Mozambican government plans additional tax on rents and broadening of VAT base

The Mozambican government has made a commitment to the International Monetary Fund (IMF) to broaden the VAT base and apply an “additional tax” to rental income, according to official document.
“We are moving forward with the fundamental fiscal reforms needed to promote growth and achieve our debt reduction objectives,” reads a letter sent to the IMF, signed by the Minister of Economy and Finance, Max Tonela, and the Governor of the Bank of Mozambique, Rogério Zandamela.
Addressed to the managing director, Kristalina Georgieva, dated December 19, the letter formalized the request for approval of the third evaluation of the IMF’s assistance programme for Mozambique, and release of the third tranche of support.
“With regard to VAT reforms, we are fully implementing the elimination of exemptions and zero rates identified through the prior action of 2022 by the end of 2023,” the letter adds.
It also points to the “effort to mobilize domestic revenue”, which “includes broadening the VAT base”, as well as an “additional tax on personal property rental income”.
The government is also committed to “aligning the extractive industry’s reference price with international prices in line with best practices, supported by tax administration measures”.
“Non-tax policy measures include increasing the concession rate for for-profit public companies,” it also states.
On January 8, the IMF approved the third assessment of the assistance plan for Mozambique, allowing for the “immediate disbursement” of a new tranche of 60.7 million dollars (55.4 million euros) for budget support.
In a statement released earlier, the IMF said that the executive board had “concluded the third review” of the implementation of the 36-month Extended Credit Facility (ECF) program in Mozambique. With this third tranche, total disbursements to Mozambique under this ECF amount to around 273 million dollars (249.2 million euros).