Mozambique and EU sign agreements
FILE - For illustration purposes only [File photo: OAM]
The Order of Accountants of Mozambique says that the reduction of VAT from 17% to 16% is “insignificant”. To boost the economy, it suggests reducing imports.
The reduction of the Value Added Tax (VAT) from 17% to 16%, now in effect, aims to boost the economy and increase the population’s purchasing power.
The Order of Accountants of Mozambique however considers that the 1% reduction is insignificant, considering expected inflation this year, which could reach around 11%.
“It will obviously have an impact, but it is small. If we make a comparison with what happened in 2022, when the inflation rate was above 10%, reducing VAT from 17% to 16% is insignificant, because it will not affect the expectations of consumers in a desirable and favourable way,” Abdul Hamid told O País on behalf of the institution.
The VAT reduction comes within the scope of the package of economic acceleration measures announced in August last year. They are meant to boost the national economy, hit in recent years by various national and international economic factors, including environmental and even political and military stability.
Meanwhile, the Order of Accountants warns that the reduction in VAT could negatively affect some services and harm the final consumer.
“The final consumer could be harmed, namely in health and education services. There are a number of reductions in the agricultural sector that are beneficial. It is possible to do more, and the state should rethink the measures to make the economy more dynamic,” Hamid says.
To boost the economy, Abdul Hamid argues that the country should produce more, export less, and expand the tax base.
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