15 January 2016

Mozambique: Tax Collection Target for 2015 Narrowly Missed

Maputo — The Mozambican Tax Authority (AT) announced on Friday that it narrowly missed its target for tax collection in 2015.

AT spokesperson Haydn David told a Maputo press conference that the tax target set in the 2015 budget was 160.7 billion meticais (3.57 billion US dollars, at current exchange rates). The amount actually collected was 159.8 billion meticais - or 99.44 per cent of the target.

The shortfall came from taxes on foreign trade, which are collected by the customs service. 50.4 billion meticais was collected by customs, which was 95.57 per cent of the target.

Internal taxes, which are the responsibility of the General Tax Directorate, raised 109.4 billion meticais, which was more than forecast - it was 101.33 per cent of the target.

David said there had been a strong recovery in customs revenue in December, with a collection that was 109.43 per cent of that month's target. “This shows a great recovery of the revenue lost earlier in the year, when one considers the adverse effect of the appreciation of the US dollar, the main reference currency in international trade”, he said.

David argued that 2015 had been “an atypical year” because of a series of adversities which affected tax collection.

These included the catastrophic flooding in January, hitting the north and centre of the country, particularly Zambezia province. The Zambezia floods cut the normal power supply to much of the province and to all of the three northern provinces (Nampula, Niassa and Cabo Delgado) for about a month.

The economic effect of the floods included a reduction in tax collection. Later in the year many businesses in Maputo were hit by repeated power cuts, following a major breakdown at a key electricity sub-station. This hit their profits, and hence the amount of tax they paid.

Furthermore, the instability in some parts of the country, following the refusal by the former rebel movement Renamo to accept the results of the October 2014 general elections, caused delays in investment decisions and affected production levels, and hence tax collection, in the affected areas.

Other unfavourable factors, said David, included the late approval of the 2015 budget, the sharp depreciation in the latter part of the year of the metical against the US dollar and the South African rand, which inhibited imports, and the reduction in the world market prices of several key Mozambican exports.

David also reported that the AT's inspections and seizures of contraband had led to the recovery of state revenue of 713.3 million meticais.

There had been 420 seizures of imported vehicles and 239 seizures of other merchandise. The offences committed by the importers included undue use of tax exemptions, the duplication of vehicle number plates, and under-invoicing through the use of forged documents.

The 2016 budget, approved on time by the country's parliament, the Assembly of the Republic, in December, sets a total tax collection target of 176.4 billion meticais. Of this sum, 117.3 billion meticais is to come from internal taxes, and 59.1 billion from taxes and duties on foreign trade.

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