Mozambique: Bill On Fiscal Benefits for Mining Companies

Mozambican Finance Minister Manuel Chang on Tuesday introduced into the country's parliament, the Assembly of the Republic, a bill revising the fiscal incentives for mining and oil activities.

The bill complements the new taxes on oil and mining companies in bills that were tabled on Monday.

Chang said the bill "rationalises" the tax breaks offered to investors in these areas. It eliminates all exemptions or reductions in direct taxes (income tax or corporation tax).

Investors are offered exemption from customs duty and Value Added Tax (VAT) on the machinery and equipment imported for their activity, and which are listed in an appendix to the bill.

These exemptions will only last for five years, as from the date of the start of mining operations, or of the approval of petroleum development plans.

To qualify for these benefits, the businesses concerned must have a mining or prospection authorisation, and must be registered for tax purposes.

Their accounts must be properly organised, in line with the income and corporation tax codes, and they must never have committed tax offences.

The Mozambican Association of Mining Operators objected to this, and wanted past offenders to become eligible for tax benefits. It also wanted to suppress the reference to organised accounts.

The government rejected such pleas since it regarded a clean record and proper accounts as "indispensable" pre-requisites for fiscal benefits.

The clarity of this bill should put an end to protracted negotiations over tax breaks. Chang was confident that this would not drive investors away, since "the decision to invest is based on a number of factors, such as political and economic stability, which is today a reality in our country".

The law will not be retroactive, and fiscal benefits that companies negotiated prior to this bill remain in effect.

Source : allafrica.com