Mozambique may take on debt to return VAT to companies

6 June 2018

The Mozambican government is studying the possibility of issuing internal or external debt in order to return Value Added Tax (VAT) that has been handed over by companies, especially small and medium-sized ones, to the Tax Authority, but it has been retained by the State, Mozambique’s Minister of Industry and Commerce said Tuesday in Lisbon.

Minister Ragendra de Sousa, on the sidelines of the Mozambique Investment Opportunities Forum, which is taking place this week in Portugal, told Portuguese news agency Lusa that the problem is mainly focused on small and medium-sized companies, since large companies “have the financial wherewithal to enter into a current account with the State.”

De Sousa said that the option for internal or external debt depends on the associated costs and added, “nothing prevents us from getting external resources to finance domestic debt, it is something to be studied on a case by case basis.”

The Minister of Industry and Commerce also said when asked that the amount of arrears of VAT represents between 10% and 12% of Gross Domestic Product, and mentioned a figure of almost US$2 billion.

Mozambique’s GDP totalled US$804.464 trillion meticais in 2017, about US$13.34 billion at the current exchange rate, according to figures from the National Statistics Institute (INE).

Most direct foreign aid to the State Budget has been frozen since 2016, after it was revealed that in 2013 and 2104 the previous government contracted loans, two of which were hidden, in the amount of US$2 billion (15% of the Gross Domestic Product of the country), and to date the country has not made it clear where most of that money went. (macauhub)