Mozambique: Businesses call for wider tax breaks

The Confederation of Business Associations of Mozambique (CTA), the country’s largest business organisation, advocated broader tax reductions on Thursday to boost economic recovery from the Covid-19 pandemic and the war in Ukraine.

CTA’s position is part of the “list of proposals” that the organisation drew up following the SAP – Package of Measures for Economic Acceleration announced in August by the president of Mozambique, Filipe Nyusi.

The Mozambican business community believes that reducing VAT from 17% to 16%, included in the SAP, should also apply to special rates of this tax applied to other goods and services, including electricity and water.

It also proposes the reintroduction of the VAT exemption for all products in the basic food basket to improve the purchasing power of families.

“In addition, we propose the creation of mechanisms to offset tax debts and to ensure the decentralisation of analysis of refunds to the provincial tax authority offices,” the statement said.

CTA also advocated that VAT exemption in agriculture should be extended to the entire agricultural sector to be more comprehensive and include the bakery industry.

Urban passenger carriers should benefit from exemption from payment of the company tax to attract greater formalisation of this sector.

“In the transport sector, the same [exemption] may contribute to the reduction of the number of informal urban transport operators and the facilitation of the effectiveness of government policies in this segment,” the note said.

Still on the measure of the company tax reduction, the CTA proposed the inclusion of tourism, as well as technical-vocational and higher education, taking into account that these ateas are still facing the effects of the Covid-19 pandemic.

On tax incentives for new investments in key sectors made in the next three years, CTA defended extending these incentives to investments already implemented and to areas affected by cyclones and armed attacks in Cabo Delgado province.

To simplify procedures for the repatriation of capital, the measure should be extended to the flow of capital entering the country, CTA advocates