The Mozambican Government intends to broaden the Value Added Tax (VAT) base with the aim of increasing revenue collection, strengthening public finances and promoting sustainable and inclusive economic growth. This measure is part of the Medium-Term Fiscal Framework (CFMP), approved by the Executive and published recently.
Objectives and expected impact
The initiative aims to widen the VAT tax base, which could result in a significant increase in domestic tax revenue. In 2023, the broadening of the VAT base generated 72.6 billion meticais (approximately 1.1 billion dollars) for the State. It is forecast that, by 2027, this effort could yield a further 105 billion meticais (around 1.6 billion dollars).
Complementary measures
In addition to broadening the VAT base, the CFMP provides for the introduction of a reduced 10% rate of Corporate Income Tax (IRPC) in sectors such as agriculture, livestock, aquaculture and urban transport. This measure aims to stimulate growth in these sectors and promote economic development and job creation, which should result in a larger tax base.
Other measures include adjusting the harmonised system and incorporating customs duties on goods and services previously exempt from VAT. This is expected to improve efficiency in collecting taxes on imported goods and services.
Combating tax evasion
To combat tax evasion, the Government plans to strengthen and step up tax audits and inspections, as well as improve invoicing. Inspection of the stamping of alcoholic drinks and manufactured tobacco will be intensified to combat tax evasion on these specific products.
Implementation of new mechanisms
The implementation of a VAT regularisation mechanism for companies in the mining sector is also planned, aimed at increasing tax compliance and, consequently, tax collection. In addition, the process of paying taxes through mobile channels will be introduced, allowing taxpayers to meet their tax obligations independently, without having to travel to Collection Units.
