TV Cabo Mozambique sentenced for tax evasion

4 January 2019

Investment

TV Cabo Mozambique has lost its second appeal to the Administrative Tribunal regarding a conviction for tax evasion, and must therefore pay just over 2.4 million meticais to the national treasury, @Verdade reports.

In fiscal year 2002, the cable television and communication company, 50 percent stated owned through Mozambican Telecommunications (TDM), stated in its accounts that it had paid 11,247,836,230 meticais (‘old metical family’) to foreign companies based in Portugal for technical assistance and argued that the company would not be subject to tax under existing double taxation agreements between the two countries.

However, the Mozambican tax authorities disagreed and, through the Maputo Special Branch, TV Cabo Mozambique was ordered to pay 1,124,783,623 (old) meticais as Industrial Contribution – levy in discharge, due for the payment of royalties to entities residing in Portugal.

@Verdade found that TV Cabo Mozambique, which is also owned by the Portuguese group Visabeira, did not agree with the Mozambican tax authorities and lodged an appeal against the decision. However, it saw the Judge of the 1st Instance of Contentious Contributions and Taxes of the Maputo Finance Office deny the appeal, because it understood that, under the Mozambique-Portugal double taxation convention, “TV Cabo Mozambique should have paid the sum of 1,224,783,623 meticais (of the former family) for failing to deduct at source the royalties paid to entities resident in Portugal and it should also have paid a fine equal to the tax”.

TV Cabo Mozambique then appealed to the Administrative Court (TA) in 2011, arguing that it did not agree on the basis for setting the tax base, which gave rise to Fiscal Procedure 120/2003. However, the 2nd Section of the TA confirmed the order issued by the Judge of the 1st Instance of Contentious Contributions and Taxes of the Special Tax Office of Maputo.

Source: Club of Mozambique