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Mozambican tax body seeks rise in fiscal revenue

The Mozambican Tax Authority (AT) intends to gradual ly raise the amount of taxes collected until they reach the equivalent of 22 percent of the country’s GDP, which is the average in the SADC (Southern African De v elopment Community) region.

There is still a long way to go, according to AT chairperson, Rosario Fernandes, who told newsmen Wednesday that currently, tax revenue amounted to only 16.3 pe r cent of GDP, which is not much higher than the minimum laid down by the World B a nk and the International Monetary Fund (IMF), which is 15 per cent.

Mozambique’s GDP currently stands at around US$ 8 billion a year, according to t he National Statistics Institute, with annual tax revenue of about US$ 1.3 billi o n.

According to Herminio Sueia, director of the AT planning office and spokesperson for AT’s management council, the institution envisages an increase in tax colle c tion equivalent to 0.5 per cent of GDP per year.

This would bring 2009 tax revenue up to 16.8 per cent of GDP and at this rate it would take about eleven years to reach the 22 per cent figure.

Sueia stressed that the rise of 0.5 per cent of GDP per year was a minimum targe t and he believed that much more could be achieved. In 2008, AT collected about 39 billion meticais (US$ 1.54 billion at current exc hange rates) in tax revenue, which is already considerably higher than the INE’sestimate.

Of this sum, 64.5 per cent came from domestic taxes, and 35.5 per cent from taxe s on foreign trade (such as import duties and Value Added Tax on imports).

For 2009, AT is aiming for a figure of 46 billion meticais in tax revenue, which would cover 44.2 per cent of planned public expenditure.

Sueia did not believe the SADC free trade area was a severe blow to tax revenue – but it meant AT had to concentrate increasingly on taxes raised internally, by broadening the tax base.

Essentially this means finding ways of bringing the enormous informal sector of the economy into the tax net.

According to AT, an ever larger number of people and institutions are paying tax es on incomes and profits.

From 2006 (when AT was set up, as a merger between the tax directorate of the fi nance ministry and the customs service) to the present, the number of individual s and institutions with Tax Identification Numbers (NUITs) has doubled and now st a nds at 772,359.

AT says it hopes to increase the number of tax-payers further by simplifying pro cedures and bringing tax collection services closer to citizens.

It is hard to pay taxes in the Mozambican countryside, where the nearest tax off ice may be dozens of kilometres away.

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