High Commission of the Republic of Mozambique

Mozambique to allocate ten per cent of tax on mining revenues to support communities

Maputo 20 Jul (AIM) – Mozambique will allocate ten per cent of tax revenues from mining and hydrocarbon production to structuring projects in the provinces and to supporting local communities.

According to a decree approved by the Council of Ministers (Cabinet), 7.25 per cent of the revenue collected from the Mining Production Tax and the Petroleum Production Tax will be allocated to the provinces and districts, “namely for structuring projects”, and 2.75 per cent for “local communities.”

“The criteria for allocating and managing the percentage of revenues earmarked for the development of provinces, districts and local communities where mining and hydrocarbon projects are being implemented need to be regulated”, reads the document.

By “structuring projects”, the Mozambican Government means “those that boost the productive sector, aiming at the collective development of a given region, under the responsibility of the provincial authorities”. This could cover technical and professional education, agriculture, including production support infrastructures, dams and irrigation, land use planning, roads, bridges and electrification, water and sanitation, among others.

The financing of projects designed and selected to support local communities must result from the coordination of the Local Advisory Council, "according to principles of transparency, participation and relevance to the District Development Plan".

In 2020, Mozambique expected to receive 96 billion US dollars in revenue over the lifetime of natural gas production from the Rovuma basin, off the coast of the northern province of Cabo Delgado, which is almost seven times the country’s annual Gross Domestic Product (GDP). But the islamist terrorist attacks that have struck much of Cabo Delgado have put major investments on hold.