Africa-Press – Mozambique. The Confederation of Mozambican Business Associations (CTA) has asked the government to revoke the new regulations imposing fiscal stamps on alcoholic drinks and tobacco products.
Speaking at a Maputo press conference on Friday, CTA economist Roque Magaia said the new regulations would prove a heavy burden on businesses, and, far from increasing the Treasury’s tax take, it would reduce the tax paid by drink companies.
Magaia said the ministerial diploma comes at an untimely moment, when companies, because of the Covid-19 pandemic, are facing enormous difficulties in keeping their operations going and their workers employed.
The battle over fiscal stamps has been under way for the past three years, and essentially involves beer.
The first diploma on fiscal stamps dates from 2016, and since then fiscal stamps have been introduced successfully on cigarette packets and on wines and spirits.
But putting stamps on cans and bottles of beer is much more challenging. In 2018, the Association of Drinks Producers and Importers (ABIBA) warned that, if the measure goes ahead, annual taxes raised from beer could collapse from eight billion meticais (about 132 million US dollars, at the exchange rate of the time) to five billion meticais. That would be an annual loss to the exchequer of over 49 million dollars.
ABIBA warned then that, the process of adding fiscal stamps is an additional cost for beer producers. That cost would be passed on to consumers, who might react by buying less beer. If less beer was sold, the breweries would inevitably lay off some of their workers.
ABIBA was in favour of fiscal stamps on wines and spirits, since this is the sector that used to be dominated by contraband. With the introduction of the fiscal stamp, it has become easy to spot smuggled wines and spirits.
But the beer consumed in Mozambique is mostly produced inside the country. It is estimated that only about five per cent of the beer drunk in Mozambique is contraband. Furthermore, the largest beer producer, CDM (Beers of Mozambque) is one of the country’s largest taxpayers, and nobody has ever accused it of tax evasion.
CDM warned that adding a fiscal stamp would slow down the bottling process, thus reducing production. Subsequently the Mozambican Tax Authority (AT) claimed the stamps could be added digitally, but it is not at all clear how this would work.
Magaia told the Friday press conference that Mozambican businesses are facing “countless adversities”, including the impact of Covid-19 and of terrorism in the northern province of Cabo Delgado. He thought the government should be protecting industry, rather than adding to its costs.
If the ministerial diploma is implemented, he warned, beer production will fall “causing losses to the State, since the tax contribution paid by the companies will decline proportionately”. Farmers too would be affected, since the amount of maize and cassava they sell to breweries would also fall.
Magaia warned that the measure also calls into question recent investment in new breweries, of over 300 million dollars, by CDM and Heineken.
A director of CDM, Hugo Gomes, told the reporters that the companies will continue attempts to persuade the government to change its mind. He added that there has been voluminous correspondence with government bodies over the matter, but the companies have never received a formal reply.
The companies still have time, since no date has yet been fixed for introducing the fiscal stamps on beer.
