The Government of Mozambique intends to implement, by 2028, a broad fiscal reform focused on eliminating inefficient tax exemptions and expanding the tax base—particularly through the taxation of the informal economy, system digitalization, and the introduction of Artificial Intelligence (AI) in tax control. These measures are outlined in the Medium-Term Fiscal Scenario (CFMP) 2026–28, approved by the Council of Ministers on June 24.
The document, reviewed this Tuesday (July 7), identifies as a priority the “review and simplification” of the Value Added Tax (VAT) Code and the Corporate Income Tax (IRPC) Code, with the aim of eliminating tax benefits that lack clear returns and reinforcing the neutrality of the tax system.
Planned actions include the creation of a specific tax regime for foreign digital services, updating the simplified tax regime, improving the tax registry, and formalizing the informal economy as a way to increase domestic revenue. The strengthening of the Tax Authority (AT) will be driven by digitalization, system interoperability, and stricter control of large enterprises. The plan also includes implementing digital collection mechanisms, predictive analysis based on risk profiles, and integrating emerging technologies such as AI for tax auditing and forensic analysis.
Regarding incentives, the CFMP proposes the “evaluation and rationalization” of special regimes to eliminate distortions and ensure a more equitable redistribution of the tax burden. Promoting “tax justice” through progressive taxation is presented as one of the structural pillars of the reform. The Government’s strategy also includes combating tax evasion, with an emphasis on enhancing AT’s audit capacity, intensifying institutional and international cooperation, and applying sanctions for practices such as under-invoicing, tax evasion, and smuggling.
The Government forecasts a gradual increase in tax revenue as a percentage of Gross Domestic Product (GDP): 21.3% in 2026, 21.4% in 2027, and 21.5% in 2028. In absolute terms, State revenue is expected to rise from 417.4 billion meticais (5.5 billion USD) in 2026 to 492.2 billion meticais (6.5 billion USD) in 2028.
As for the extractive sector, the CFMP estimates that revenue from Liquefied Natural Gas (LNG) will remain stable at around 0.3% of GDP during the three-year period, reflecting the production’s maturation phase and the legal framework of the Sovereign Fund, which has been in the process of operationalization since 2024.
Source: Lusa
