Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms

Bruno Rodolfo

doi:doi:10.11648/j.jwer.20251402.12

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Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms

Bruno Rodolfo^*

Published in Journal of World Economic Research (Volume 14, Issue 2)

Received: 14 July 2025 Accepted: 28 July 2025 Published: 13 August 2025

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Abstract

Illicit financial flows (IFFs) pose a critical threat to fiscal sustainability and development in many low-income countries, including Mozambique. Characterized by tax evasion, trade misinvoicing, offshore transfers, and corruption, IFFs have led to significant public revenue losses, particularly in the extractive sector. According to recent estimates, Mozambique loses approximately US$1.4 billion annually to these flows—undermining investments in health, education, and infrastructure. In response, the government has introduced a range of fiscal transparency reforms, including the digitalization of tax systems, creation of specialized tax units, and adherence to international standards such as the Extractive Industries Transparency Initiative (EITI). However, the effectiveness of these measures remains uncertain. This study aims to assess the extent to which fiscal transparency reforms have contributed to combating IFFs in Mozambique. Using a mixed-methods approach, the research integrates qualitative data from policy documents and interviews with key stakeholders, along with descriptive statistical analysis of revenue and compliance trends. The findings indicate modest progress in improving transparency and revenue mobilization, particularly through digital platforms and increased reporting requirements. Nevertheless, structural and institutional challenges—such as limited legal enforcement, weak coordination among oversight bodies, and the absence of a beneficial ownership registry—continue to hinder reform impact. The study concludes that while fiscal transparency initiatives are necessary, they are insufficient in isolation. A more comprehensive strategy is required—one that includes legal reforms, technological investment, capacity building, and stronger citizen engagement. The article provides policy recommendations to address these gaps and contributes to the broader debate on how developing economies can mobilize domestic resources by curbing illicit financial flows and promoting accountable fiscal governance.

Published in	Journal of World Economic Research (Volume 14, Issue 2)
DOI	10.11648/j.jwer.20251402.12
Page(s)	120-126
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2025. Published by Science Publishing Group

Keywords

Illicit Financial Flows, Mozambique, Tax Evasion, Tax Reform, Tax Transparency

References

[1]	Braun, V., & Clarke, V. (2021). Thematic Analysis: A Practical Guide. SAGE. https://uk.sagepub.com/en-gb/eur/thematic-analysis/book248481
[2]	Cobham, A., & Janský, P. (2021). Estimating Illicit Financial Flows: A Critical Guide. Global Tax Justice Journal, 3(1), 15–29. https://doi.org/10.1093/oso/9780198854418.001.0001
[3]	Creswell, J. W., & Poth, C. N. (2022). Qualitative Inquiry and Research Design: Choosing Among Five Approaches. SAGE.
[4]	Denzin, N. K., & Lincoln, Y. S. (2021). The SAGE Handbook of Qualitative Research. SAGE.
[5]	EITI Mozambique. (2022). Extractive Industry Transparency Report. Maputo: EITI National Committee.
[6]	Flick, U. (2022). Qualitative Inquiry – A Systematic Approach. SAGE.
[7]	Gaspar, V., & Mauro, P. (2022). Transparency for Development: Fiscal Institutions and the Public Trust. IMF Publications.
[8]	Global Financial Integrity (GFI). (2023). Illicit Financial Flows and Developing Countries: Updated Regional Profiles. https://gfiintegrity.org/issue/illicit-financial-flows
[9]	Kar, D., & Spanjers, J. (2020). Illicit Financial Flows to and from Developing Countries: 2005–2014. GFI. https://gfintegrity.org/report/illicit-financial-flows-to-and-from-developing-countries-2005-2014
[10]	Matavele, M., & Mussagy, F. (2021). Transparency in Mozambique’s Extractive Industry. CIP Working Paper, 12(3), 45–61. https://www.cipmoz.org/wp-content/uploads/2023/03/EXTRACTIVE-SECTOR-TRANSPARENCY-INDEX-20212022.pdf
[11]	Ministry of Economy and Finance (MEF). (2023). Annual Report on Fiscal Risks and Public Revenue. Maputo.
[12]	Ndikumana, L., & Boyce, J. K. (2020). Capital Flight from Africa: Updated Methodology and New Estimates. PERI Working Paper, No. 523.
[13]	Nhantumbo, E. (2024). Corruption and Fiscal Transparency in Mozambique. Mozambican Economic Journal, 8(1), 66–83.
[14]	UN (2021). Financial Integrity for Sustainable Development. United Nations.
[15]	Administrative Court. (2023). Audit and Public Accounts Report. Maputo.

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Rodolfo, B. (2025). Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms. Journal of World Economic Research, 14(2), 120-126. https://doi.org/10.11648/j.jwer.20251402.12

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Rodolfo, B. Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms. J. World Econ. Res. 2025, 14(2), 120-126. doi: 10.11648/j.jwer.20251402.12

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AMA Style

Rodolfo B. Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms. J World Econ Res. 2025;14(2):120-126. doi: 10.11648/j.jwer.20251402.12

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@article{10.11648/j.jwer.20251402.12,
  author = {Bruno Rodolfo},
  title = {Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms
},
  journal = {Journal of World Economic Research},
  volume = {14},
  number = {2},
  pages = {120-126},
  doi = {10.11648/j.jwer.20251402.12},
  url = {https://doi.org/10.11648/j.jwer.20251402.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20251402.12},
  abstract = {Illicit financial flows (IFFs) pose a critical threat to fiscal sustainability and development in many low-income countries, including Mozambique. Characterized by tax evasion, trade misinvoicing, offshore transfers, and corruption, IFFs have led to significant public revenue losses, particularly in the extractive sector. According to recent estimates, Mozambique loses approximately US$1.4 billion annually to these flows—undermining investments in health, education, and infrastructure. In response, the government has introduced a range of fiscal transparency reforms, including the digitalization of tax systems, creation of specialized tax units, and adherence to international standards such as the Extractive Industries Transparency Initiative (EITI). However, the effectiveness of these measures remains uncertain. This study aims to assess the extent to which fiscal transparency reforms have contributed to combating IFFs in Mozambique. Using a mixed-methods approach, the research integrates qualitative data from policy documents and interviews with key stakeholders, along with descriptive statistical analysis of revenue and compliance trends. The findings indicate modest progress in improving transparency and revenue mobilization, particularly through digital platforms and increased reporting requirements. Nevertheless, structural and institutional challenges—such as limited legal enforcement, weak coordination among oversight bodies, and the absence of a beneficial ownership registry—continue to hinder reform impact. The study concludes that while fiscal transparency initiatives are necessary, they are insufficient in isolation. A more comprehensive strategy is required—one that includes legal reforms, technological investment, capacity building, and stronger citizen engagement. The article provides policy recommendations to address these gaps and contributes to the broader debate on how developing economies can mobilize domestic resources by curbing illicit financial flows and promoting accountable fiscal governance.},
 year = {2025}
}

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TY  - JOUR
T1  - Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms

AU  - Bruno Rodolfo
Y1  - 2025/08/13
PY  - 2025
N1  - https://doi.org/10.11648/j.jwer.20251402.12
DO  - 10.11648/j.jwer.20251402.12
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 120
EP  - 126
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20251402.12
AB  - Illicit financial flows (IFFs) pose a critical threat to fiscal sustainability and development in many low-income countries, including Mozambique. Characterized by tax evasion, trade misinvoicing, offshore transfers, and corruption, IFFs have led to significant public revenue losses, particularly in the extractive sector. According to recent estimates, Mozambique loses approximately US$1.4 billion annually to these flows—undermining investments in health, education, and infrastructure. In response, the government has introduced a range of fiscal transparency reforms, including the digitalization of tax systems, creation of specialized tax units, and adherence to international standards such as the Extractive Industries Transparency Initiative (EITI). However, the effectiveness of these measures remains uncertain. This study aims to assess the extent to which fiscal transparency reforms have contributed to combating IFFs in Mozambique. Using a mixed-methods approach, the research integrates qualitative data from policy documents and interviews with key stakeholders, along with descriptive statistical analysis of revenue and compliance trends. The findings indicate modest progress in improving transparency and revenue mobilization, particularly through digital platforms and increased reporting requirements. Nevertheless, structural and institutional challenges—such as limited legal enforcement, weak coordination among oversight bodies, and the absence of a beneficial ownership registry—continue to hinder reform impact. The study concludes that while fiscal transparency initiatives are necessary, they are insufficient in isolation. A more comprehensive strategy is required—one that includes legal reforms, technological investment, capacity building, and stronger citizen engagement. The article provides policy recommendations to address these gaps and contributes to the broader debate on how developing economies can mobilize domestic resources by curbing illicit financial flows and promoting accountable fiscal governance.
VL  - 14
IS  - 2
ER  -

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Author Information

Bruno Rodolfo

Faculty of Education and Communication, Catholic University of Mozambique, Nampula, Mozambique

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http://orcid.org/0009-0009-9071-3410

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APA Style

Rodolfo, B. (2025). Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms. Journal of World Economic Research, 14(2), 120-126. https://doi.org/10.11648/j.jwer.20251402.12

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ACS Style

Rodolfo, B. Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms. J. World Econ. Res. 2025, 14(2), 120-126. doi: 10.11648/j.jwer.20251402.12

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AMA Style

Rodolfo B. Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms. J World Econ Res. 2025;14(2):120-126. doi: 10.11648/j.jwer.20251402.12

Copy | Download

@article{10.11648/j.jwer.20251402.12,
  author = {Bruno Rodolfo},
  title = {Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms
},
  journal = {Journal of World Economic Research},
  volume = {14},
  number = {2},
  pages = {120-126},
  doi = {10.11648/j.jwer.20251402.12},
  url = {https://doi.org/10.11648/j.jwer.20251402.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20251402.12},
  abstract = {Illicit financial flows (IFFs) pose a critical threat to fiscal sustainability and development in many low-income countries, including Mozambique. Characterized by tax evasion, trade misinvoicing, offshore transfers, and corruption, IFFs have led to significant public revenue losses, particularly in the extractive sector. According to recent estimates, Mozambique loses approximately US$1.4 billion annually to these flows—undermining investments in health, education, and infrastructure. In response, the government has introduced a range of fiscal transparency reforms, including the digitalization of tax systems, creation of specialized tax units, and adherence to international standards such as the Extractive Industries Transparency Initiative (EITI). However, the effectiveness of these measures remains uncertain. This study aims to assess the extent to which fiscal transparency reforms have contributed to combating IFFs in Mozambique. Using a mixed-methods approach, the research integrates qualitative data from policy documents and interviews with key stakeholders, along with descriptive statistical analysis of revenue and compliance trends. The findings indicate modest progress in improving transparency and revenue mobilization, particularly through digital platforms and increased reporting requirements. Nevertheless, structural and institutional challenges—such as limited legal enforcement, weak coordination among oversight bodies, and the absence of a beneficial ownership registry—continue to hinder reform impact. The study concludes that while fiscal transparency initiatives are necessary, they are insufficient in isolation. A more comprehensive strategy is required—one that includes legal reforms, technological investment, capacity building, and stronger citizen engagement. The article provides policy recommendations to address these gaps and contributes to the broader debate on how developing economies can mobilize domestic resources by curbing illicit financial flows and promoting accountable fiscal governance.},
 year = {2025}
}

Copy | Download

TY  - JOUR
T1  - Combatting Illicit Financial Flows in Mozambique: The Role of Tax Transparency Reforms

AU  - Bruno Rodolfo
Y1  - 2025/08/13
PY  - 2025
N1  - https://doi.org/10.11648/j.jwer.20251402.12
DO  - 10.11648/j.jwer.20251402.12
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 120
EP  - 126
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20251402.12
AB  - Illicit financial flows (IFFs) pose a critical threat to fiscal sustainability and development in many low-income countries, including Mozambique. Characterized by tax evasion, trade misinvoicing, offshore transfers, and corruption, IFFs have led to significant public revenue losses, particularly in the extractive sector. According to recent estimates, Mozambique loses approximately US$1.4 billion annually to these flows—undermining investments in health, education, and infrastructure. In response, the government has introduced a range of fiscal transparency reforms, including the digitalization of tax systems, creation of specialized tax units, and adherence to international standards such as the Extractive Industries Transparency Initiative (EITI). However, the effectiveness of these measures remains uncertain. This study aims to assess the extent to which fiscal transparency reforms have contributed to combating IFFs in Mozambique. Using a mixed-methods approach, the research integrates qualitative data from policy documents and interviews with key stakeholders, along with descriptive statistical analysis of revenue and compliance trends. The findings indicate modest progress in improving transparency and revenue mobilization, particularly through digital platforms and increased reporting requirements. Nevertheless, structural and institutional challenges—such as limited legal enforcement, weak coordination among oversight bodies, and the absence of a beneficial ownership registry—continue to hinder reform impact. The study concludes that while fiscal transparency initiatives are necessary, they are insufficient in isolation. A more comprehensive strategy is required—one that includes legal reforms, technological investment, capacity building, and stronger citizen engagement. The article provides policy recommendations to address these gaps and contributes to the broader debate on how developing economies can mobilize domestic resources by curbing illicit financial flows and promoting accountable fiscal governance.
VL  - 14
IS  - 2
ER  -

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