The Somali government has terminated its contract with MGS Soft Inc., the firm hired to manage rental income tax collection in Mogadishu, citing serious violations and unethical conduct.

In a letter to the company, Finance Minister Bihi Iman said the decision followed a month-long internal investigation that exposed multiple breaches of contract, misuse of public funds, and unauthorised data tampering.

“This decision is based on a series of serious violations and conduct contrary to the terms and objectives of the agreement,” read the letter, dated March 25, 2025.

The probe also revealed that MGS Soft Inc., which signed the deal in early 2024, failed to inform the ministry about changes in ownership, restricted system access without permission, and manipulated rental income tax data.

According to the minister, the company altered passwords and removed key users from monitoring systems, actions that undermined transparency.

“Passwords for key users were altered without authorisation, and relevant users were removed from monitoring reports,” the letter said.

The government further accused MGS Soft officials of collecting rental tax directly into personal accounts, violating Article 3.3 of the agreement that requires all revenues to be deposited into designated accounts. Iman said this action breached the Public Finance Management Act, 2019.

The ministry said the company terminated over 200 employees during its one-year tenure, which disrupted operations and went against the government’s goal of involving the private sector in national development.

“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 said.

The deal was originally designed to improve accountability and digital infrastructure in tax collection. Under the revenue-sharing agreement, MGS Soft—formerly Mogadishu General Service—offered a ready database and prebuilt system, with a provision for renewal if targets were met.

However, concerns were raised by Auditor General Ahmed Isse as early as February 2025, further pushing the ministry to act on the growing list of concerns.