Value Added Tax (VAT) Specialist Full-Time

Project description

The Supporting the Policy Environment for Economic Development (SPEED+) activity is a four-year, $37.2 million USAID-funded project designed to improve the business enabling environment. SPEED+ provides technical assistance and capacity-building to improve public-private policy dialogue, strengthen implementation of government policies and regulations, and support economic and structural policy reforms in 1) agriculture, 2) trade and business enabling environment, 3) power and water, and 4) biodiversity conservation.

As part of the workstream supporting expansion of private sector-driven renewable energy supply (on-grid and off-grid), SPEED+ will engage an international consultant to provide technical assistance to formulate and implement an effective strategy for the removal of import duty and Value Added Tax (VAT) fees on solar equipment in Mozambique, in order to promote the use of such equipment for more rapid scaling-up of access to electricity, particularly for rural households.

Background

In 2016, the United Kingdom Department for International Development (DFID) supported the Government of Mozambique to establish the Energy Africa Compact, a multi-donor agreement. The Energy Africa Compact includes a commitment to reduce or eliminate duty and VAT on renewable energy products. DFID commissioned the Energy Africa – Mozambique fiscal and economic impact assessment report, which provided an analysis of the projected fiscal and economic impact of a ten-year exemption from VAT and customs duties on the import of picoPV products, solar home systems (SHS), and improved cook stoves. The report indicated that the national economic benefits would be seven times greater that the fiscal cost of tax exemptions – economic benefits include fiscal benefits through new VAT receipts and increased business tax revenue, and overall economic benefits accruing from improved health and environmental impacts. However, the methodology used found a negative fiscal impact across the 10 years of $1.1 million. In addition, there was little engagement of the Tax Authority (AT), MIREME and other key stakeholders in the process of conducting the analysis. Although the Tax Authority did not reject the report findings, the reform effort has stalled.

SPEED+ is working with MIREME and Tax Authority to develop an Off-Grid Renewable Energy Duty/VAT Task Force to re-energize this reform effort, which is stipulated in the Energy Africa Compact. SPEED+ plans to re-engage with MIREME, the AT, MEF, AMER and its members, other private sector companies and other stakeholders to chart a path forward. The establishment of the Off-Grid Renewable Energy Duty & VAT Task Force is a promising first step. Next steps may include additional analysis of fiscal and economic benefits. The SPEED+ duty/VAT exemption team will have 3 key members and be supported by SPEED+ technical staff. The members will be:

• An international consultant;
• A Mozambican consultant;
• Technical focal point of the government Duty/VAT Task Force.

Scope of work

The main objective of the consultancy is to assist MIREME and members of the duty/VAT taskforce, including the Tax Authority and National Customs Directorate, to make a comprehensive assessment of the costs and benefits of the removal of import duties and VAT on off-grid solar solutions. The assessment should support the eventual approval of the exemptions. A comprehensive assessment would engage members in examining the fiscal impact, the economic impact, and the broader impact of accelerating rural electrification. The assessment should be motivated by a study that analyzes the costs and benefits of the removal of VAT and import duties on household (HH) energy products of considerable importance to the Mozambican population – solar photovoltaic (PV) lanterns and SHS to reduce firewood, charcoal, candles and kerosene requirements. It should be noted that the market for off-grid electrification in Mozambique presents significant opportunities for private sector investment: the projected market for new connections has been estimated at 4.1 million HH reaching 20.6 million Mozambicans.

The SPEED+ consultant team will assist MIREME and the task force to:

• better understand the Government’s decision factors that are crucial for the approval of the exemptions;
• better understand the existing Energy Africa Mozambique fiscal/economic assessment and identify any needs for additional analysis or information;
• better understand the potential impact of the duty/VAT exemptions on rural electrification and scaling up of solar energy use, by presenting information from comparable countries;
• as needed, conduct an updated fiscal and economic benefits analysis of the removal of import duties and VAT from renewable energy equipment.

As a result, the Duty/VAT Task Force will be sensitized to the comprehensive benefits of improving the business environment for solar products and will be encouraged to adopt the reform proposal based on sound data and analysis.

Technical Tasks

1. Review all relevant existing documentation related to the advocacy for import duties and VAT removal for SHS equipment in Mozambique;
2. Mentor/support Mozambican consultant and technical focal point of the Duty/VAT Task Force to develop a briefing on the existing Energy Africa Mozambique study for the Task Force;
3. Lead research and draft brief report/powerpoint (with support as needed from local consultant and technical focal point) on the experience of comparable countries which have reduced or eliminated duty/VAT on renewable energy products and the impact on increasing consumption of those products and, as possible, the increase in rural electrification. Key points would include the roadmap used for the exemption; the parameters used in cost/benefit analyses (compared to the Energy Africa Mozambique study); and any known impacts post-exemption;
4. In close consultation with the Duty/VAT Task Force, help to assess the need for further research and analysis, taking into consideration the existing results of the Energy Africa – Mozambique fiscal/economic impact assessment and the methodology used for comparable studies;
5. If proven necessary, update Energy Africa – Mozambique analysis or develop a new analysis of the fiscal and economic effects of removing import duties and VAT from picoPV and solar home system products;
6. Present the updated model and report to the Duty/VAT Task Force;
7. Develop brief (1 day) training so that Duty/VAT Task Force members can effectively explain and defend the model (note that the Task Force technical focal points are expected to serve as key experts on the model;
8. Provide technical assistance as needed to make changes or updates to the model when securing final approvals for the proposed policy changes.

Qualifications

The international consultant will need to meet the following qualifications:

• Advanced degree in business, economics, public finance, tax policy and administration law or related field;
• Ten plus years of experience working in sub-Saharan Africa;
• Prior experience working on taxation and tariffs in the renewable energy/energy and power sector, particularly the Harmonized System. Specific experience with duty/VAT exemptions for renewable equipment a plus;
• Prior experience providing technical assistance to government policy decision-making;
• Strong presentation and writing skills;
• Portuguese skills a plus.