The Government intends to reduce the current Corporate Income Tax (IRPC) rate from 32% to 10% for large agricultural operations in order to stimulate production.
This information is included in the Economic Recovery and Growth Plan (PRECE), approved on September 16 by the Council of Ministers, which clarifies that the tax reduction does not represent a significant loss of revenue for the State but will encourage more competitive investments and formalization of companies in the sector.
According to the document prepared by the Ministry of Finance and cited by Lusa, the measure covers large commercial operations in agriculture, livestock, hunting, forestry, and fishing. “Agriculture is considered the foundation of Mozambique’s development, but its contribution remains limited.”
“As part of promoting sector competitiveness, it is also expected to reduce the withholding tax from 20% to 10% on foreign entities providing services to domestic agricultural companies, in addition to eliminating the 20% withholding tax on interest from external financing for agricultural projects,” the document states.
Other measures included in PRECE provide fiscal incentives for new investments in “key sectors” over the next five years. “These tax incentives cover new private initiatives in agriculture, agro-processing, manufacturing, tourism, and urban transport, aiming to expand installed productive capacity. The measure will increase the share of commercial farms from the current roughly 1% to 10% by 2035,” it adds. The plan also includes a reduction in energy taxes for the agricultural sector and an exemption from Value Added Tax (VAT) for agricultural production and irrigation inputs. The Government also aims to facilitate access to agricultural inputs for family farmers, particularly households affected by adverse climatic events in the northern region of the country.
“This action will help improve productivity per hectare of food products, and also includes the introduction of an agricultural insurance program to protect small farmers against losses, with subsidies covering up to 70% of the insurance cost, to be implemented by the Ministry of Economy through the state-owned insurance company Empresa Moçambicana de Seguros (Emose), in partnership with the World Bank.”
Data indicates that Mozambique has more than 4.5 million agricultural holdings, the vast majority of which are small-scale, operating on less than two hectares.
Source: Diário Económico
