CTA EXPRESSES CONCERN AT TAX BURDEN
Maputo, 18 April (AIM) – The Mozambican Confederation of Business Associations (CTA) has expressed its concern at what it regards as a high tax burden, the collection of taxes that have no legal justification, and the non-compliance with measures of the Economic Acceleration Package (PAE), which calls for the government to purchase national products and reduce value added tax (VAT).
The business people expressed these concerns on Wednesday, in Maputo, at a session of the Business Environment Monitoring Council (CMAN), a forum led by the Prime Minister, Adriano Maleiane.
Addressing the concerns raised by the business people, the Deputy Minister of Economy and Finance, Amílcar Tivane, said that the government cannot maintain exemptions from VAT on processed goods for ever.
The issue here is the end of the exemption from VAT for sugar, soap and vegetable oil. The government granted this exemption in 2007, as a temporary measure, in the hope that it would protect the Mozambican processing industries from foreign competition. The exemption was extended for 15 years, but was eventually scrapped in December 2023.
“The big question is that we can’t have a fiscal architecture in which the issue of exemptions is maintained for a long time”, said Tivane. “The country has internal capacity and considers it important to have a joint reflection, between the government and the business sector, to evaluate incentives on how to strengthen investments in the value chain of material production, with an emphasis on promoting oilseeds (such as cotton, groundnuts, rapeseed, and soya)”.
According to Tivane, after 15 years, the government has not found strong evidence to justify maintaining the exemptions from VAT for sugar, soap or vegetable oil, “and we’re still discussing it with the business sector. I’m not sure that putting this exemption into the tax code will solve the problem.”
For his part, the chairperson of the CTA, Agostinho Vuma, claimed that illegal taxes are being imposed on businesses by the publicly-owned electricity company, EDM.
He said that EDM forces investors in remote regions make agreements for the supply of electricity “and, as part of this contract, there is a fee that they must pay to the Ministry of Mineral Resources and Energy.”
Prime Minister Adriano Maleiane said that the government has been committed to creating conditions aimed at boosting the economy and improving the business environment, with the implementation of reforms that contribute to making the country more attractive to domestic and foreign investment.
“By way of example, in 2022, we carried out, among other actions, the revision of the Investment Law, the Commercial Code and various social policy instruments, with emphasis on the VAT code, the Specific Consumption Tax Code (ICE), and updating the customs tariff in order to ensure that it is adapted to the new demands of international trade”, Maleiane said.
(AIM)
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