Data released by the State of Tax Justice, a report that evaluates the performance of tax systems around the world, places Mozambique as one of the countries in Africa that suffers the most from tax losses, amounting to around 333.5 million dollars (21.4 billion meticais) a year at the exchange rate of the day.

This figure over three years corresponds to more than a billion dollars in losses for the state coffers, around 300 million dollars more than the plan that the country needed to mobilize to respond to Covid-19 in the social protection, health, public works and housing, business and education sectors, according to the Centre for Democracy and Development (CDD), a non-governmental organization (NGO).

For the CDD, the fault lies in the inefficiency of tax systems, with an emphasis on tax abuses by multinationals.

The NGO says in its latest document that the numerous tax incentives granted to multinationals with the aim of attracting investment, result in lost resources and their cost-benefit is not properly monitored and evaluated by the Tax Authority (AT).

"Although these are still estimates, the level of collection could be much higher if the government, especially the Ministry of Economy and Finance (MEF), resolved the various inefficiencies in the process of collecting revenue in the country," says the NGO document that MZNews had access to.

The NGO goes further and accuses the government of doing nothing to re-evaluate the contracts in force, and denounces the use of aggressive tax planning schemes by a large number of multinationals.

"It is not new news for the MEF or the AT that a growing number of multinationals have used tax treaties in aggressive tax planning schemes, making double taxation agreements one of the main channels undermining domestic resource mobilization," reads the NGO document.

"Even though they are aware of this fact, the institutions have so far done nothing to re-evaluate the treaties in force, ensuring that they are not misused and that they benefit Mozambicans," says the NGO.

The NGO recalls that Mozambique has a total of nine treaties in force, of which only one (1), with India, prevents tax abuse practices.

"The remaining eight (8) treaties increase the vulnerability of the Mozambican tax system and limit its ability to protect its tax rights," the organization points out.

The NGO also denounces the existence of numerous unnecessary tax incentives for multinationals operating in Mozambique. "These incentives are expensive for the country and lead to a loss of revenue," says the organization.

As a solution, the CDD suggests implementing stricter measures to prevent the abuse of tax treaties, carrying out cost-benefit analyses of tax incentives and improving levels of transparency and accountability.

"Only with these measures will the government be able to guarantee that the country's resources are used to fight poverty and inequality, and to build a more inclusive and sustainable future for all Mozambicans," I concluded.