Mozambique: Business Environment

Company Tax

32%

Tax Rate For Foreign Companies

Resident companies are taxed on their global income, whereas non-resident companies are subject to tax only on their income originated in Mozambique. A company is resident if its head office or place of effective management or control is in Mozambique, or if the business is registered in the country.
Any non-resident entity carrying out economic activities in Mozambique without being registered as a taxpayer is liable to a final and definitive 20% withholding tax applied on all income earned.

Capital Gains Taxation

Capital gains are considered normal income and are taxed at the corporate tax rate. If a taxpayer reinvests the sale proceeds within three tax years following the year of the sale, the gain may be deferred until the end of the third year. However, if the taxpayer does not realise the reinvestment, the tax that was not assessed during the three-year period will be charged, along with compensatory interest.

Capital gains in the extractive industry are calculated based on the difference between the amortization value and the acquisition value, deducting charges for the valuation of assets and disposal expenses, being taxed in full and separately at a rate of 32%.

Main Allowable Deductions and Tax Credits

Goodwill should be regarded as an intangible asset for tax amortisation purposes. Interest and other financial costs are generally deductible unless the tax authorities consider that the interest rate applicable in one transaction is higher than the rate applicable in the market, with the exceeding amount being subject to taxation.
Provisions for depreciation of stock; ongoing judicial procedures; bad debts (up to 1.5% of the provision per year); credit institutions/insurance companies; reconstruction of mines; and rehabilitation of land are deductible.
Charitable contributions are deductible up to 5% of the previous year’s taxable income (or in full for donations to the government).
Taxes are generally deductible (except for corporate income tax), and fines and penalties are not.
Losses may be carried forward for a period of five consecutive years, while the carryback of losses is not allowed. Payments to non-residents are generally allowed as deductible expenses.

Other Corporate Taxes

Other taxes include:

• stamp duties (0.03% to 50% on the amount of the transaction, or MZN 0.50 to MZN 5,000)
• property transfer taxes (SISA), levied at 2% (10% if the beneficiaries live in a tax haven)
• municipality tax on real estate from 0.4% (for housing purposes) to 0.7% (for office purposes or mixed activities)
• Surface tax on entities undertaking a mining activity in the country (MZN 85,000)
• municipality tax on economic activities, levied on commercial or industrial activities (rates vary according to the sector, location and size of the premises)
• municipal vehicles tax, levied at varying rates according to the type of fuel, engine capacity, period of registration, and weight
• social security contributions paid by the employer are equal to 4% of the employee's gross salary, without any ceiling
• payroll taxes between 0% and 32% of the salary has to be withheld at source by the employer.

Other Domestic Resources

Mozambique Tax Authority

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Individual taxpayers can enjoy the following deductions:
- MZN 1,800 for each married or single taxpayer
- MZN 600 for one dependant, MZN 900 for two dependants, MZN 1,200 for three dependants, and MZN 1,800 for four or more dependants
- deductions of tax credit for international double taxation.
Deductions from business income depend on the taxation regime adopted by each taxpayer.

Special Expatriate Tax Regime

Resident individuals are subject to tax on worldwide income. Non-residents are taxable only on Mozambique-source income.
Non-resident individuals are subject to a 20% flat tax rate, which must be withheld and remitted by the employer/payer.
An individual will be considered resident for tax purposes if he/she resides in Mozambique for more than 180 days in a tax year, or if resident for a shorter period and on 31 December, the individual occupies a residence under circumstances indicating an intention to continue occupancy on a permanent basis.