Value Added Tax (VAT)
Considered by some to be evil. For others, a completely necessary good.
It is the most famous of all taxes, it is levied on the value of the transfer of goods and provision of services carried out in the national territory for consideration by a taxable person acting as such, as well as on imports of goods.
In other words, from the moment we wake up and go to bed we live in the “networks” of VAT, we are constantly paying VAT, on the light we turn on, the shower we take, what we eat and wear, the gasoline and diesel we consume, in the products we import, etc.
In Mozambique, VAT was adopted exactly on its own merits in 1999, taking into account the advantages that this taxation method has in relation to the previous cascade taxation system. Naturally, our country was not the first to introduce this method, the country benefited enormously from the experiences of other countries that implemented this taxation system before.

The following are taxable persons in accordance with the provisions of article 2 of the VAT Code:

1. Natural or legal persons resident or with a permanent establishment or representation in the national territory, who, independently and on a regular basis, carry out, for-profit or non-profit, activities;
2. Natural or legal persons who, while not carrying out an activity, also carry out, independently, any taxable transaction;
3. Non-resident natural or legal persons without a permanent establishment or representation, who, even independently, carry out any taxable operation, as long as such operation is connected with the exercise of their business activities, such operation meets the assumptions of real incidence of IRPS and IRPC.
4. Natural or legal persons who incorrectly mention value added tax on an equivalent document invoice.

Applied fees and exemptions

With the amendment of the VAT Code through Law No. 22/2022 of December 28, approved by the republic's assembly, VAT now has two rates:
1. The general rate goes from 17% to 16% (art. 17)
2. The reduced rate of 5% (art. 17 A) for the following transfers of goods and provision of services:
- Medical and health services (and closely related operations) carried out by private hospital establishments, clinics, dispensaries and the like;
- Educational services provided by private establishments integrated into the National Education System and recognized by the Ministry of Education, as well as the transfer of goods and provision of related services;
- Professional training services carried out by private entities, as well as transfers of goods and related services such as accommodation and teaching materials;
- Lessons taught personally on school or higher education subjects.

Exemptions are limited to:

- Iron bicycle transmission up to 4 speeds;
- Provision of rubbish removal services carried out by public entities or contracted by them;
- Transmission of production factors from solar panels for rural electrification.

The exemptions relating to:

- Transmission of sugar;
- Transmission of raw materials, intermediate products, parts, equipment and components, carried out by the national sugar industry;
- Transmission of cooking oils and soaps;
- Transmission of goods resulting from the industrial activity of the production of cooking oil and soap carried out by the respective factories;
- Transmission of goods to be used as raw material in the oil and soap industry;
- Transmission of goods and services carried out within the scope of the agricultural activity of sugar cane production and intended for industry.

Curiosities about VAT

In a perfect world, taxes would not exist, along with misfortune, misery, unemployment and everything that justifies the existence of taxes, it would all be fictional.
But, we are aware that the world is far from perfect, even if it is painful, it is important to pay tax for the benefits that its collection brings to the common good by allowing the financing of public expenditure (roads and bridges; security public; national health system; mandatory education, public infrastructures, among others).
At least, unlike direct taxes, the weight of VAT is felt indirectly because we only pay VAT when we make an expense.
This is due to its peculiar characteristics, which cause the fiscal anesthesia effect, essentially:
The generality which consists of applying a general consumption tax to goods and services proportional to the price of the goods and services, regardless of the number of transactions that took place in the production and distribution process prior to the taxation phase. In a broad-based model, value added tax is applicable up to and including the retail trade stage.
Neutrality both internally and internationally, the tax burden remains the same regardless of the production and trade system. At an international level, this tax adequately ensures the necessary fiscal adjustments at the borders with the adoption of the principle of taxation in the country of destination, a principle adopted in terms of VAT for international transactions.
Interesting though!
However, the existence of a completely neutral tax is out of the question. Some benefits that affect such characteristics will always have to be granted, namely exemptions that do not allow the right to deduct input tax, a practical example, the exemptions referred to in the third topic of this article.