Mozambique: Businesses call for tax cuts

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Mozambique: Businesses call for tax cuts

7:36 CAT | 22 Mar 2022

Photo: O País

The Confederation of Mozambican Business Associations on Monday called for a sharp reduction in the profit tax paid by agricultural companies.

The standard rate of profit tax (IRPC) is 32 per cent but the CTA argues that, for agro-business, the rate should be cut to ten per cent.

The CTA chairperson for agro-business, nutrition and food security, Pilona Chongo, told a Maputo press conference on Monday that the current tax rate makes agro-business non-viable, and thus unattractive for investors.

Agricultural businesses, said Chongo, wanted, not only a cut in profit tax to 10 per cent, but also exemption from Value Added Tax (VAT) for the entire chain of agricultural production. Furthermore, the circulation fees charged on agricultural goods at provincial and district level should be abolished.

Chongo said that agriculture had been exempted from the full weight of profit tax, but this exemption expired in 2015. Since then, in the annual negotiations between the government and the CTA, the government has promised to re-introduce the exemption, but has not yet done so.

When the 2021 minimum wage was negotiated, the government again promised to reduce the rate of IRPC, particularly for livestock and forestry producers. This was supposed to cushion the impact of the ten per cent rise in the minimum wage, “since the financial situation of the companies is fragile”.

Chongo claimed that the allocation of ten per cent of the state budget to agriculture, and the government’s flagship agricultural development programme, “Sustenta”, are not enough to raise household income, if they are not accompanied by other reforms in critical areas.

According to the CTA’s own statistics, agricultural production rose from 20 million tonnes in 2018 to 43 million tonnes in 2020 and is expected to reach 47 million tonnes in 2022.

Source: AIM