Mozambique’s income tax revenue increased by 4% to €2.226 billion in 2024, exceeding forecasts. Personal Income Tax and Corporate Income Tax showed significant contributions. However, the economy grew only 1.9%, hindered by social unrest and climate impacts, with substantial contractions in the fourth quarter. The government’s GDP growth estimates aim for a 5.5% increase for 2024.
In 2024, Mozambique witnessed a 4% increase in income tax collections, amounting to €2.226 billion, which surpassed the government’s expectations despite the economy’s sluggish growth. This figure accounts for almost 105% of the annual forecast and represents 45% of the total tax revenue for the year.
Personal Income Tax (IRPS) collections reached 62.639 billion meticais (€900 million), achieving 96% of the annual target and demonstrating a 7% increase compared to 2023. The Ministry of Finance attributes this rise to enhanced oversight of withholdings at source and timely payments by companies and the Civil Service, particularly due to the new single salary scale implementation.
Corporate Income Tax (IRPC) generated 91.985 billion meticais (€1.321 billion), exceeding the annual forecast by 112.7% with a growth of 2.1% year-on-year. In addition, the Special Tax on Gaming contributed collections of 387.8 million meticais (€5.5 million) in 2024.
Despite these tax revenue increases, the country’s economy only grew by 1.9% in 2024, significantly lower than anticipated. Minister of Finance Carla Loveira noted that the economy’s performance was hindered by post-election unrest, which included demonstrations and protests. In the fourth quarter of 2024, the economy contracted by 4.87% year-on-year, attributed to these factors alongside the ongoing impacts of climate change such as severe droughts and cyclones.
Following the general elections on October 9, Mozambique has faced extensive social unrest, exacerbated by dissatisfaction over the announced voting results. These protests involved barricades, vandalism, and violence, resulting in over 300 fatalities. The government’s estimates projected GDP growth of 1.536 trillion meticais (approximately €23 billion) for 2024, reflecting an intended increase of 5.5%.
In summary, Mozambique’s income tax collections for 2024 have risen by 4%, reflecting robustness against economic challenges. However, the overall economic growth has faltered, with significant contraction noted in the latter part of the year due to social unrest and climate-related issues. As the nation strives for stability, its fiscal policies have yielded notable results, though broader economic conditions remain precarious.
Original Source: clubofmozambique.com
