Mozambique: Parliament approves draft law on tax luxury products and those with adverse health effects

20 March 2009

Maputo, Mozambique, 20 March – The Mozambican parliament Thursday approved a draft law to increase the rate of Specific Consumption Tax (ICE).

This is a tax applied on products that may be harmful to health, such as tobacco and alcohol, and on luxury products in addition to Value Added Tax (VAT) of 17 percent.

The government said that the increase in tax was intended to discourage consumption of tobacco and alcohol, but there has been no increase in the tax on beer, which is the most popular and cheapest alcoholic drink in Mozambique, which remained unchanged at 40 percent.

Tax was raised on other alcoholic drinks, such as wine, which rose from 40 to 55 percent, and spirits, which rose to 65 percent.

The ICE tax rate on tobacco rose from 65 to 70 percent.

In relation to vehicles, the new rates aim to encourage people to by cars and motorbikes with smaller engines as the ICE on tax of a vehicle with less than 1,000 cc or a motorbike with less than 250 cc was reduced from 15 percent to zero. (macauhub)