Africa Coronavirus Economy Finance Government Mozambique

Mozambique to use 2019 capital gains tax income to finance deficit

The Mozambican government will use [part of] the balance of the capital gains tax levied in 2019 to ease “fiscal pressures” resulting from the Covid-19 pandemic, the Minister of Economy and Finance announced last Friday (April 10).

This balance currently amounts to around 37 billion meticais [around €504.1 million].

“We are going to take the 14 billion meticais [€190.8 million] to face fiscal pressures,” Minister Adriano Maleiane told deputies of the Assembly of the Republic’s Planning and Budget Commission (CPO) at a hearing on the State Budget (OE) and the Economic and Social Plan (PES) proposals for 2020 on Friday.

This figure is part of the US$880 million (€803.9 million) that the Mozambican executive had collected at the end of 2019 [in capital gains tax revenue] from the sale of Anadarko’s stakes in the Rovuma basin Area 1 in northern Mozambique to Occidental, which subsequently sold it to the French company Total.

According to Adriano Maleiane, the Mozambican executive last year already used 17 billion meticais (€231.6 million euros) of this capital gains income in expenditure provided for in the budget law and has meanwhile carried over to 2020 a balance of about 37 billion meticais (€504.1 million).

Government took US$248M from capital gains for “emergency expenses” – O País

Of this balance, 14 billion meticais will be used to fill the deficit in state revenue resulting from the deferment of taxes on capital requested by the private sector to address the impact of Covid-19, Maleiane said.

Last year, he continued, companies had asked for the postponement of some of their tax obligations which would deprive the state of about 30 billion meticais (€408.6 million euros) in income.

The executive, Maleiane pointed out, was using the amount with caution, having opened a special account at the central bank for the deposit and management of the sum. The money was “in a specific account at the central bank, although there is no obligation to do so. The money was not deposited in a single treasury account”, he said.

Source: Lusa via Club of Mozambique

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