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.