Mozambique is advancing its tourism sector with new tax regulations targeting international digital platforms like Booking and Trivago. These platforms, which facilitate accommodations and other tourism-related services in Mozambique, currently earn commissions without contributing to the country’s tax revenue.

The proposed regulations aim to bridge this gap, ensuring that revenue generated within Mozambique bolsters national development.

Read also: Ethiopia opens its economy to foreign bank investments for the first time

Draft law seeks taxation of online tourism transactions

The Mozambican Tax Authority (AT) has developed a draft law to formalise the taxation of digital transactions in the tourism sector. Expected to be presented for legislative approval soon, the measure aligns with broader efforts to modernise Mozambique’s fiscal administration. The initiative will tax revenue earned by platforms like Booking and Trivago, which generate income through commissions on reservations for Mozambican accommodations.

Amorim Ambasse, director of the Digital Economy Taxation Unit at the AT, explained that while these platforms lack a physical presence in Mozambique, their economic activities originate within the country and should therefore be taxable. “This is about ensuring fair taxation of revenue generated within our borders,” Ambasse stated.

Strengthening oversight and compliance

In addition to taxing foreign platforms, the proposed legislation seeks to address the repatriation of revenue by Mozambican tourism establishments processing payments abroad. Currently, some businesses bypass local tax obligations. Under the new regulations, such earnings must be repatriated within 15 days of a tourist’s departure.

To enhance compliance, Mozambique has introduced a registration system for tourism establishments via the Tourism Management System managed by the National Tourism Institute (INATUR). Established under Decree No. 74/2022, the system aims to improve regulatory oversight and revenue collection mechanisms.

Read also: Host Africa acquires Nigerian web hosting firm GO54 to broaden regional service offerings

Broader global and local implications

The move mirrors global trends in taxing the digital economy. Countries worldwide are implementing measures to capture revenue from internet-based transactions, ensuring a level playing field for local and international businesses.

For Mozambique, these measures could provide additional funds to develop infrastructure, marketing initiatives, and tourism services, boosting the industry’s competitiveness. Local operators may also gain a fairer market environment as global platforms operate within the same regulatory framework.

However, for travelers, these changes may translate to higher accommodation costs, as digital platforms are likely to pass on the taxes. Despite this, improved infrastructure and services funded by increased tax revenue could enhance the overall travel experience in Mozambique.

Aligning tourism with economic growth

Mozambique’s focus on regulating digital platforms highlights its commitment to aligning tourism with national economic objectives. By ensuring that foreign companies contribute to the fiscal framework, the government aims to maximize the benefits of its expanding tourism industry.

These measures underscore Mozambique’s broader strategy to strengthen its financial position, promote fair competition, and adapt to the evolving digital economy. As global trends push for greater accountability in digital transactions, Mozambique’s approach sets a benchmark for other nations navigating similar challenges.