CTA proposes tax compensation to relieve state debt with suppliers

The Confederation of Economic Associations of Mozambique (CTA) is proposing that the Ministry of Economy and Finance (MEF) offset the debt that the state has with suppliers through tax obligations. The proposal aims to ease the financial pressure on companies that provide services and goods to the state.

During a meeting held last Friday, March 8, with representatives of the MEF, the CTA presented the proposal as a way of mitigating the effects of the state’s late payments to suppliers. The suggestion also includes the possibility of using this mechanism for processes related to VAT refunds.

In response, the MEF said that it will analyze the mechanism for extending the compensation of the various tax obligations, showing openness to considering the CTA’s proposal as part of a review of tax policy. The Ministry has promised to incorporate some of the points raised by entrepreneurs into the ongoing tax reform, including the revision of the IRPC code and the creation of incentives for entrepreneurs.

This CTA proposal comes in a context in which the Mozambican government has been facing challenges in paying its debts to suppliers. In November 2023, the Executive announced that it had settled around three million euros in overdue payments, but the total debt is still significant. The CTA estimated that this debt exceeds 400 million dollars and advocated the inclusion of a specific item in the 2024 State Budget to settle these arrears.

CTA’s proposal represents an attempt to find creative solutions to deal with the economic challenges faced by Mozambican companies due to delays in state payments. The MEF’s positive response in analyzing the proposal is a sign that the authorities are open to dialogue and finding solutions that benefit the country’s economy.