The Council of Ministers in Mozambique, on 30th of May 2017, approved the proposed changes to the special tax regimes applicable to Petroleum and Mining Operations. The following step is for the draft bill to be sent to Parliament for approval and promulgation by the President. The legislation is expected to enter into force from 1st of January 2018.
The change refers to the tax stability regime initiated by the new law in 2014 in case of the tax regime for petroleum operations, where it describes that the tax stability period starts from the date of the petroleum rights assignment and for 10 years from the beginning of the commercial production. In addition, 50% reduction of the petroleum production tax applicable to products used for the development of the domestic industry has been removed. The change also states that tax constancy becomes effective with proof of realization of investment equivalent to US$100 million.
In case of Mining operations, the change states that tax stability becomes effective with proof of realization of investment equal to US$5 million and it does not apply to Surface Tax. The changes to the tax regime related to mining operations also include the increase of the mining production tax from 1.5% to 3% levied on sand and gravel. Additionally, 50% reduction of the mining production tax applicable to mining products used for the development of the domestic industry has been removed. Again, the Surface Tax regarding mining businesses for mineral water is 85,000 MT/per mining title instead of the 85,000 MT/ha.