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CTA Study Reveals “High Tax Burden Threatens to Erode Profits of Mozambican Companies”

CTA Study Reveals “High Tax Burden Threatens to Erode Profits of Mozambican Companies”

A study by the Confederation of Economic Associations of Mozambique (CTA) finds that the high tax burden threatens to annul the profits of companies, affect business viability and competitiveness.

“The results show that the current tax burden on Mozambican companies is 36.1% and is above that which exists in most developing countries,” says the study, “Tax Burden in the Business Sector in Mozambique,” published on Wednesday, February 8, by Lusa.

According to the analysis, the weight of taxes and fees threatens to annul the profits of companies, if the current growing trend continues and reaches 43% of the commercial results of economic units.

This increase will also put at risk the volume of revenue collected by the State, due to the slowdown in business activity and competitiveness, the assessment points out.

The study also criticizes the narrowing of the tax base in Mozambique, pointing out that the collection of taxes and fees is concentrated in only 19.3% of taxable entities, including individuals and legal entities, with a significant majority of 80.7% escaping tax obligations.

CTA considers that there is a “federalization” in the structure of taxes and fees in Mozambique, which consists in the proliferation of entities that create fees independently, without authorization from supervisory bodies.

“This conclusion is substantiated by estimates that show that of the total tax contributions, the industrial sector channels 59.4% to the Tax Authority and the remaining 49.6% to other state entities,” the text notes.

The tax policy in force in the country, the text continues, is more complex and difficult to control, harming the private sector.

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According to the analysis, companies are also forced to deal with situations that constitute double taxation, as happens in the area of transport, which is subject to two taxes: one on circulation and another on vehicles.

CTA defends a reflection on the introduction of new taxes and fees, given the current spiral in the tax burden borne by companies. Tax policy should be centralized in the Ministry of Economy and Finance, avoiding the dispersion of taxes among several entities.

It is also recommended that the principles of Value Added Tax (VAT) deduction be reviewed with the aim of reducing this burden.


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