Revenue from Mozambican mega-projects growing

Tax revenue collected by the Mozambican state from the mega-projects under implementation in the country grew by almost 40 per cent in the first half of this year, according to Finance Minister Manuel Chang.

Speaking in Maputo on Friday, at the opening of a meeting of the Fiscal Council, held under the slogan “All Together in the Fair Taxation of Available Natural Resources”, Chang said that the mega-projects had contributed about seven per cent of all taxes collected in the first half of the year.

This was a growth of 38.6 per cent, compared with the taxes the mega-projects had paid in the same period of 2012.

“This result is satisfactory”, said Chang. “However, there is still a challenge to ensure that this sector pays increasing sums to reduce the deficit on the state budget”. In the revised 2013 budget, about 33 per cent of planned public expenditure is not covered by projected revenue. This gap must be filled by foreign loans and grants, and the issuing of domestic debt.

The first mega-projects were the MOZAL aluminium smelter on the outskirts of Maputo, and the exploitation of the natural gas fields in Inhambane province by the South African petro-chemical giant, Sasol. They have now been joined by an increasing number of mining and hydrocarbon concerns, notably in the Moatize coal basin in the western province of Tete, and in the Rovuma Basin, of the coast of Cabo Delgado province.

Total tax collection in the first half of the year was slightly less than 55.6 billion meticais (about 1.85 billion US dollars). This was 48.8 per cent of the revenue planned in the 2013 budget, before the Mozambican parliament, the Assembly of the Republic, voted to revise it upwards on Monday.

The amendment raises the ceiling on expenditure from 174.9 to 188.7 billion meticais. Expected revenue also rises (largely due to capital gains tax paid by mining and hydrocarbon companies on shares sold outside the country) from 114 to 120.5 billion meticais. This leaves a primary deficit of 66.2 billion meticais.

The revenue raised in the first six months of the year represented a nominal growth of 27.3 per cent on the January-June 2012 figure. Chang attributed this sharp growth partly to the capital gains tax.

The impact of the mining and hydrocarbon companies was analysed at a recent Finance Ministry meeting held in the southern province of Gaza. Although the meeting found the results of these projects positive, it urged the Mozambican Tax Authority (AT) to follow closely the implicit fiscal situation of these mega-projects. In particular, the AT should ensure that the corporate social responsibility actions of these companies should not be undertaken at the expense of their tax responsibilities.

The AT was implementing this instruction “with visible results”, said Chang, but he admitted that “reaching this objective requires building up the capacity of our human resources”.

He called for consolidating a training strategy, aimed particularly at tax auditing, the negotiation of contracts, and fighting against financial crime. Such a strategy was key for better control of the activities of mining and hydrocarbon companies.

Post published in: Africa News

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