Somali Government terminates MGS Soft's tax collection deal
Finance Minister Bihi Iman, in a letter to the company, said that the termination came as a result of documented violations and ethical misconduct.
Somalia’s Ministry of Finance has announced the termination of a concession agreement with MGS Soft Inc., a company contracted to manage the rental income tax system in Mogadishu.
Finance Minister Bihi Iman, in a letter to the company, said that the termination came as a result of documented violations and ethical misconduct.
More To Read
- Somalia PM Hamza Barre launches five-year National Transformation Plan
- Egypt and Somalia sign strategic partnership agreement
- Somalia secures agreement to settle $36 million debt with OPEC Fund
- Journalist’s memoir reveals story of Somalia’s resilience
- Somalia, Ethiopia to have stronger GDP growth this year - World Bank
- Somalia assures commitment to stability, economic growth as G7 praises key progress
“This decision is based on a series of serious violations and conduct contrary to the terms and objectives of the agreement,” the letter reads in part.
A letter dated March 25, 2025, from the Ministry of Finance, seen by The Eastleigh Voice, lists a series of alleged contractual breaches and governance violations by MGS Soft Inc. in the management of the rental income tax system.
The contract cancellation came after a month-long internal investigation into the actions of the company and its Chief Executive Officer, Abdirisaq Hersi Mohamed.
The probe also showed that MGS Soft Inc., which had signed the deal in early 2024, was embroiled in contract breach, hidden ownership changes, data manipulation and the misuse of public funds.
The agreement between the ministry and the company was part of efforts by the government to introduce structure, accountability, and digital infrastructure to rental tax collection.
At the time, MGS Soft, which then operated as Mogadishu General Service, offered access to an existing database and a prebuilt system.
The deal between MGS Soft and the ministry was a revenue-sharing model where the one-year contract would be renewed after it hit the targets, as it was seen as a cost-effective approach that aligned with modern fiscal governance.
According to the termination letter, the company changed ownership and did not inform the ministry, which the government says was a breach of their terms of agreement.
Minister Bihi added that there was no prior written consent to show intent of ownership change.
In the letter, the minister says that there was an unauthorised restriction of system access on February 2, 2025; its employees could access the system for hours.
“Passwords for key users were altered without authorisation, and relevant users were removed from monitoring reports.”
According to the termination letter, the Somali government accused MGS Soft Inc. of manipulating and altering data within the rental income tax system, which compromised transparency.
“Furthermore, officials of MGS Soft Inc. directly collected rental taxes into personal accounts, contravening Article 3.3 of the agreement, which mandates that all revenues be deposited into the designated account.”
According to Iman, this move violated the Public Finance Management Act, 2019.
The company was also accused of mass termination of employees in the one year it collected tax on behalf of the Somali government.
“MGS Soft Inc. terminated more than 200 employees, creating operational instability and undermining the key objective of harnessing private sector resources for economic development,” the letter reads in part.
The country’s auditor general, Ahmed Isse, had raised alarm about the company's actions in February 2025.
Top Stories Today
