CAPITAL GAINS TAX BEING DISCUSSED WITH VALE

The Mozambican Tax Authority (AT) is negotiating capital gains tax payments with several major companies, including the Brazilian mining giant Vale, according to AT chairperson Amelia Nakhare, cited in Monday’s issue of the independent daily “O Pais”. The capital gains in Vale’s case derive from the 2014 sale of assets to the Japanese company Mitsui. Under that agreement Mitsui was to pay 450 million US dollars for a 15 per cent share in Vale’s open cast coal mine at Moatize in the western province of Tete, and a further 313 million dollars for half of Vale’s interest in the new railway from Moatize to the northern port of Nacala-a-Velha.    From the tax point of view, this deal is not closed, Nakhare did not say exactly how much tax should be paid on the deal, but she promised it would be “significant”.      The AT is still chasing capital gains tax owed by the Anglo-Australian company Rio Tinto which in 2011 purchased another Australian mining company, Riversdale, for 3.7 billion dollars. Riversdale’s only significant asset was the coal mine at Benga, also in Tete. Subsequently Rio Tinto sold Benga on to the Indian consortium ICVL, for 50 million dollars, thus making a huge loss. But tax is still owed on these deals, and Nakhare said negotiations are under way.Companies do not automatically inform the AT of share acquisitions and takeovers, and Nakhare said that the AT often only learns about such deals through the media.“When the media announces that company negotiations are taking place on the market, that allows us to go in search of additional income from capital gains tax”, she said.