* Amended capital gains tax law becomes effective Jan 1
* Will not be applied retroactively
(Adds details, quotes)
By Agnieszka Flak and Pascal Fletcher
JOHANNESBURG, Dec 17 Mozambique will apply a 32
percent tax on future sales of local assets by foreign companies
operating in the emerging coal and gas producer as it seeks a
greater share of profits from its mineral wealth, a tax official
said on Monday.
Several oil and mining majors have rushed in to Mozambique
to seek opportunities in what is expected to become one of the
world's leading coal and gas exporters and the tax will affect
future sales of assets located in the southern African state.
The parliament in the former Portuguese colony passed an
amendment to its corporate income tax regime last week. This
stipulates that sales of Mozambican assets held by non-resident
entities will be taxed at 32 percent without consideration for
the period they were held.
Up to now, the sale of local assets belonging to foreign
companies have been taxed on a progressively declining basis,
depending on the length of time they were held.
"The alteration consists of the rate (32 percent) being
applied, independently of the period of the contract," Herminio
Sueia, director general of planning, studies and international
cooperation at Mozambique's tax authority told Reuters.
"The rate is the rate."
The amended law will come into force on Jan. 1 next year,
but will not be applied retroactively to deals completed before.
The fixed rate tax is far above the 12.8 percent rate
applied to capital gains on the buyout of Cove Energy by
Thailand's PTT Exploration and Production.
"The amended code will give the government very broad
jurisdiction to levy this tax, including indirect transfers of
interests in non-resident companies with local assets," Eurasia
Group analyst Mark Rosenberg said in a note.
"As a result, even an ordinary stock exchange transaction
involving a company with Mozambican assets would be subject to
Mozambican capital gains tax."
Sueia said the state sought to clarify current legislation.
"The second reason was to optimise the gains for the nation
from these operations," he said. "The idea is not to discourage
investment... We think it's fair."
The government has been keen to amend the code to reap
bigger profits from growing coal and gas investment, especially
as actual production of gas is still years away.
Mozambique's government has faced criticism from civil
society and the opposition over huge tax breaks it granted to
outside firms as it sought to attract investment in the years
following a bloody civil war which ended in 1992.
The government was particularly chastised over this after
Rio Tinto paid $4 billion to buy coal explorer
Riversdale without having to pay any capital gains tax.
Oil majors, including U.S.-listed Anadarko Petroleum
and Italy's Eni will also be affected by the amended
law if they proceed to sell parts of their interest in the gas
blocks in the offshore Rovuma basin.
(Editing by Matthew Tostevin)