Mozambique’s income tax revenues rose 4% in 2024 to €2.226 billion, surpassing expectations. Personal Income Tax reached €900 million, and Corporate Income Tax totaled €1.321 billion. Despite these increases, economic growth lagged at 1.9% due to post-election unrest and natural disasters, with a significant decline in the economy during the fourth quarter. The government aimed for a GDP growth of 5.5%.
In 2024, Mozambique’s income tax collections experienced a 4% increase, reaching €2.226 billion, surpassing government projections despite lower-than-expected economic growth. This collection, totaling 155 billion meticais, represents approximately 105% of the annual forecast and constitutes 45% of the country’s total tax revenue for the year.
From Personal Income Tax (IRPS), collections amounted to 62.639 million meticais (€900 million), achieving 96% of the annual target and demonstrating a 7% increase compared to 2023. This improvement is attributed to strict control over withholdings and timely payments by both corporate entities and the Civil Service, linked to the new single salary scale.
The Corporate Income Tax (IRPC) from businesses reached 91.985 million meticais (€1.321 million), which represents 112.7% of the annual estimate, reflecting a growth of 2.1% year-on-year. Additionally, the Special Tax on Gaming contributed 387.8 million meticais (€5.5 million) to the tax revenue in 2024.
Despite the tax revenue increases, Mozambique’s economy only grew by 1.9% in 2024, significantly lower than anticipated, primarily due to post-election demonstrations and protests affecting stability, as indicated by the Minister of Finance, Carla Loveira. In the fourth quarter alone, the economy contracted by 4.87% compared to the same period in 2023.
This economic downturn is linked to various factors, including adverse climate conditions such as droughts and cyclones alongside the social unrest following the general elections on October 9. Demonstrations have escalated post-election with severe consequences, including over 300 reported fatalities. The government had hoped for a GDP growth of 5.5%, projecting a total GDP of 1.536 trillion meticais (approximately €23 billion) for 2024.
In summary, while Mozambique’s income tax collections saw a notable increase in 2024, economic growth failed to meet expectations, primarily due to social and political unrest post-elections. The growth of personal and corporate income tax revenue reflects improved tax compliance, yet the overall GDP growth suffered due to various disruptions. The government’s projections for stronger economic performance remain uncertain amidst ongoing challenges.
Original Source: clubofmozambique.com
