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Mozambique Mining Industry: Tax payments leads to disagreements between Tax Authority and mining companies

Moatize Vale Coal Mine
Moatize Vale Coal Mine

The Tax Authority (AT) of Mozambique has notified Anglo-Australian group Rio Tinto to pay tax due to the State for the purchase of Australian company Riversdale Mining, wrote the daily newspaper Notícias. The purchase process of Riversdale Mining, completed in 2011, led to Rio Tinto Coal Mozambique, the Mozambican subsidiary of the group, to own the mining concessions of Benga – currently the only one in operation – Zambezi and Changara.

The group, which paid US$3.9 billion for the Australian company, this year sold its coal assets in Mozambique to Indian consortium International Coal Ventures Pvt Ltd (ICVL) for US$50 million.

According to Mozambican daily newspaper Notícias, the Mozambican Tax Authority considers that Rio Tinto Coal Mozambique is owned by Riversdale Mining Limited, while the Anglo-Australian group said it had nothing to pay and that if there was any tax due it would be the responsibility of Riversdale Mining.

Considering that there has been no statement from Rio Tinto about the fiscal items used to calculate the tax, the AT said in a statement it would make efforts to notify the Rio Tinto group to pay the tax owed.

Another tax disagreement is taking place between the Tax Authority and Brazilian-owned mining company Vale Moçambique. The AT wants to tax the recent sale of a 15 percent share of the Moatize mine to Japanese group Mitsui & Co and Vale argues that the financial gain would serve to amortise costs incurred.

Mining company Vale Moçambique recently sold a share of 15 percent of its 95 percent holding in the Moatize coal project to Japanese group Mitsui.

Based on current legislation, the transaction is taxable for capital gains, but on 11 December, Vale told the Mozambique Tax Authority that no tax was payable as the income from the sale would be absorbed by the company’s cost recovery.

AT said it did not agree with the arguments of Vale Moçambique and reported that the law gives the state the exclusive right to establish and fix the terms of tax obligations, which implies it is prepared to tax any operation of that nature. (macauhub/BR/MZ)

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