In a significant move aimed at plugging revenue leaks and curbing tax evasion, the Mozambican government has taken decisive steps by imposing reference prices for minerals. This strategic measure aims to tackle a long-standing loophole that allowed mining companies to underreport their actual production to reduce their tax obligations.
Starting this month, the declaration of mineral values will be aligned with the reference prices published in the monthly bulletin issued by the Ministry of Finance. This proactive approach seeks to combat under-invoicing of minerals, which has reportedly cost the State millions of dollars each year.
Ministerial Diploma [Specify Date] provides detailed guidelines for implementing these reference prices. For instance, in the case of rubies, companies unable to sell their rubies via auction will be required to apply a minimum of US$265.99 per carat. This amount is based on the highest price achieved in auctions conducted from January 1st to June 30th.
For titanium-bearing heavy sands, the pricing will be based on the mineral content of ilmenite, rutile, and zircon. The reference prices are set at US$425.25 per tonne for ilmenite, US$2,205.18 per tonne for zircon, and US$1,706.28 per tonne for rutile.
In the case of gold, the reference price will be determined by the Bank of Mozambique, further enhancing the government’s efforts to ensure accurate valuation and fair tax contributions from the mining sector.
This legislative shift is backed by a well-structured commission composed of representatives from key entities including the Ministry of Finance, the Tax Authority, the National Institute of Mines, the Mineral Resources General Inspectorate, and the Kimberley Process Management Unit. This comprehensive approach guarantees transparency and collaboration in setting accurate reference prices.
This move holds considerable promise for Mozambique’s financial landscape, as it addresses the systematic undervaluation of minerals that has been affecting the nation’s revenues for years. The implementation of reference prices stands to close the gaps and ensure a fair and equitable contribution from the mining industry to the national economy.
The Mozambican government’s commitment to combating under-invoicing is a testament to its dedication to enhancing fiscal discipline and fostering a more transparent business environment. As the implementation of reference prices gains momentum, industry players and observers will be keenly watching the impact on tax revenues and the overall economic landscape.
Mozambique’s stride towards reference prices for minerals is a significant step in closing the chapter on tax evasion by mining companies. With the careful structuring of guidelines, collaboration among relevant bodies, and the backing of the Bank of Mozambique, this legislative change promises to bolster Mozambique’s financial integrity and promote a fairer mining industry.
