The Mozambican parliament approved today revisions to its tax code and fiscal reforms as part of the PAE – an economic stimulus package launched by the country’s President last August.
Mozambique’s Minister of Finance and Economy, Max Tonela, presented the proposal for the law amending the previous legislation that establishes the principles of organization of the country’s tax system including an adjustment to include small taxpayers in the simplified tax law.
Chief among the changes was the Specific Consumption Tax (ICE) levied on special consumer goods, requiring differentiated treatment for different reasons such as goods considered harmful to public health and the environment, superfluous or luxury items, among others that for extra-fiscal reasons.
Alcoholic beverages, non-alcoholic beverages containing added sugar or other sweeteners, tobacco products, motor vehicles, perfumery products, cosmetics, jewelry, and works of art are all taxed under the ICE.
The approved changes to ICE will reduce fiscal burden through the adoption of the customs value as a taxable amount, instead of the incidence added to customs duties, implementing the principle of Tax Justice.
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It will set a maximum tax limit of 30% to all goods subject to ad valorem taxes – with the exception of ethyl alcohol, alcoholic beverages, manufactured tobacco, and its derivatives, in order to guarantee a balance between the tax burden and the facilitation of the legitimate trade;
It will extend the benefit of reducing ICE rates to new malt beer factories, to other alcoholic and non-alcoholic beverages produced in Mozambique, in the first three years of operation of manufacturing plants, as a policy to stimulate the national industrialization process;
The changes will also extend the benefit of reducing ICE fees to breweries that use domestic raw materials, as a measure to encourage the development of value chains in agriculture and reduce ICE rates on hygiene and cleaning products from 30% to 10%, making them more accessible to the majority of the population in order to promote public health;
In addition, the approved legislation will extend ICE taxation on fuels – instead of taxation based on a fuel tax, it now follows good international practice and thus allows greater fiscal efficiency and plastic articles (PET), such as bottles, demijohns, and flasks, in the context of environmental protection, with provision for offsetting the tax to be paid, in cases where the quantity is proven to be recycled locally.