Mozambique: New VAT Code in force since January 1st

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Mozambique: New VAT Code in force since January 1st

7:15 CAT | 04 Jan 2023

File photo: Lusa

Law nº 22/2022, of the 28th of December came into force on the 1st of January 2023, implementing the Value Added Tax (VAT) Code approved in December of last year by the Assembly of Republic.

The new legal diploma amends and republishes Law nº 16/2020, of December 23rd.

Most significant is the reduction of the tax rate from the previous 17% to 16%, the implementation of one of the Economic Acceleration Package (PAE) measures announced in August 2022 by head of state President Filipe Nyusi.
In general, the new VAT Code Law amends eight articles of the previous law, namely, articles 9, 10, 12, 15, 17, 19, 20 and 21.

According to the new law, the following are exempt of VAT: operations involving the transmission and/or sale of maize, maize flour, rice, bread, iodized salt, powdered milk for infants up to one year old, wheat, wheat flour, fresh or chilled tomatoes, potatoes, onions, frozen horse mackerel, lighting oil, domestic gas-LPG, jet fuel, condoms, common and iron bicycles up to four speeds and insecticides.

Among the services exempt from the payment of VAT are real estate leasing operations for residential purposes; banking and financial operations, subject to stamp duty; and insurance and reinsurance operations, as well as related services provided by brokers and other insurance intermediaries, subject to stamp duty.

Exempt from VAT when imported will be goods whose transmission within the national territory benefits from VAT exemption, as well as goods that enjoy exemption from the payment of customs duties.

By contrast, the transmission of double-cab pick-up vehicles, commonly known as light vehicles for the transport of goods, is now subject to the payment of VAT, a measure contested by the Associação de Importação e Distribuição Automóvel de Moçambique (AIDAM), which calls it “maladjusted” and undermining of economic activity in the sector.

Also coming into force on the 1st of January, alongside the VAT code, were the new Customs Tariff and the Law establishing the Principles of Organization of the Tax System of the Republic of Mozambique.

Source: Carta de Moçambique