August 29, 2013 / 11:47 AM / 4 years ago

Mozambique to tax capital gains at fixed 32 pct rate from 2014

MAPUTO, Aug 29 (Reuters) - The sales of local assets by foreign companies operating in Mozambique will from next year be taxed at a fixed rate of 32 percent, a tax official in the emerging coal and gas producer said.

Mozambique’s parliament passed an amendment to its tax regime last year, stipulating that sales of assets held by non-resident firms will be taxed at 32 percent without consideration for the period they were held, but the new law was put on hold, pending a review by the president.

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 constitutional issues that delayed the passing of the tax law have been overcome and the president has promulgated the law,” Rosario Fernandes, head of the tax authority, told Reuters late on Wednesday.

“Come Jan. 1, capital gains in all mega projects, including oil and gas, will be taxed according to the new legislation.”

Italy’s oil and gas group Eni agreed to pay the former Portuguese colony $400 million in taxes on its $4.2 billion sale of a gas field stake to China’s CNPC.

Eni also pledged to build a power plant, which Fernandes said is worth another $130 million.

If the new tax rule had been applied, Eni’s tax bill on the deal would have been as high as $1.35 billion, analysts said. (Reporting by Manuel Mucari; Writing by Agnieszka Flak)

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