Tax
Rebuilding revenue from customs and Mogadishu port, with contested federal-state shares
Domestic revenue rests heavily on customs at Mogadishu port and airport plus limited inland taxes. Revenue-sharing between the federal government and member states is unresolved, and armed groups levy their own taxation.
Key rules
- Jurisdiction — Federal Ministry of Finance; member states levy their own taxes and control their own ports.
Governing law
- Income Tax Law 1984 and subsequent federal revenue legislation
- Customs tariff legislation
- Federal-member state revenue-sharing arrangements — not settled in statute
In practice
Revenue reconstruction has been one of the more measurable areas of progress, with federal domestic revenue rising from a very low base through improved customs administration at Mogadishu port and airport and the introduction of a limited sales tax and large-taxpayer administration. Two structural problems persist. First, the constitutional division of taxing power and revenue sharing between the federal government and the member states is unsettled, and states such as Puntland and Jubaland control their own port revenue, so there is no single national tax base. Second, al-Shabaab operates an effective extortion-based taxation system on road transport, businesses and agriculture that in some assessments rivals government collection, which means businesses may pay twice. Somalia reached HIPC completion point in 2023, which was tied to revenue and public financial management reforms.