Mozambique: Prime Minister insists on payment of VAT

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Mozambique: Prime Minister insists on payment of VAT

12:24 CAT | 30 Aug 2022

Image: Domingo

Mozambican Prime Minister Adriano Maleiane on Friday ruled out any further reduction in Value Added Tax (VAT).

On 9 August, President Filipe Nyusi announced that the government intends to cut the standard rate of VAT from 17 to 16 per cent. All imported goods intended for agriculture or electrification will be zero rated and thus pay no VAT.

Opposition political parties have been calling for much deeper cuts in VAT – but, at a press conference marking the end of a two day working visit to the southern province of Gaza, Maleiane said further cuts are out of the question, since VAT is a key source of funding for the state budget.

The Prime Minister insisted that the tax must be paid, and strongly objected to the practice of shops and other businesses striking deals with their clients, whereby the latter do not pay VAT and it is left off the invoice.

People who did not pay VAT on their purchases were holding back the country’s development, he said. Asking clients “do you want it with or without VAT?” was completely illegitimate. “We all have to pay with VAT, because that is the only way we will grow”, Maleiane said.

In his meeting with the managers of the company that exploits the heavy mineral sands in the Gaza district of Chibuto, a project budgeted at 400 million US dollars, Maleiane claimed that it is well underway, “a sign that the tax incentives and all the conditions that the government is creating for investors are giving good results.”

“As they said, it is still the first unit that they are operating and they told us that they may go up to 12 units over the next few years. But so far the project is doing well. They need to have an area with easy access to the sea and they are making an investment for this. The impression is very good”, he explained.

Regarding environmental issues, Maleiane said that the matter was discussed between the government and the managers of the company and it was concluded that it respects Mozambican legislation.

READ: Chinese company exploiting heavy sands in Chibuto to build Chongoene port | Mozambique

During the meeting, Maleiane explained about the relationship that the companies should have with the communities, warning that they should invest in the communities otherwise “it will be very difficult to work.”

“The recommendation that we leave is that, first, they should know that when they are investing, the first beneficiaries should be the communities. Therefore, they should create all the conditions to at least have acceptance from the community”, he added.

Source: AIM