Mozambique’s Income Tax Collections Increase Despite Economic…

In 2024, Mozambique’s income tax revenue rose by 4% to €2.226 billion, exceeding forecasts despite an economic growth slump. Personal Income Tax totaled €900 million, while Corporate Income Tax reached €1.321 million. The economy grew only 1.9%, hindered by post-election unrest, attributed to protests after the October elections, and the adverse effects of climate change.

In 2024, Mozambique experienced a 4% increase in income tax revenue, amounting to €2.226 billion, exceeding the government’s projection despite economic growth falling short of expectations. This revenue represents 105% of the annual forecast and constitutes 45% of the total tax revenue for the year.

The collection from Personal Income Tax (IRPS) reached 62.639 billion meticais (€900 million), achieving 96% of its annual target and reflecting a 7% increase compared to 2023. This growth has been attributed to effective withholding controls and compliance by businesses and the Civil Service following the implementation of a unified salary scale.

Corporate Income Tax (IRPC), sourced from companies, totaled 91.985 billion meticais (€1.321 million), surpassing its annual forecast at 112.7% and showing a 2.1% growth from the prior year. Additionally, the Special Tax on Gaming contributed 387.8 million meticais (€5.5 million) to the revenue in 2024.

Despite these positive tax revenue figures, the Mozambican economy grew by only 1.9% in 2024, significantly lower than anticipated. The slowdown was attributed to the effects of post-election demonstrations and protests, as reported by Finance Minister Carla Loveira.

The economy faced a year-on-year decline of 4.87% in the fourth quarter of 2024, primarily due to the unrest following the general elections held on October 9.

Moreover, the challenges posed by climate change—including severe droughts, cyclones, and social unrest—further hampered economic activity. The government had initially projected a GDP increase of 5.5%, estimating it would reach 1.536 trillion meticais (approximately €23 billion) for the year.

Mozambique’s income tax collections reported a moderate increase in 2024, reflecting effective tax controls amidst significant economic challenges. Growth in tax revenue, particularly in Personal and Corporate Income Taxes, stands in contrast to the overall slowdown in economic performance, which has been affected by political unrest and environmental issues. Moving forward, the government’s ability to balance tax revenue generation while addressing socio-economic unrest will be critical for sustainable growth.

Original Source: clubofmozambique.com