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VAT in the Agriculture Sector in Mozambique
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VAT in the Agriculture Sector in Mozambique

Value Added Tax (VAT) in the Agriculture Sector in Mozambique

Due to the importance of the agricultural sector in Mozambique the government has approved several policies to support the development of this sector including the VAT exemption for agricultural products. However, it seems that for the private sector is not clear how the fiscal system works in this sector including the VAT exemption. Moreover, the Mozambican Parliament has recently approved a bill that alter the Value Added Tax (VAT) code, exempting from VAT some imported commodities that constitute raw materials for the animal feed industry such as maize and soybean. For some segments of the society the impact of such an exemption on domestically produced maize and soybean can be negative.

This study - a SPEED response to a CTA request - reveals what is the VAT regime for agricultural products in Mozambique and how it works in practice for small, medium and large enterprises. The study also presents the main implications of waiving the VAT on imported maize and soybean for the competitiveness of domestically produced maize and soybean and for the different sectors including animal feed and food industry. The study conclude that this exemption cannot be effective on an environment where most of the domestic farmers are not registered and consequently have no fiscal number (NUIT) and cannot produce a legal document to be presented to the Tax Authority. Also, 82% of maize and soybean farming is done by family producers which fall under the Simplified VAT Regime. Under this Regime there is no deduction of the VAT paid on inputs. Additionally, the reimbursement process is difficult and time consuming. Thus, under this environment VAT is most of the time a cost for the farmers and for the food and animal feed industry.

This is a Draft Report based on the first assessment done in Zambezia, Nampula, Sofala and Manica provinces. We expect the reader to make comments & recommendations to be included on the Final Report.

There will be a seminar in Maputo on March 06, to present findings of the report and discuss next steps. Please contact rosario_marapusse@speed-program.com for more details.

You are invited to participate!

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