Indiana Holds US$36.9M Outstanding in Tanzania Settlement Amid Tax Dispute
Indiana Resources confirms receipt of settlement payments from Tanzania but moves to arbitration after a tax dispute threatens the agreement. The company awaits Australian tax approval to return capital to shareholders.
- US$90 million settlement payments received from Tanzania
- Tanzania breaches Settlement Deed with a tax assessment dispute
- Indiana initiates arbitration at London Court of International Arbitration
- Company seeks Australian Taxation Office ruling for shareholder capital return
- Outstanding award amount stands at US$36.9 million as of May 2025
Settlement Progress and Tax Dispute
Indiana Resources Limited (ASX – IDA) has confirmed it received all scheduled instalments under the US$90 million Settlement Deed with the United Republic of Tanzania, a significant milestone following the agreement reached in July 2024. However, the relationship has soured due to a recent tax assessment issued by Tanzania's Revenue Authority in the Lindi region, which the company says breaches the terms of the Settlement Deed.
The tax assessment, described as a “Notice of Jeopardy Assessment,” has not been withdrawn despite Indiana's requests, prompting the company to take legal action to protect its interests and those of the claimants involved in the settlement.
Arbitration and Legal Maneuvers
In response to Tanzania's breach, Indiana has lodged a Notice of Arbitration with the London Court of International Arbitration (LCIA), invoking the dispute resolution provisions of the Settlement Deed. This move signals a firm stance by Indiana to enforce the agreement and seek clarity on the tax dispute.
Additionally, Indiana has reserved its rights regarding the International Centre for Settlement of Investment Disputes (ICSID) arbitration process. The company has not issued a letter of discontinuance, meaning the ICSID proceedings could resume if the Tanzanian breach persists. Should the ICSID annulment proceedings restart and Tanzania’s annulment application be dismissed, Indiana expects Tanzania to fulfill its commitment to pay the outstanding award plus interest within 45 days.
Financial Implications and Shareholder Returns
As of May 2025, the total award including interest stands at approximately US$126.9 million. After receiving three instalments totaling US$90 million, the outstanding amount is about US$36.9 million. This sizeable sum remains a key financial consideration for Indiana and its shareholders.
On the domestic front, Indiana has applied for a tax ruling from the Australian Taxation Office (ATO) to facilitate a capital return payment to shareholders. The company is awaiting final confirmation on the amount eligible for distribution and will announce details once the ATO provides its ruling. This development is critical for investors anticipating a return of capital following the settlement receipts.
Looking Ahead
Indiana Resources’ decisive legal actions underscore the complexities of international settlements involving sovereign states and the challenges posed by unexpected tax claims. The unfolding arbitration and tax rulings will be pivotal in determining the company’s financial position and its ability to deliver shareholder returns.
Bottom Line?
Indiana’s arbitration and tax rulings will shape the next phase of its Tanzania settlement saga and investor returns.
Questions in the middle?
- What timeline can investors expect for the Australian Taxation Office ruling on the capital return?
- How might the arbitration outcome affect Indiana’s financial position and future dealings with Tanzania?
- Could Tanzania’s breach lead to further legal or diplomatic complications impacting the settlement?