As a way to pursue the closure of persistent loopholes that have allowed mining companies to declare less than their actual mineral production, the Mozambican government has taken a decisive step by imposing reference prices for minerals. This move, which comes into effect this month, aims to tackle the issue of tax evasion and ensure fair revenue contribution from the mining sector.
The Ministry of Finance has unveiled its first monthly bulletin, revealing reference prices that must be adhered to while declaring the value of minerals. This strategic move is projected to combat under-invoicing of minerals, a practice that has reportedly cost the State millions of dollars annually.
A recently issued Ministerial Diploma outlines the specifics of the reference prices for different minerals. For instance, in the case of rubies, companies that are unable to sell their gemstones through auctions are required to use a set price of US$265.99 per carat, determined based on the highest price achieved in auctions held between January 1 and June 30.
The reference prices for titanium-bearing heavy sands, which contain essential minerals like ilmenite, rutile, and zircon, are determined by their mineral content. The diploma highlights the following reference prices: US$425.25 per tonne for ilmenite, US$2,205.18 per tonne for zircon, and US$1,706.28 per tonne for rutile.
Notably, the reference price for gold will be set by the esteemed Bank of Mozambique.
Under the prevailing legal framework, these reference prices are established through a commission that includes representatives from crucial entities such as the Ministry of Finance, the Tax Authority, the National Institute of Mines, the Mineral Resources General Inspectorate, and the Kimberley Process Management Unit. This inclusive approach ensures a balanced decision-making process and comprehensive oversight.
The move to impose reference prices for minerals is a clear signal of the Mozambican government’s commitment to rectify a long-standing issue within the mining industry. By curbing tax evasion through under-invoicing, the government aims to bolster its revenue streams and ensure a fair contribution from the mining sector towards the country’s development.
As the reference prices take effect, industry players will need to adhere to the new regulations and accurately declare the value of their mineral exports. This development is poised to not only protect the interests of the State but also foster transparency and accountability within the mining industry.
Mozambique’s decisive move to implement reference prices for minerals is a significant step towards combating tax evasion and under-invoicing in the mining sector. With meticulous regulations and an inclusive commission overseeing the process, the government is positioned to create a more equitable environment for both the State and mining companies, ensuring sustainable economic growth for the nation.
