Mozambique: Tax Authority Cuts Staffing

The Mozambican Tax Authority (AT) is taking the government call for austerity seriously, and has slashed the number of high paid senior staff on its payroll.

Speaking to journalists in Maputo on Friday, AT chairperson Amelia Nakhare said she has cut the number of general directors and assistant directors in the AT from 16 to nine, and a reduction to eight is in the pipeline.

Furthermore, wherever there are regional AT directors, the post of regional delegate is eliminated. The post of deputy regional director has also been eliminated.

Nakhare said that these reforms are intended to create “a more flexible and results-oriented structure”.

Nakhare also revealed that the country’s banks have not been paying their taxes on time. She said that last year the commercial banks failed to pay about two billion meticais (about 34.5 million US dollars, at current exchange rates). She said the banks have been notified and must pay this tax bill.

As for the capital gains tax owed to Mozambique by the Anglo-Australian mining company Rio Tinto, Nakhare said that all attempts to reach an amicable solution have failed, and the ball is now in the court of the three governments concerned (of Mozambique, the United Kingdom and Australia).

Rio Tinto took over the Australian company Riversdale Mining in 2011, paying 3.9 billion dollars. But the only assets possessed by Riversdale were its licences in Mozambique, particularly the open cast coal mine at Benga, in Moatize district, Tete province. The AT demanded the payment of capital gains tax, and Rio Tinto refused, on the grounds that the takeover had not been negotiated in Mozambique.

The purchase of Riversdale turned out to be an extraordinarily bad deal for Rio Tinto. The international coal price collapsed, and in mid-2014 Rio Tinto sold its coal assets in Mozambique for the derisory sum of 50 million dollars to International Coal Ventures Limited (ICVL) of India.

In the AT’s view that did not change the fact that tax was still owed on the 2011 takeover. Nakhare said that, with the failure of negotiations, the tax demand now went before the governments and their legal teams.

Source: Agencia de Informacao de Mocambique