18 January 2018

Mozambique: New Reference Prices Fixed to Discourage Wood Exports

Maputo — The Mozambican Tax Authority (AT) has dramatically increased the reference price (on which taxes are paid) for the export of processed wood, reports Thursday's issue of the Maputo daily “Noticias”.

The purpose of the move is clearly to halt deforestation. The export of unprocessed logs is already banned, and the AT is now moving to make the export of processed wood more expensive. The move may also result from a suspicion that exporters have lied about the true value of their wood, presenting the authorities with phoney invoices.

The timber operators are outraged. Narciso Gabriel, chairperson of the Association of Timber Operators of Cabo Delgado, claimed that the AT has increased he reference price by 300 per cent. However, the examples he gave show how poor his grasp of mathematics is.

Gabriel said that the reference price for a cubic metre of the precious hardwood known as umbila (bleedwood) has risen from 17,500 meticais (297 US dollars) to 50,000 meticais. This is an increase, not of 300, but of 186 per cent. The mathematical mistake, almost certainly a deliberate exaggeration, was not corrected by “Noticias”.

He protested that the new reference prices are retroactive, and cover timber that was logged last year. He believed that if the government wanted to increase taxes, then it should have issued reference prices only valid for the 2018 logging campaign.

“We all know that in the months of December to March only wood from the previous logging campaign is exported”, Gabriel said. “Why are they increasing the rates precisely in this period?”.

He said that timber operators have commitments already signed, mostly with Chinese exporters, based on the 2017 reference prices. He did not see how they could now approach the exporters and tell them the price has risen because of a government decision.

One of these exporters, Lee Shee Sin, of the company Parl Trading, claimed that, at the prices now laid down by the AT, a 21 cubic metre container of wood will have to pay 1.05 million meticais rather than the previous 367,500 meticais - which is also a 186 per cent increase.

“This rise is unjust”, he protested. “I wouldn't like to believe that the government wants to abolish the timber business but the prices practiced lead me to believe that it does indeed want to ban the timber trade”.

The Cabo Delgado association is asking for a meeting with the Minister of Land, Environment and Rural Development, Celso Correia, in an attempt to overrule the AT's decision.

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