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Mozambique’s tax revenue increase of 14% in 2018 has disguised the country’s frailty in applying laws and anticipates difficulties in implementing further similar measures, the Economist Intelligence Unit (EIU) said.
The Mozambican authorities, according to the forecasting group, attribute the rise of tax return to the introduction of new taxes and improved implementation of current laws, together with modest growth in 2018. However the application of such legislation is “weak,” the analysts noted.
Last year Mozambique’s tax revenue rose by 14%, from 196 billion meticais in 2017 to 223 billion in 2018, due to the introduction in January 2019 of tax on alcohol, tobacco and new vehicles.
Economic growth reached 3.5% last year and is expected to drop slightly to 3.4% this year, according to the EIU. The analysts also expect tax revenue to rise this year.
According to the note sent to investors which Lusa had access to, after the elections later this year, the depth of the country’s financial crisis will force the government to increase tax revenue through a phasing out of subsidies, a reduction in exemptions and the privatisation of public assets, however there will be strong resistance from businesspeople and consumers.
Mozambique has been pushed into a financial crisis due to a long-running debt scandal and has been shut out of from international debt markets.
The country’s economic growth is also weak, but that could change when major LNG projects come online, according to the EIU.Source: Lusa
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