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Mozambique: Tax Exemption to Small Companies Suggested
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Agencia de Informacao de Mocambique (Maputo)
16 April 2008
Posted to the web 16 April 2008
Maputo
Economist Jim Lafleur, the economic advisor to the Confederation of Trade Associations (CTA), suggested that small and medium-sized companies in the country should be exempt from tax, as a means to increase their contribution in the fight against absolute poverty through the creation of more jobs.
He further explained that besides the heavy burden of taxes they have to bear, these companies also have to face corruption AND RED TAPE.
He revealed that this group of companies contribute between 15 and 20 per cent to the Gross Domestic Product (GDP), compared with about 26 per cent of the big companies, some of which are enjoying tax exemption.
Speaking of corruption and red tape, Lafleur said that this kind of phenomenon, that the big companies face in public administration and in the implementation of policies, the small and medium-sized companies live with it every day in different services, in the licensing of commercial activities, the police, the customs services and tax authorities, among others.
'One of the big problems in the fight against corruption is not the lack of laws, because they do exist. The problem is that there are too many laws and regulations', he said.
He questioned the need to have 120 types of stamp taxes, about 2,000 types of permits, and one has to go about 37 tax payments. 'Why require a minimum capital and the opening of a bank account to register a company?' 'The Portuguese rulers had this requirement because they wanted to make it difficult for black people to have companies', he explained.
Lafleur went further to mention other constraints to the development of small and medium-sized companies, including some aspects of the Labour Law, particularly concerning trainees. 'This law is not clear, and needs simplifying'.
He added that the most important policy that is lacking in this country is one for the creation of jobs, through the creation of an environment to attract investments, and with clear laws, eradicating corruption and red tape. 'Simplifying laws and eliminating red tape will go a long way into fighting against corruption', he said.
Insisting on the suggestion to exempt small and medium-sized companies from tax, he explained that 'the most important thing in the country now is the creation of new jobs', and 'when someone buys goods has to pay the Value Added Tax (VAT), but he does not receive this money back. The government must simplify procedures'.
The small companies employ 200,000 people, which accounts to 57 per cent of the country's workforce, while the medium-sized companies employ 70,000 (23 per cent) and the big companies offer 60,000 jobs (20 per cent).
In terms of value of business, the small companies represent 24 per cent, the medium-sized, 17 per cent, while the big companies represent 59 per cent.
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On the other hand, the small companies, with no more than 9 workers each, represent 89.5 per cent of the total number of companies in the country, while the big companies, with a workforce of more than 99 employees, represent only 1.4 per cent.
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| Copyright © 2008 Agencia de Informacao de Mocambique. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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