Mozal continues to benefit from large tax incentives in corporate income tax (IRPC), value added tax (VAT) and royalties.
Analysts have however called for review of the economic benefits of the megaproject, as government face the biggest financial and economic crises.
The International Monetary Fund (IMF) has also called for elimination of the incentives.
Operating since 1998 in Maputo province, the aluminium smelter was the first major project to attract direct foreign investment (FDI) in the independent Mozambique.
President Joaquim Chissano’s regime extended immense facilities and tax incentives to the project, which saw commencement of a free zone, only for the company to operate together with their suppliers.
Tax benefits began at the rate of taxation, which was determined in one percent of gross revenues from quarterly sales volume, in accordance with Decree 45/97, total exemption from IRPC, exemption from Industrial Contribution, exemption from Urban Property Tax as well as of any other state import on their real estate.
However, records from the General State Accounts of the last few years, indicate that the megaproject has obtained the greatest profits than any other company in the country, and has also not paid the VAT and royalties.
Economic experts feel that the tax exemptions need to be eliminated in order to support further urgent consolidation of public finances.
Quizzed by @Verdade, Mozal stated that it had paid the annual taxes required by applicable law, specifically decree 45/97 of December 23.
In addition Mozal’s foreign suppliers, which represent more than 70% of its services, were also exempt.
This comes at the backdrop of the company importing even local available services and goods, as decisions made in Maputo.
Several academic studies have found that over the last 20 years few Mozambican companies have been able to become suppliers of this smelter which basically imports its raw material and exports aluminium.
In 2015, to minimize its losses, Mozal’s majority shareholder, BHP Billiton , passed its participation to a new multinational created in 2014, denominated South32.
The governmental position of maintaining the fiscal benefits of megaprojects goes against the IMF’s position, whose recommendations are usually appreciated positively by the successive government of the Frelimo party.
“The position of the Fund on tax exemptions in general (including VAT) is that they need to be eliminated in order to support further urgent consolidation of public finances,” IMF told @Verdade.
