28 November 2012

Mozambique: Taxation in the Agricultural Sector

Maputo — On November 27, the CTA organized a seminar followed by a discussion on the preliminary results of the study entitled "Taxation in the agricultural sector in Mozambique", funded by USAID / SPEED.

The study, made by Jo Beth Mertens and presented by the economic adviser of the CTA, Hipolito Hamela, presents taxation in agriculture with an emphasis on exit tax of 20%, the absence of documents, such as invoices and receipts issued by the peasants for tax purposes, the existence of numerous peasants without Individual Number of Tax Registration (NUIT) that are outside the tax system.

According to the study, the requirement of "documented expenses" for tax purposes and the exit tax are the two major problems that negatively affect the agricultural sector. Several recommendations were made, including:

  • Do not require registration to the regime of Simplified Tax for Small Taxpayer (ISPC) from producers having a turnover of less than 36 monthly minimum wages, highest minimum wage as at 31 December of the year preceding that to which the activity refers.
  • The elimination of the simplified VAT system, rendered useless by the existence of the ISPC, because in reality, ISPC replaces the simplified VAT system.
  • Changing the VAT Act with a clear indication of the products that are exempt and those that apply a zero tax rate.

The representative of the Tax Authority noted that it was important not to encourage measures to promote non-tax registration and noted that 24,000 "disseminators" had been trained and certified by the Tax Authority to disseminate tax information in the districts.

Questions have been raised about Law of Freight Transport, which requires among other things that the carrier, buyer and seller of goods hold a NUIT; VAT and the application of high customs tariffs on imported goods of prime necessity in the agricultural value chain, such as milk substitutes and food for animals, prevent Mozambican agriculture to be competitive.

In conclusion, it was emphasized that these fiscal problems were not limited to agriculture but involved different sectors of the economy.

The preliminary report of the study is available

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