Changes to capital gains tax still under analysis in Mozambique

23 November 2012

The Mozambican is still looking into possible changes to the capital gains tax system, the deputy Mining Resources Minister, Abdul Razak Noormahomed said.

During the Coaltrans conference, which is due to end Friday in Maputo, the deputy minister said that the government was discussing the tax and added that the 2007 law was currently the one being applied.

“The aim of the possible change to the law,” said Abdul Razak Noormahomed, “is to make it possible for both the investors and the country to have a fair slice of the benefits.”

The issue was raised when Irish company Cove Energy was acquired by Thailand’s PTT Exploration & Production for US$1.9 billion.

Mozambique later received US$175 million from applying a 12.8 percent tax on the capital gains from the sale of the Irish company.

The gains were supposed to be taxed at a rate of 32 percent, but as Cove Energy was still in its investment phase, Mozambique’s tax legislation outlines reducing that rate to just 12.8 percent, which was applied in this case. (macauhub)