Between 2016 and 2022, the government forfeited around 150.6 billion meticais due to the tax breaks it granted to mega-projects, enough money to cover 69.4% of internal credits, according to an analysis by the non-governmental organization (NGO) Centre for Public Integrity (CIP).

"From 2017 to 2022, the volume of tax benefits grew by 82%, from 17.0 billion meticais in 2017 to 31.0 billion meticais in 2022," reads the NGO document consulted by MZNews.

The NGO's research shows that in 6 years, the value of the tax benefits granted to mega-projects has almost doubled. And the value of the tax benefits granted corresponds to 11% of the total state revenue collected in the same period.

In detail, the study says that value added tax (VAT) accounts for 48% of total benefits, followed by corporate income tax (CIT), 31%, and customs duties, 17%.

In total, the three categories of taxes (VAT, IRPC and customs duties) together account for 96% of the total benefits attributed to mega-projects.

As for the tax contribution of the mega-projects, according to the NGO, they accounted for around 202.7 billion meticais in taxes, which corresponds to 14% of the total state revenue collected.

Of the amount collected from the mega-projects, the NGO says that around 80.3 billion meticais refers to the value of the capital gains tax levied on the sale of shares in the extractive sector in 2017 and 20193.

The NGO also says that on average, tax breaks cover more than 80% of domestic financing needs. The contribution of mega-projects (122.4 billion meticais), excluding capital gains, is less than the tax breaks granted (150.6 billion meticais).

"By giving up this revenue, the government is jeopardizing compliance with public spending, including public investments, such as the construction of schools, hospitals, among others. On the other hand, it creates incentives for companies to exploit resources quickly but inefficiently, to the detriment of Mozambicans," warns the NGO.