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Executive Plans to Broaden VAT Base to Increase Revenues to Over $1.6bn by 2027

Executive Plans to Broaden VAT Base to Increase Revenues to Over $1.6bn by 2027

The government plans to broaden the Value Added Tax (VAT) tax base in order to increase revenue collection and, at the same time, strengthen public finances, promote sustainable and inclusive economic growth and ensure efficient management of state resources.

The document entitled “Medium Term Fiscal Scenario (CFMP)” approved by the Executive and released on Tuesday, June 18, by Lusa, explains that the decision comes as part of the continuing effort to mobilise domestic revenue, recalling that in 2023, the measure to broaden the VAT base earned the state 72.6 billion meticais (1.1 billion dollars).

“The continuation of this endeavour seeks to broaden the VAT tax base, which can lead to an increase in domestic tax collection, contributing to an increase in tax revenue, with the expectation that by 2027 it will be possible to collect an additional 105 billion meticais in revenue (1.6 billion dollars),” he adds.

According to the CFMP, the Executive plans to “introduce a reduced rate of 10 per cent for Corporate Income Tax (IRPC) on agricultural, livestock, aquaculture and urban transport activities”, stressing that “by stimulating growth in these sectors and promoting economic development and job creation, it is expected that there will be an increase in economic activity and, consequently, an expansion in the tax base”.

Another measure is the “adjustment of the harmonised system and incorporation of customs duties on goods and services that are no longer exempt from VAT, which could result in an improvement in the efficiency of tax collection on imported goods and services”.

In the document mentioned by Lusa, there are also plans to implement the VAT regularisation mechanism for companies in the mining sector, in order to “increase tax compliance” in these activities, “which will result in greater tax collection”.

The document also establishes measures “to combat tax evasion”, namely by reinforcing and intensifying audits, tax inspections and invoicing, and also intends to focus on “intensifying inspections of the sealing of alcoholic beverages and manufactured tobacco”, to combat tax evasion on specific products.

Another measure involves starting the process of paying taxes via mobile channels, to “allow taxpayers to fulfil their tax obligations autonomously, without the need to go to the Collection Units”.

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