Sugar industry concerned about taxes and smuggling

The people responsible for the Mozambican sugar industry are concerned about the end of the temporary exemption from Value Added Tax (VAT), according to the edition of Mozambican newspaper Notícias. A government decree from 2004 exempted sugar companies from paying VAT on importing raw materials and capital goods as well as on the internal sale of sugar, but the decree’s validity ended on December 31, 2006. As VAT stands at 17 percent in Mozambique, the sugar companies fear that this tax will be reflected in the end-user price of the product, making it difficult for Mozambican sugar to compete with the sugar that enters the country illegally from Zimbabwe and Malawi.

Recently, the sugar companies publicly applauded the government’s efforts to reduce smuggling, particularly in the south of the country, but added that the problem was still serious in the country’s central provinces, where it is estimated that most of the sugar sold illegally entered the country. According to the sugar companies, the smuggling of sugar leads to annual losses for the sugar industry of around US$1 million.

In 2006, Mozambique’s four sugar companies produced 242.525 tons of sugar, 175.837 tons of which were exported. Projections for 2007 indicate that sugar cane production will total 2,5 million tons, from which 292.000 tons of sugar will be produced. (macauhubm, China)