9 October 2017

Mozambique: Tax Collection On Target

Maputo — So far this year tax collection in Mozambique is more or less on target, the chairperson of the Tax Authority, Amelia Nakhare, announced in Maputo on Monday.

Speaking at a national meeting to plan the AT's activities for 2018, Nakhare said that from 1 January to 30 September this year the AT had collected revenue of slightly more than 139 billion meticais (about 2.28 billion US dollars). This was 101.13 per cent of the target set for the first nine months of the year.

It was also 74.6 per cent of the annual target set in the 2017 state budget of 186.33 billion meticais. It thus seems certain that this target will be reached and probably surpassed.

But there is still a great deal of tax owing that has not yet been collected. Nakhare said the AT had undertaken 1,199 audits which uncovered a total of 3.59 billion meticais in tax debts. Of this sum, slightly less than 162 million meticais has actually been collected.

Factors behind the tax debts, Nakhare continued, include human error, tax avoidance, corruption, bargaining over and extending payment periods, and lack of AT resources. But she admitted that Mozambique's economic crisis is also hitting tax collection. This year, 1,549 companies that used to pay taxes have ceased their activities, and a further 220 have suspended payment of corporation tax.

Nakhare also admitted that the levels of corruption inside the AT remain a major challenge. Fighting corruption among tax officials, she said, "does not just involve administrative measures, but also far-reaching work of institutional reform, training, development of moral and ethical values, and improving the legal framework". She wanted the law amended to ensure "implacable penalties" for corrupt AT staff.

Success in these actions, Nakhare added, also involved "joint action against red tape, a trap that corruption uses to extend its tentacles".

Nakhare stressed the importance of this year's drive to place fiscal stamps on alcoholic drinks and tobacco products, which was intended "to improve efficiency in collecting revenue and in fighting contraband and corruption".

In theory, any alcoholic drinks, or tobacco products that do not bear the fiscal stamp are illegal, and should be seized and destroyed. However, this depends on integrity among AT staff, particularly at the borders.

"We remain concerned at the involvement of our staff in activities that weaken implementation of the fiscal stamps, and facilitate the entry of contraband merchandise across the borders", said Nakhare.

Although it is difficult to calculate how much money the state loses through contraband, Nakhare said it is estimated that over 60 per cent of the drinks market was supplied by smuggled goods.

Liquid fuels are also smuggled, and Nakhare put the losses from this form of contraband at between 2.5 and four billion meticais a year.

"The transformation of Mozambique", she stressed, "involves a very robust tax system, which demands greater investment in the capacity for customs and tax inspection". The government was taking this seriously in that it had provided the AT with a budget for 30 vehicles for inspection activities.

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