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State revenues from extractive industries increasing in Mozambique

9th March 2018

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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The extractive industry – oil, gas and mining – now provides the Mozambique State with 4.1% of its revenues from taxation. This figure was released by the country’s director-general of tax, Augusto Tacarindua, at a recent seminar in Maputo on taxing extractive industries. In the past, the sector had accounted for only 0.4% of the country’s tax revenues.

He noted that the oil and gas industry had recently made a record contribution to tax revenues and that these developments reflected the growing share of the extractive sector in the country’s gross domestic product. It also meant that the overall tax revenues of the Mozambique State were increasing.

The purpose of the seminar, which was jointly organised with the US-based International Tax and Investment Centre (ITIC), was to bring together the different actors in the extractive sector – tax administration, taxpayers (companies), civil society organisations, academics and other specialists in the sector, including specialists in comparing tax regimes around the world.

The seminar ran for two days and was specifically focused on taxing the oil and gas industry. On the side of the State, it was attended by officials of the Mozambique Tax Authority, the Ministry of Economy and Finance, the Ministry of Mineral Resources and Energy, the National Petroleum Institute and the Bank of Mozambique.

“The country has been making reforms to legislation applicable to the sector, with a view to creating convenience for the investors and adapting it to international best practice, [and] to a just and transparent sharing between the operators in the extractive sector and the State,” stated Tacarindua. Dan Witt, of the ITIC, affirmed that it was important that the country developed more transparent laws to protect the national patrimony for future generations.

Regarding the mining industry and tax, Maputo daily ‘O País’ also, but separately, reported that the Mineral Resources and Energy provincial director for Zambézia province, Almeida Manhiça, had stated that Chinese mining company Africa Great Wall Mining Development Company had paid taxes totalling a little more than $1.4-million over the past four years. He added that the miner had paid more than 25-million meticais (about $400 000) in taxes just this year.

Africa Great Wall Mining Development has been operating in Zambézia since 2013, mining heavy mineral sands. According to Manhiça, it has so far extracted and exported close to 500 000 t of product, earning the company foreign currency revenues of just over $24-million over the past four years. He added that the business was investing in the construction of a floating dock on the banks of the Muendene river to export its output. Previously, the company used ferry boats (‘ferribotes’) – presumably, barges – to transport its product to the coast for transshipment and export. This process added $6.00/t to the mine’s processing costs.

Meanwhile, in the country’s Niassa province, the provincial authorities have stated that gold production last year was 86.2% higher than originally planned, Mozambique news agency AIM has reported. Output of the precious metal came to 93.1 kg, instead of the expected 50 kg. (Production of the metal in the province seems to be entirely in the hands of artisanal miners.) The provincial authorities state that the higher production figures are the result of an improvement in its information collection methods, actions to reduce tax evasion, and increased oversight in the gold-producing area.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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