Mozambique’s Income Tax Collections Rise Despite Economic Challenges in 2024

In 2024, Mozambique’s income tax collections increased by 4% to €2.226 billion, exceeding forecasts despite a mere 1.9% economic growth. Personal and corporate income taxes performed strongly, but social unrest and climate change negatively impacted the economy. The government projected 5.5% GDP growth, but actual results reflected significant decline due to various factors.

In 2024, Mozambique’s income tax collections rose by 4% to €2.226 billion, surpassing government forecasts despite lower-than-expected economic growth. This sum, amounting to 155 billion meticais, constitutes nearly 105% of the annual projection and accounts for 45% of the total tax revenue for the year.

The collection of Personal Income Tax (IRPS) totaled 62.639 billion meticais (€900 million), achieving 96% of the annual target and reflecting a 7% increase from the previous year. The Ministry of Finance attributes this growth to effective control measures on withholdings and payments enforced by companies and government departments.

Corporate Income Tax (IRPC) yielded 91.985 billion meticais (€1.321 billion), representing 112.7% of the annual goal, with a year-on-year increase of 2.1%. Moreover, the Special Tax on Gaming contributed 387.8 million meticais (€5.5 million) in 2024.

Despite these positive figures, Mozambique’s economy expanded by merely 1.9% in 2024, significantly below expectations. Minister of Finance Carla Loveira noted that this growth was hindered by recent post-election protests and demonstrations. GDP experienced a decline of 4.87% in the fourth quarter of 2024 compared to the same period in 2023.

The impact of climate change, including severe droughts and cyclones, alongside the unrest following the unfolding of the general elections on October 9, further compounded economic difficulties. Such unrest has resulted in significant casualties, with reports of over 300 deaths due to protests, vandalism, and police confrontations. The government had projected a 5.5% increase in GDP to 1.536 trillion meticais (approximately €23 billion) for 2024.

In conclusion, Mozambique’s income tax revenues have shown resilience with a 4% increase despite economic challenges. The significant contributions from personal and corporate income taxes reflect effective tax administration. However, the overall economic growth has struggled due to social unrest and climate-related disruptions, leading to a contraction in GDP during the latter part of the year. The government continues to address these challenges as it aims for more robust economic performance.

Original Source: clubofmozambique.com