Mozambican government plans to exempt some industries from VAT

3 January 2007

Maputo, Mozambique, 03 Jan – The Mozambican government plans to present a legislation proposal to parliament to renew the value added tax (VAT) exemption for the sugar, soap and vegetable oil industries, Mozambican daily newspaper, Notícias reported Tuesday.

In 2004, a government decree exempted VAT on importing raw materials and capital goods as well as on the final products of those industries.

But the decree expired on December 31, 2006 and, as VAT stands at 17 percent, the directors of the companies in question have said they will have to raise their prices, which will increase competition from imported, and even smuggled, products from neighboring countries.

The companies that have been affected sent a document to the government proposing that the VAT exemption be maintained and the Finance Minister, Manuel Chang, confirmed to Notícias that he had received it and added that the reasoning for exemption to continue was valid.

However, constitutional changes carried out in the meantime have made it impossible for the government to make changes to taxes, and parliament must now be consulted.

As parliament will only be back in session in March, the Finance Minister told the paper he was looking for a solution to cover the period between January 1 and the date when the Republican Assembly once again approves the VAT exemption for the three industries. (macauhub)