Tax cuts announced to stimulate economy

Maputo, 9 Aug (AIM) – President Filipe Nyusi on 9 August announced a dramatic cut in profit tax (IRPC) as one of a range of measures intended to stimulate the economy.

Under President Nyusi’s proposals, the basic rate of profit tax is cut from 32 to 10 per cent. The President also announced a cut in the basic rate of Value Added Tax (VAT) from 17 to 16 per cent. All imported goods intended for agriculture or electrification will be zero rated and thus pay no VAT.

President Nyusi announced the measures in Maputo during a ceremony to launch the Economic Acceleration Measures Package (PAE), a total of 20 measures to stimulate the economy. Upon hearing the announcement, the audience, consisting largely of businesspeople, burst into applause.

President Nyusi hoped these such tax incentives will increase investment in agriculture, aquaculture, and urban transport.

The President pledged to eliminate unnecessary red tape, particularly to improve the efficiency of the country’s airports and transport corridors, while the entry visa regime will be eased. He promised to waive the visa requirement for citizens of all countries that are not regarded as a likely source of illegal immigration. “Why should we be bothered about a brother from Cape Verde?”, he asked.

Investors will be granted visas for longer periods, President Nyusi said. Such visas would be valid for 90 rather than 30 days. For the first time, mixed visas will be issued, covering both tourism and business. He promised that visa applications could be made online, and the visas then collected at the point of entry.

President Nyusi declared his determination to improve the efficiency and effectiveness of the public administration. He wanted to see a public administration “that does much more with much less”.

The President also confirmed that a Mozambican Sovereign Wealth Fund will soon be set up, essentially to handle income from hydrocarbons “in a transparent way”. This would not be “a storehouse of money” but would serve the Mozambican future.

The President described the package as “deep and daring measures” that would be implemented over two years, and would require “collective support from the government, parliament and the judiciary”.
(AIM)