Energy Africa – Mozambique: Technical assistance to model and analyse the economic effects of VAT and tariffs

This study models and analyses the economic effects of VAT and tariffs on picoPV products, solar home systems and improved cookstoves

Abstract

This study has been commissioned to analyse the costs and benefits of removal of Value Added Tax (VAT) and import duties on household energy products of considerable importance to the majority of the population of Mozambique – solar photovoltaic (PV) lanterns, solar home systems and improved cookstoves to reduce firewood and/or charcoal requirements.

It discusses the justification for support to the household energy sector, the development partner support to improving household energy access, requested tax exemptions, the approach to the analysis, analysis of model results, recommendations, and the advocacy and marketing strategy.

The quantified analysis, using the model, provides a strong case for the Government of Mozambique to commit to eliminating VAT and import duties on household energy products for a 10 year period. The factors quantified in the model show that the benefits significantly exceed the costs. There is an important caveat to the recommendation, which is that the tariff reductions should only be made for products which meet specified standards.

Citation

Robinson, P.; Tipping, A. Energy Africa – Mozambique. Technical assistance to model and analyse the economic effects of VAT and tariffs on picoPV products, solar home systems and improved cookstoves. Evidence on Demand, UK (2016) iv 21 p.

Energy Africa – Mozambique: Technical assistance to model and analyse the economic effects of VAT and tariffs

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