Taxation in the Agricultural Sector in Mozambique - An Analysis of VAT Exemptions and Other Tax Issues
The requirement of “documented expenses” for income tax purposes and the “taxa liberatoria” are the two biggest tax issues adversely affecting the agricultural sector. The income of thousands of smallholder farmers and the agriculture production of these farmers could be protected by dealing with this issue. If these issues are not dealt with soon, the market for small farmers could drastically diminish. If these problems are not addressed, it may become cheaper for firms to import agricultural products than buy from local farmers. In fact, there are reports that maize is now exported to Malawi where the produce is properly documented and then it is re-imported into Mozambique. This arises because buyers cannot legally buy from unregistered farmers without paying substantial taxes, either through the 20% “taxa liberatoria” or through fines that increase costs 67 percent.