargeable instrument from stamp duty and the Minister has to do so by a notice published in the Government Gazette. (iv). The onus of proving that the assessment or decision in respect of which an appeal is preferred is excessive or erroneous shall be on the appellant. The Appeal was dismissed. Statutory Provisions referred to: (i) Tax Revenue Appeals Act, [Cap. 408 R.E 2019], section 18(2)(b) (ii) Stamp duty Act, Cap 189 R.E 2019 Sections 5 (1) (b), 16 (1), 18 and 26 Dr. Fayaz Bhojan, Dr. Abel Mwiburi and Anitha Kimario Learned Advocates for the appellant. Mr. Amandus Ndayeza, Yohana Ndile and Nyamtungila Mgune Learned State Attorneys for the Respondent.