No-frills carrier caves; will pay billions to TRA, TAA in back taxes and airport fees

At last FastJet, owner of Fly540 airline, has agreed to pay debts amounting to billions of shillings it owes the Tanzania Revenue Authority (TRA) and Tanzania Airports Authority (TAA).
For almost a month FastJet has been passing the buck to Fly540 (T) Ltd over payment of debts totalling over Sh4 billion to TRA and TAA.
FastJet has been maintaining that Fly540 was supposed to pay the debts under a contract for taking over the airline.  The new turn of events arose yesterday when the FastJet general manager for Africa, Mr Kyle Haywood, told a press conference that they were ready to pay the debts pending proper reconciliation by TRA and TAA.
“We have met with TRA and TAA to discuss the pending bills. We will pay, but we want supporting documents of all these bills.  We are in discussion with TRA, for we have to validate what are paying,” said Mr Haywood.
According to documents availed to The Citizen, the airline owes to TRA a total of Sh2.9 billion and TAA a total of Sh570 million.
In a letter Ref. No. EC.30/158/01.B61, dated February 12, 2013, TAA said it wants the debtor, FastJet, to effect the payment of debts amounting to Sh570,668,242 and Sh152,596,000 ($95,360) within three days.
These are  outstanding debts on landing and parking charges.
In the latest move, TRA claims in a letter, whose copy was availed to the media, that the airline has not met its obligations. They include tax liabilities such like 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) amounting to Sh117,872,376, SDL per differences with final accounts 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.
Dated December 3, 2012, the document states that the scope of TRA audit of tax liabilities facing the airline included corporate tax remittance from 2009 to 2011, PAYE, SDL from January 2009 to November 2012 and Rental as well as Stamp Duty from 2009 to 2012.
According to TRA, the preliminary audit charges of all categories of taxes outlined above are yet to be paid by the company which was registered as an airline known as Fly540 Tanzania on May 29, 2008.
The TRA document further states that the audit was intended to induce voluntary compliance through an effective and efficient tax audit programme.
Further, it was  to utilise audit opportunities to educate, foster customer care hence build trust, confidence and improved compliance to the tax payer, FastJet. No frills carrier caves; will pay billions to TRA, TAA in back taxes and airport fees
“We have a strong future in Tanzania. We will invest more to increase the number of airlines and flights. We have to put a lot of capital in the aviation industry,” said Mr Haywood who is based in South Africa.
“Our airline is growing very fast. For the past two months we have recorded 75,000 passengers. We are also seeking Tanzanians to own shares in the airline,” he said.
He also announced that the airline had inaugurated flights to Mwanza and Kilimanjaro and would start flying to Zanzibar next month.
FastJet’s Africa Operations, previously called Lonrho Aviation (BVI) Ltd, have been licensing the Fly540 brand from Five Forty Aviation since 2008. FastJet’s Africa Operations now fly three Fly540 branded planes in Angola and two in Ghana. It flew two planes using the Fly540 brand in Tanzania until November 2012 when the new company took over the operations.