Now the Tanzanian taxman is also chasing after FastJet

FASTJET NOW TARGET OF TANZANIA’S TAXMAN TOO


The bad news for FastJet just don’t seem to end as information has emerged from Dar es Salaam, that the Tanzania Revenue Authority, aka The Taxman, is now chasing down the upstart over payment of both current as well as apparent legacy debts from past operations by Fly540 Tanzania.

While those old outstandings also shed light on the business practices of Fly540 Tanzania, prior to selling the company to FastJet, it is now clear that the separation of old debts has apparently failed to take hold or be recognized by Tanzanian authorities, as TRA now follows hot on the heels of another large claim for current and past debts from the Tanzania Civil Aviation Authority.

Information passed from a regular aviation source in Dar es Salaam speak of a back log of payments for several years, covering PAYE and other taxes due, amounting to nearly 3 billion Tanzania Shillings and covering periods between 2009 and 2011, clearly incurred under the management of the initial Fly540 Tanzania owners who may have used the hasty sale of the airline’s Tanzanian operation to rid themselves of these long overdue obligations.

The demand note, served on FastJet a week ago, gave them a few days to pay up or else, as was the case with the TCAA demands, and these ongoing public negative headlines are thought to impact on the public standing of FastJet in Tanzania, which may yet cost them dearly in terms of passenger loads, as Air Tanzania and Precision Air have all but matched their regular fares while offering wider choices of departures between Dar, Kilimanjaro and Mwanza, at least as far as Precision Air is concerned.

If FastJet cannot get out of the headlines with such very negative stories of money owed to the Tanzanian government and hence to the people of Tanzania, I wonder how long it will take for passengers to vote with their feet? It must be a nightmare for their PR people because one thing chases the next. And not only in Tanzania, but also in Kenya where reports talk of other court cases with the Fly540 people before they even started flying. It is almost a worst case scenario that you are judged in the court of public opinion before a single plane has flown. How anyone can repair that damage I wonder really. I think they simply failed to understand the market here and failed to understand the nature of their chosen partners. I think that is the biggest failure really on the part of those who made that decision and the results are very negative for them now’ wrote another regular source from Dar es Salaam when asked to comment, as usual, for fear of repercussions, on condition of strict anonymity as ‘otherwise they will revenge us when they can’.

FastJet was days ago reported to have raised further capital worth some 4 million UK Pounds amid questions if such added funding was to be used to start operations in new markets like South Africa, or else bring their plans to commence flights in Kenya under a new partnership deal with Jetlink to fruition or otherwise make financial provisions to pay such debts which the airline has until now denied owing altogether, pointing the ‘debtcollectors’ to their former partners at Fly540 in both Tanzania and Kenya.

Watch this space for more emerging news as this tragicomedy called FastJet continues to amaze East Africa’s avation fraternity.

As accusations and counteraccusations between the two protagonists are flying high and low over this case – and it should be noted that the issue of legacy cost has always been mentioned here at least, though perhaps not in other media – I opted to have FastJet’s ‘Dismay’ message copied here for the benefit of my readers. As to one Mr. Nugent, perhaps he could opt to offer facts for a change which will be happily reflected here rather than being a mere mouthpiece of his masters. 

fastjet are dismayed that once again an inaccurate article has been published in the Media today.

The historic debts that the article refers to were, we believe, primarily incurred by the Fly540 operation in Kenya run by Mr Don Smith. 

There is a distinct lack of clarity regarding the historic charges and we have been working with the TRA and TAA to understand where the liability sits. Where amounts have been agreed and liability ascertained, we have settled those amounts rapidly.

In its first few months of operation, fastjet has carried over 70,000 passengers, has dramatically lowered the cost of flying in Tanzania and has delivered a level of safety and performance never seen before in the country. We are determined to continue to grow, despite the attempts from various quarters, and to offer the people of Tanzania greater opportunity to fly at an affordable cost.

 

And here some added facts, as they became available …

 

A TRA document now in circulation in Tanzania shows the various categories of tax liabilities which the aviation company owes the tax body, including Pay As You Earn (Paye) as per payroll analysis amounting to Sh456,317,637 and Paye difference with accounts worth of Sh987,517,985.

Other categories of tax claims include: Skills Development Levy (SDL) as per payroll analysis amounting to Sh117,872,376 SDL per differences with final accounts worth of Sh237,004,317, final rental tax of Sh70,877,283, stamp duty amounting to Sh15,708,037 and departure tax of Sh951,562,012.

“We intend to issue tax assessment on the above tax liabilities established seven days after receipt of preliminary findings as all anomalies were communicated thoroughly to officials, namely, Mr Davis Gitari and Ms Regina Lwena during the audit,” reads part of the claims’ document released by TRA.

Dated 3rd December 2012, the document of reference No. F-DRD-0010-C states that the scope of TRA audit of tax liabilities facing the airline had included corporate tax remittances from 2009 to 2011, Paye and SDL starting from January 2009 to November 2012 and Rental and Stamp Duty from 2009 to 2012.

18 Comments

  1. Yet another biased, partial piece of journalism. You have developed quite an industry of trying to destroy a start up company.

    1. Mister Nugent, they are doing the destroying all by themselves, looking at the way they conduct their affairs. Clearly their due diligence was not worth the paper it was written on and they chose partners no one else would touch. But sure, blame it on the media, as a mouthpiece sycophant you seem to have lost the ability to see the truth others see.
      W.

      1. ‘Mouthpiece sycophant’? Plain English please!

        Aside from confusing language, most of these stories are originating from one source, which suggests an agenda is at play. Secodly, the argument lacks any sense of balance or willingness to do justice to both sides of the argument. Thirdly, if I did owe money to someone (and not saying Fastjet do as I haven’t seen actual physical evidence), it doesn’t do anyone any justice to put to put these issues into the public domain until a legal remedy is sought. So, where is all of the evidence, where is the legal paperwork, where are the court summons, where are the judgments? EVIDENCE, EVIDENCE, EVIDENCE! Until I see all of this, I am afraid, I cannot believe any of this poor and misguided journalism.

      2. And it seems that people’s personal details are not even kept private and confidential on this website! Firstly, I have not given permission for personal details to be published on this website. Secondly, I am not a journalist and have not written any articles about Fastjet, I am merely offering my opinions. If you disagree with my opinion – that’s fine.

      3. And Fastjet are not my masters. I don’t have any pay masters – I am my own master!

      4. Yes. I expect no less than this from your blog… I.e. I have no expectations. You know who I am now. Who are you? And I can tell you my life history if you want, which shows that I act with integrity. Who are you and what are your interests?

        And for Luke, I have no problem in companies paying what they owe, when they owe it. That’s for Fastjet to worry about – not me. Unfortunately, a lot of information is flying around (pardon the pun) and no hard evidence is provided to substantiate the claims. So, yet again Wolfgang, or whoever you are, where is the evidence? Why don’t you unmask yourself to the public and come clean with your evidence? If you don’t have any, then the air must be thin indeed.

        I’m afraid to dissappoint you but Stelios wouldn’t know I am from Adam (or Luke). And he probably wouldn’t thank me for writing these comments.

        As for other airlines running scarred of competition, go ahead and grow a pair.

    2. due diligence and not bribes would have been at the order here; do not blame the tax collector, blame those that avoided paying taxes; i also wonder where the number of 70K passengers comes from??? do not provide wrong info in order to acquire sympathy! as long as which ever investor thinks they can save the day by bending the rules, these issue of “catch up” should not surprise anyone. Pay what is due to whom it is due and these issue will disappear

      1. Luke, you talk about bribes. What bribes? I’d be interested if you could substantiate these claims with evidence. Have these ever been investigated. If you have evidence, then surely you should bring them to the attention of the law. Basically, you are saying that Fastjet paid bribes to someone? I would be interested in knowing more about that.

        As for the 70,000 passengers, that wouldn’t come as a surprise to me. But if there is doubts there, the authorities should check this.

        As for paying up, that is for Fastjet, not me. I am sure they will deal sensibly with that issue, should there be one.

    3. No serious response to any of my comments, therefore I will assume the author has nothing of any significance to add to the debate. Oh, and you should have asked for my proper title, its Doctor Nugent.

      1. I am not trying to impress anyone, least of all you, but if you want to get your facts right, at least ask questions before assuming you know the answers in the first place. POINT MADE!

  2. Thanks for adding some facts and figures, particularly in relation to tax and other liabilities. I am aware of these, and as far as I know, Fastjet issued a statement to say they are working with those concerned to address these issues. As you will see from previous comments, I agree that if a person or organisation owes taxes or other things to a Government, they should pay up. Do you have any more up to date information on the current state of play?

    1. Dr. Nugent, that is what I do when I get added material, corroborated from at least two sources.
      I have plenty of stuff at hand, from both airlines, and a regular bin of dirt too, but all from individual sources lacking a second one to be safe to publish and meet minimum verification standards. So for now that material cannot go out until more individuals come forward, difficult at best, as the level of intimidation and the threat levels are quite intense now towards anyone suspected to leaking such crucial information.
      W.

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