Mozambique’s Tax Authority has rejected the idea of a cut in taxes levied on the country’s resources sector in the short term. However Tax Authority president Rosário Fernandes told the Macauhub news agency that there was the possibility of “exceptional and case by case” reductions.
This follows an appeal, in late May, by the country manager for Mozambique for Brazilian mining major Vale and CEO of Vale Mozambique, Pedro Gutemberg, for Maputo to assist the coal sector by temporarily reducing taxes. This, he argued, was because logistics problems were damaging the competitiveness of the country’s coal industry. He cited rail and shipping costs, as well as a drop in coal prices, as the causes of the Moatize operation’s $44-million loss during the first quarter of this year.
In a response, made during the first week of July on the sidelines of a conference in Maputo on transparency in the resources sector, Fernandes observed that “the sustainability of the entire machinery of the State budget” did not allow for the “implications” of such a cut. “Vale took a business initiative to [request a tax cut], which is fair enough, but the law is characterised by its universality, equity and tax justice. “This means that the law is valid for everyone.”
However, the Mozambique government could “appreciate [particular] situations” which could apply to a reduction in value added, income or company taxes. “In very specific situations, you could have a timely review and this happens regarding both taxes and earnings,” he noted. “In the cases of the sugar companies, soap and the oils companies this has happened and they do not pay the 32% [company tax]. What the State has to determine is the time-frame for the application of this exception, which is normally five years.”
At the same conference, a representative of the Mozambique nongovernmental organisation (NGO) Centro de Integridade Pública (CIP – the Centre for Public Integrity), which was one of the organisers of the conference, Fátima Mimbire, told the Mozambique news agency AIM that resources companies operating in the country should make available information regarding their payments and contracts. This would increase transparency in the sector.
Currently, she affirmed, neither local nor international companies provided significant inormation for the public. “In Mozambique, there does not exist any law or legal framework which requires the publication of payments made to the State by resources companies. They present accounts directly to government through its institutions.”
In her presentation to the conference, Mimbire argued that resources companies should be obliged to publish their reports in the country’s national newspapers as well as on their own websites. “Unhappily, this does not happen,” she pointed out. “It is important that this [information] should be published, so that the people have information about the patrimony of the companies. The reports that are published at international level don’t contain specific information about Mozambique. “This information does not permit us Mozam-bicans to use these documents to obtain more details of what is happening.”
Subsequently and separately, the CIP criticised the statistics made avilable by the Mozambique government to the Extractive Industries Trans-parency Initiative (EITI) for its latest report on the country, published in April and covering the year 2011. The NGO pointed out that the official statistics supplied to the EITI differed considerably from other official statistics regarding the mining sector in 2011. These alternative statistics are found especially in the Social and Economic Plan, the Budgetary Implementation Report and the State General Accounts for that year.
For example, in its submission to the EITI the Mozambique government stated that it had collected $110.2-million in taxes (at the official exchange rate in 2011) from 36 mining and hydrocarbons companies which made payments of at least $18 000 each. But the Mineral Resources Ministry reported 144 companies active in the sector. Similarly, government statistics given to the EITI state that Vale produced one-million tons of coal at its Moatize operation that year. But the mine only started operations in May 2011 and Vale’s report to the EITI gave production figures for that year of 617 000 t.