Business Environment

flag Mozambique Mozambique: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The tax year is the calendar year. A different tax period can be allowed only when a company is more than 50% owned by an entity that has adopted a different tax period.
Accounting Standards
IFRS standards must be adopted by all listed companies, public companies, companies with a majority state shareholding, banks and other medium and large companies.
Accounting Regulation Bodies
Mozambique Tax Authority
Accounting Reports
The annual accounting report has to include a balance sheet, a profit and loss account and a cash flow statement.
Publication Requirements
All legal entities must file annual returns by the 31st May following the end of the tax year.
Professional Accountancy Bodies
The Mozambique Association of Accountants and Auditors (OCAM)
Certification and Auditing
All public companies are required by law to be audited. Regarding private companies, a statutory auditing is mandatory for PLCs and branch offices, while it is not for LLCs and representative offices.
Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Imposto sobre o Valor Acrescentado (IVA)
Tax Rate
17%
Reduced Tax Rate
Certain goods and services are exempt from VAT, including banking, financial, insurance and reinsurance; medical, sanitary, garbage removal, educational, funeral and ambulance transport services; education and related goods; non-profit organizations or public entity services and goods (including social assistance, sports and cultural activities, guide services at museums and state-owned parks); goods for the disabled; human organs and blood; milk; medicine and other pharmaceutical products; supplies for nurseries, homes for abandoned or disabled children and the aged, rehabilitation centres, and similar public and non-profit entities; services by the state or non-profit entities; cultural, educational or technical newspapers, magazines and books; supply of staff by religious or philosophical entities; stamps; gaming and betting; alimentary oil and soaps; sugar and certain sugar industry products; public transportation services.
Zero-rated supplies include exports and international transport; certain basic foodstuffs (maize, bread, etc.); illuminating paraffin and jet-fuel; products from activities of production of rations for animal feed for human consumption; farming goods and services for sugarcane production; goods to be used as raw material in alimentary oil and soap industry; mosquito nets, common bicycles and condoms.
Other Consumption Taxes
Excise duties are levied on certain goods, including tobacco (75%), alcoholic beverages (40%, 55% for wine of fresh grapes), cosmetics, cloths (30%), airplanes without engines (35%), boats (35%), etc.
A municipal vehicles tax is levied on the use of light and heavy vehicles less than 25 years old, motorcycles less than 15 years old, aeroplanes, and boats for private use, with rates varying depending on the type of fuel, engine capacity, period of registration, and weight.

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Corporate Taxes

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.
 

Country Comparison For Corporate Taxation

  Mozambique Sub-Saharan Africa United States Germany
Number of Payments of Taxes per Year 37.0 36.6 10.6 9.0
Time Taken For Administrative Formalities (Hours) 200.0 284.8 175.0 218.0
Total Share of Taxes (% of Profit) 36.1 47.3 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Personal Income tax Progressive rate from 10% to 32%
From MZM 0 to MZM 42,000 10%
From MZM 42,000 to MZM 168,000 15%
From MZM 168,000 to MZM 504,000 20%
From MZM 504,000 to MZM 1,512,000 25%
Above MZM 1,512,000 32%
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.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of tax conventions signed by Mozambique
Withholding Taxes
Dividends: 20%/10% (shares listed on the Mozambique stock exchange); Interests 20%; Royalties 20%
Bilateral Agreement
Mozambique and Mauritius concluded a Double Taxation Agreement.

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Intellectual Property

National Organisations
The Industrial Property Institute (IPI).
Regional Organisations
The African Regional Intellectual Property Organization (ARIPO)

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Legal Framework

Independence of Justice
The constitution of Mozambique grants independence to the judiciary system. Nevertheless, undue interference by members of the public administration aimed at directly or indirectly influence the decisions of the courts are still reported.
Equal Treatment of Nationals and Foreigners
Foreigners are formally granted the same rights as Mozambican citizens.
The Language of Justice
Portuguese is the official judicial language in the country.
Recourse to an Interpreter
It is possible to request an interpreter, who is obliged to observe all honesty, integrity and sincerity.
Sources of the Law and Legal Similarities
Mozambique’s legal system is based on Portuguese civil law and customary law. The main source of the law is the Constitution of 2004.
Legislative power is vested in the Assembly of the Republic and the government.
Only validly approved and ratified international treaties and agreements can enter into force in  Mozambique.
Checking National Laws Online
Library of the Congress website

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Standards

National Standards Organisations
National Institute for Normalization and Standards (INNOQ)
Integration in the International Standards Network
The INNOQ is a correspondent member of the International Organization for Standardization (ISO).
Classification of Standards
ISO-3166
Online Consultation of Standards
Consult the ISO catalogue.
Certification Organisations
National Institute for Normalization and Standards (INNOQ)

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Business Practices

General Information
Opening Hours and Days
A typical working week in Mozambique goes from Monday to Friday.
Business hours are generally from 8:00am to 5:00pm
Government offices normally open from 7:30am and close at 3:30pm
 

Public Holidays

1 Jan New Year
3 Feb Mozambican Heroes Day
30 Mar Good Friday
7 Apr Mozambican Woman's Day
1 May May Day
25 Jun Independence Day
7 Sep Victory Day
25 Sep Armed Forces Day
4 Oct Peace and Reconciliation Day
25 Dec Christmas Day
 
 

Periods When Companies Usually Close

Christmas time December
New Year's Eve 1st January
 

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Latest Update: October 2022