Property titan, Turnstar Holdings Limited may soon be engaged in a tussle with the Tanzania Revenue Authority over claims of withheld tax, the company has announced in its latest annual report.
Turnstar, the owners of Botswana’s largest shopping mall – Game City – announced that the Tanzanian revenue authorities have issued withholding tax, Value Added Tax (VAT) and Pay As You Earn (PAYE) assessments, totalling almost US $ 1.8million (An equivalent of P18.7 million).
“These assessments have been objected to, and will be defended in terms of the Tax legislation,” Turnstar said in a statement signed by group Chairman Patrick Balopi and Managing Director (MD) Gulaam Abdoola.
The duo did not give any further details as to why the Tanzania Revenue Authority would assess their liability in such a high amount. Dar es Salaam is Turnstar’s pot of gold, through its Mlimani City complex, holding the company’s largest asset by value.
Turnstar acquired Mlimani City in 2011 in a transaction valued at US$77 million (around P800 million).
The property consists of a shopping centre with lettable space in excess of 18,794m2. The shopping centre is Tanzania’s first indoor air conditioned mall and home to notable South Africa retail giants like Shoprite and Mr Price. The investment company views this prime space as not only sustainable but as an unmatched investment, as it carters not only for the city of Dar es Salaam but also the surrounding towns.
In addition to Mlimani City, Turnstar also has a fully let office park consisting of four double-storey A-grade buildings, with a let space of plus or minus 11,308m2. The properties also include a conference centre with a full range of facilities and amenities which played host to the African leg of the World Economic Forum. The property development has a residential housing estate with 50 units.
Turnstar aims to have access to 75000m2 of undeveloped land for future use. The company believes this latest acquisition will enable them to benefit from the booming Tanzanian economy and widen its future investment and future earnings.
Despite tough market conditions, the Group recorded a profit from operations of P 63million, for the half year ended 31 July 2017. This is an increase of 2.3 percent in comparison to the corresponding half year ended 31 July 2016, and is mainly attributable to the 4.5 percent increase in Group rental revenues. Group investment properties increased to P 2.3 billion, due to the additions and developments at Game City and Mlimani City.
The Mlimani City expansion is estimated to have cost $45million (Just under half a billion) and will generate an attractive development yield of 13 percent in addition to net asset value uplift going forward.
The developments to the mall include the addition of 15,997 square metres of new retail office and 420 square metres of conference space, up to 342 bays of basement parking and a hotel. A botanical garden has also been developed to complete the attraction of the Mlimani City node.
Turnstar also invested P250 million on the refurbishment and expansion of the Game City Mall, which is expected to enhance the quality of Turnstar’s property portfolio as well as its underlying net asset value. Both Mlimani and Game City expansions have been completed.
The development was funded through a loan from Rand Merchant Botswana (RMB), which is a division of FNB Botswana and First Rand Bank Limited.
The Game City expansions include refurbishment to existing structures and the addition of a restaurant node, multi-function entertainment area with play section for children, an additional 4,000 square metres of retail space including a high fashion wing and a secure underground parkade accommodating 400 vehicles.
Game City mall has over 120 shops including Game Store, cinema, supermarkets, fast foods restaurants and clothing shops.