Abidjan, July 1 - Ivory Coast will cut export taxes on its chief export cocoa from the start of the coming 2009/10 season as it seeks to meet World Bank debt relief terms, its cocoa reform committee said in documents obtained by Reuters on Wednesday.
From next season, the export tax known as DUS (Droit Unique do Sortie) will be cut to 210 CFA francs per kg from this season's 220 francs, and registration tax will be cut to 5 percent from 10 percent of the price of beans, inclusive of cost, insurance and freight.
Shippers said the move would make the immediate export of beans more appealing than hoarding.
Cocoa taxes in Ivory Coast, the world's biggest producer, are among the highest of cocoa-growing countries, and the World Bank has long made their reduction a condition of debt relief.
"The government is committed to reducing taxation to 22 percent of the international price obtained in order to reach achievement point of the HIPC (Highly Indebted Poor Countries) initiative," the government-appointed reform committee said in the document.
DISCOURAGE STOCKPILING
The move would encourage cocoa firms to export beans, whereas in the past they have been able to make money by buying beans and stockpiling them for sale the following season when higher taxes would apply, said an exective with an international shipping firm in Abidjan.
"Normally keeping a stock (of beans) has been logical because taxes would either rise or stay the same, but if they fall, it changes everything because you don't gain anything by having stocks available," he said. Bean exports for the 2008/09 season, which ends in September, were down 20 percent on the previous season by June 23, though semi-finished product shipments were higher, according to customs data.
This season has been disrupted by bad weather, disease and changes in the government's administration of the sector as it responds to accusations of corruption.
The World Bank is pressing Ivory Coast to cut cocoa taxes by around half by 2010. Prices of the bean, which accounts for around 20 percent of Ivorian gross domestic product, have fallen by 7 percent this year.
Benchmark cocoa futures for delivery in September traded around 1,610 pounds per tonne in London on Wednesday, up around 0.3 percent from Tuesday's close.