Mozambique supercharges control of its Natural resource exports
Mozambique’s government is implementing measures with the potential to generate hundreds of millions of USD annually, enhancing efficiency, combating smuggling, and reducing fiscal risks.
Mozambique has taken a significant step forward in bolstering its economy with a new fiscal measure aimed at better control of its natural resources’s wealth as part of Filipe Nyusi’s PAE (Economic Acceleration Package).
The country is implementing measure 6 of the PAE package, which aims to strengthen the supervision of natural resource export operations.
The measure will ensure greater efficiency in the taxation of exports by implementing enhanced control measures. It will also address the under-invoicing of exports, combat smuggling, and reduce fiscal risks by introducing independent controls and supervision of the export process safeguarding valuable resources to contribute to the country’s economic growth.
Under-invoicing of exports, a practice where the true value of exported goods is intentionally understated to minimize tax liabilities, has long plagued virtually every African economy with significant natural resources.
This measure is a decisive response to this challenge as it tightens regulations and closes loopholes in export operations. By ensuring better control of quantities, specifications, and associated values, the government intends to put an end to under-invoicing and secure the country’s rightful share of the revenue from natural resource exports.
A joint ministerial decree from the Minister of Economy and Finance and the Minister of Mineral Resources and Energy has been published and aims precisely to mitigate and combat the under-invoicing of exports, a practice where the real value of exported goods is intentionally understated to minimize tax obligations.
The measure is also part of the latest fiscal consolidation measures being implemented by the Government.
As part of the measure, an international tender was launched to select an independent entity that will oversee the quantities and specifications of goods exported by mining companies, aiming to reduce the risk of manipulation to fraudulently reduce tax obligations.
“We have witnessed on our national ports, 1000 tons of a mineral with a certain specification and declared price leaving on a ship, but mysteriously, 1500 tons of a different, more valuable mineral with a much higher specification and price being declared at the destination port,” explained a source at the Ministry of Economy and Finance.
The tender has reached its final evaluation phase, and the selected company is expected to be announced in the coming days, thus completing the cycle of robust measures aimed at a more vigorous and effective approach to reduce fiscal risks and combat tax evasion in the exportation of national resources.
“By ensuring better control of quantities, specifications, and associated prices, the government aims to put an end to tax evasion and secure its fair share of the revenue from natural resource exports,” concluded the source.
The introduction of independent controls and supervision in the export process is aligned with the track record of PAE (Economic Acceleration Package) as it takes proactive steps to safeguard the economy, protect national resources, and promote transparency and accountability.
The measure will support the fight against smuggling, a practice that has not only undermined the country’s economic potential but also fueled illicit activities.
By intensifying efforts to curb smuggling, the country will ensure that they contribute to sustainable development and the well-being of its people.
The introduction of independent controls and supervision in the export process will act as a strong deterrent, signaling the government’s commitment to combating illegal activities.
While this fiscal measure presents a promising pathway forward, its successful implementation will be crucial. The government must ensure that the newly introduced controls and supervision mechanisms are adequately resourced, staffed with competent personnel, and supported by robust legal frameworks.
To date, the group coordinating the implementation of the PAE package has been taking an inclusive approach involving various stakeholders, such as industry representatives, civil society organizations, and international partners, that have proven vital in ensuring the effectiveness and sustainability of all measures implemented to date.
This measure holds the potential to deliver long-term benefits for the country’s economy, its people, and the environment. Through diligent implementation and ongoing evaluation, this measure could serve as a model for neighboring countries such as Zimbabwe, seeking to strengthen their fiscal systems, enhance transparency, and harness the full potential of their natural resources for the benefit of their citizens.
The implemented measure approves the regulation of the reference price for the determination of the value of mineral products, as provided for in Law No. 28/2014 of September 23, amended and republished by Law No. 15/2017 of December 28, concerning the specific regime of taxation and tax benefits for mining activities.
