December 2, 2010

Assembly approves tax amnesty

The Mozambican parliament, the Assembly of the Republic, passed unanimously a government bill for a limited tax amnesty. The bill will allow any person or company who owes back taxes to pay the money by the end of 2011, without any fines, interest payments, or legal costs.

Introducing the bill, Finance Minister Manuel Chang said that urgent measures were needed to deal with the current situation in which 24 fiscal units are chasing 169,000 tax debtors. There are not enough days in the year for the fiscal courts to handle this avalanche of debt. Chang believed that the bill would bring advantages both to the tax administration and to the taxpayer. The treasury would recover some of the back taxes, while the taxpayer would be able to pay off the debt "in a softer way", in a procedure that Chang promised would be speedy and free of red tape.

The risk for the treasury with the current backlog is that tax debts expire after ten years. Clever tax evaders know that, and just wait for the ten years to pass, hoping that the fiscal courts will not catch up with tem in that period. Chang's assumption is that a good number of the debtors are essentially honest and will jump at the chance to pay off their debt, if there are no fines or charges attached. This will ease the backlog and make it easier to chase the persistent tax evaders.

Chang's projection is that the bill would allow the Treasury to recover about 751 million meticais (21.3 million US dollars) that otherwise might be lost for ever. (AIM)

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