27 February 2012

Mozambique: No Changes in Tax Regime for Mining

Maputo — The Mozambican government has guaranteed that the new mining law currently under discussion will have no impact on the tax system for mining and hydrocarbons.

Speaking to journalists on Friday, the Minister of Mineral Resources, Esperanca Bias, said the existing fiscal regime will remain in force. The draft of a new mining law is intended to simplify the procedures for obtaining mining licences, and to avoid creating obstacles for investors.

"The new law on mining will not touch taxation", Bias said. "There's no need to, since we charging the same tax rate that the rest of the region does. In the case of coal, that's three per cent of the revenue".

Furthermore, as soon as they obtain their licence, companies are obliged to pay the surface tax for the area granted to them. "It would be unfair to change the taxes", Bias said.

She pointed out that mining can be a risky activity, since it is not guaranteed that exploration will produce results. "If, at the end of the period of the exploration licence, the company has not discovered the resource it was looking for, it can request an extension, or hand back the licence, and all the information it obtained during the work it did then belongs to the state", she said. "It would be unjust for us to change the taxes".

Bias stressed that the government does want mining to benefit communities living in the areas where the resources are extracted. Thus the draft law specified that a percentage of the revenue the state earns from mining must go towards developing the local communities. The exact percentage will be specified each year in the state budget.

Bias added that the government is drawing up a national policy to regulate the social responsibility activities of investors. This will deal with such matters as the resettlement of communities when new mines are opened. This has become a serious concern following the accusation that the Brazilian mining giant Vale provided shoddy housing for the families moved to make way for its open cast coal mine in Moatize district, in the western province of Tete.

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