This paper examines the revenue-productivity effects of Mozambique’s tax reforms since 1998, tracing how policy and
administrative changes altered the state’s capacity to convert tax bases into stable and growing revenues. Combining macro-level
fiscal data with micro-level revenue-productivity indicators (tax buoyancy, C-efficiency and effective collection ratios), we find that
reforms initially lifted the tax-to-GDP ratio from 13 % in 2004 to 21 % in 2011, but subsequent gains plateaued as generous
incentives, base-narrowing exemptions and administrative constraints eroded productivity. Corporate income tax (CIT) exhibits a
high statutory rate (32 %) yet low productivity, reflecting profit-shifting opportunities and sector-specific holidays introduced under
the 2009 Code of Fiscal Benefits. Value-added tax (VAT) remains the single largest revenue source (27.5 % of total revenue in 2021),
but its C-efficiency is undermined by extensive zero-ratings and refund delays, while regressivity concerns limit further rate increases

. Personal income tax (PIT) collections are concentrated on public-sector wages, leaving large informal and high-income segments
undertaxed. Difference-in-differences estimates exploiting cross-sector variation in incentive exposure indicate that firms benefiting
from tax holidays reduced reported profits by 18–25 % relative to non-beneficiaries, implying revenue losses of about 1.3 % of GDP
annually—roughly the cost of universal primary health care. Simulations of a revenue-neutral base-broadening reform—scaling back
CIT holidays and VAT exemptions while lowering statutory CIT and VAT rates by 2–3 pp—suggest a net productivity gain of 0.8 % of
GDP within three years, with distributional impacts cushioned by expanded social transfers. The findings imply that Mozambique can
achieve higher and more equitable revenue productivity not through higher headline rates, but by rationalising incentives,
strengthening administration (e-invoicing, risk-based audits) and aligning sub-national revenue tools with central reforms.