Mozambique: Tax Benefits Cost Billions, Transparency Concerns Raised

Mozambique's government has been granting tax benefits worth MZN355bn ($5.5bn) between 2009 and 2025, with the majority of these breaks going to imports through waived VAT, customs duties, and excise, according to a new study by the Centre for Public Integrity (CIP).

The legal significance of this development lies in the fact that the government has never properly tested or evaluated the effectiveness of these tax incentives, leaving it unclear whether they have actually attracted investment that would not have come otherwise. The CIP's findings raise questions about the transparency and accountability of the government's tax policies, particularly given the significant revenue foregone as a result of these breaks.

The relevant legal context in this matter is Mozambique's Tax Code, which governs the granting of tax incentives and relief from customs duties and excise. The CIP's study highlights concerns about the design of the scheme, including the lack of clear criteria for determining which imports are eligible for relief and whether these goods can be made locally.

The key parties involved in this matter include the Mozambican government, the Tax Authority, and international donors such as the IMF. Practitioners should take note that the CIP's findings may have implications for future tax policies and reforms in Mozambique, particularly with regards to transparency and accountability measures.