Complex procedures affect VAT refund to cotton companies
22 Nov '06
1 min read
Mozambique failed to refund Valued Added Tax (VAT) to cotton companies. The amount to be refunded to cotton companies is about MZM30 million (US $1.2 million).
Due to complex procedure of acquiring tax refund, VAT refund gets accumulated. Country has to refund MZM4.7 million to Dunavant Company alone.
This delay in refund is significantly affecting cash flow of cotton companies. Companies which never paid VAT also claim refund leading to loss of money for country.
In cotton sector costs are calculated in meticais and export transactions are done in US dollar and any fluctuation in the value of currency will affect finance in the sector.
During 2005-2006, country's cotton growers produced approximately 110,000 tons of raw cotton compared to 79,000 tons of the previous year.
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