Mozambique: Beira Commercial Association calls for more comprehensive tax relief

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Mozambique: Beira Commercial Association calls for more comprehensive tax relief

11:06 CAT | 15 Aug 2022

File photo: CRV Magazine

The president of the Beira Commercial Association (ACB) in the main city in central Mozambique said on Thursday (11-08) that he regretted that the reduction in the Corporate Income Tax (IRPC) announced last Tuesday (09-08) did not cover more economic activities.

On Tuesday, President Filipe Nyusi announced a package of 20 measures to stimulate the economy, including a reduction from 32% to 10% in the IRPC rate on agriculture, aquaculture and public transport.

Reacting to the measures at a press conference this Thursday, ACB president Félix Machado argued that the tax relief should have covered other areas with a direct impact on the lives of the majority of the population, such as bakery and poultry.

“Most of the ladies who do business in this country are linked to poultry farming, and everyone eats bread these days, hence the ACB’s opinion that bakeries should also be covered in the IRPC reduction,” Machado declared.

If the measures announced by the head of state were aimed at avoiding a larger budget deficit, Machado said, public accounts would not have suffered any significant effect if the tax relief had included some areas with an impact on the cost of living.

“We are not saying that what was announced is wrong, we are asking for the expansion of the IRPC [relief], so that workers benefit,” he declared.

He also commented on the creation of a US$250 million loan guarantee fund aimed at reducing interest rates, and asked that the management and allocation of the amount be decentralised so that economic activities carried out in the provinces are benefited.

“We propose that each province identify areas of interest that can leverage small and medium-sized companies, because the country is large and the private sector is not just in Maputo,” he said.

Regarding the decision to transfer 10% of revenues from the exploitation of natural resources to the provinces where they are extracted, the president of the ACB praised the decision, saying it would promote development.

“The challenge is in its implementation. Thankfully, a monitoring office was created, with the hope that the private sector will be represented,” Machado remarked.

Machado called for special attention to be paid to areas affected by natural disasters and those in Cabo Delgado impacted by armed violence there, noting that the devastation was greatest in these areas. “The new measures ignore the cyclones and the Cabo Delgado issue,” he lamented.

The 20 measures are part of the PAE – Economic Acceleration Stimulus Package, which aims to respond to the country’s growth needs, the negative impact of the Russia-Ukraine war, armed violence in Cabo Delgado province and natural disasters.

The measures announced lower the IRPC in agriculture, aquaculture and public transport from 32% to 10%, and VAT on agriculture and renewable energies from 17% to 16%.

The Mozambican head of state also signalled the introduction of tax incentives for new investments over the next three years, without as yet specifying the rates of these incentives.
The package raises the share of revenues from natural resources transferred to the provinces where they are extracted from 2.5% to 10% and establishes a loan guarantee fund worth US$250 million to help banks provide domestic credit at more affordable interest rates.

Source: Lusa