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CDD Recommends that Government Set Up a Watchdog for Millionaires to Broaden National Tax Base

CDD Recommends that Government Set Up a Watchdog for Millionaires to Broaden National Tax Base

The Centre for Democracy and Development (CDD) suggests that the Tax Authority (AT) focus its tax collection actions on the growing class of Mozambican millionaires. The government is recommended to create a unit for the inspection of millionaires to broaden the national tax base. Recently, Mozambique was listed as the 16th African country with the most millionaires in Africa, with 1,100 domestic individuals with more than $1 million in assets. Citing a 2016 World Bank report, CDD notes that the country has two multimillionaires. In this regard, it recommends the AT to identify all such individuals and make them fulfil their tax obligations.

“Ignoring these issues, in a context of rising millionaires in the country, implies distorting the tax system in favour of the richest, making it regressive. That is, the tax system will remain focused on collecting taxes from poor and ‘ordinary’ citizens, instead of ensuring that the richest also pay their fair share,” reads a note published by the NGO earlier this month.

The CDD recalls that one of the purposes of taxation in the country is precisely to distribute national income equally, “in addition to meeting the State’s financial needs, promoting social justice and equal opportunities”.

For the organisation, the AT should create a special system and specific strategy for monitoring High Net Worth Individuals (HNWI), given the complexity of their transactions and the ease with which they can evade their tax obligations.

CDD

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