Mozambique

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A look at taxation in Mozambique

A look at taxation in Mozambique

A look at taxation in Mozambique

Diagram of the taxes included in the Mozambican tax system (Click to View Big)

The Mozambican tax system is relatively complex and often poses problems for new and existing investors. A good understanding of the tax system is necessary to ensure that companies can benefit from any exemptions which may apply, as well as to ensure compliance.

The Mozambican tax system is relatively complex and often poses problems for new and existing investors alike. A good understanding of the tax system is necessary to ensure that companies can benefit from any exemptions which may apply, as well as to ensure compliance.

The current tax system is the result of a reform initiated in 1998 that has the following main pillars:

•    Value Added Tax - VAT (IVA) is an indirect tax on expenditure. VAT is applied at the rate of 17% on the supplies of goods and services undertaken within the country, including imports.
•    IRPC (Imposto sobre o Rendimento das Pessoas Colectivas) is a Corporate Income Tax. The rate is 32% with certain exceptions.
•    IRPS (Imposto sobre o Rendimento das Pessoas Singulares) is an Individual Income Tax. Rates are calculated based on a scale of earnings, with reductions for married people and those with numbers of dependents.

These direct taxes replaced the income tax system established in 1968, which was regulated by the Code of Income Tax.

In addition there is a municipal tax system, regulated by the Municipal Tax Code, which applies to any company operating in an area designated a municipality.

The National System of Social Security (INSS) is not technically defined as a State tax as it is not revenue generated by the State. This is revenue earmarked to finance the National System of Social Security. It is an entitlement to future social benefits by the contributors and other recipients of the system. The following compulsory contributions apply: the cost to the employer is four percent, while the cost to the employee, withheld and charged by the employer on the payroll, is three percent.

The chargeable basis of these rates is as follows:
•    Basic gross salary of the employee;
•    Bonuses, commissions and other remunerations paid on regular basis;
•    Management awards.

Both national and foreign employees fall within the scope of the Social Security System, as do any residents within Mozambique, who are employed in an economic activity, even if the work is on a part-time basis, including remunerated probation and trainee periods. For foreign employees the contribution is waived if they can present proof that they contribute to a social security system in another country.

The tax system can be complex and investors are recommended to seek qualified professional advice to ensure that they are compliant. ACIS provides a comprehensive series of guides to the tax system in English, free of charge from www.acismoz.com and the site also includes a database of reputable professionals including lawyers, and auditors to assist companies with tax matters.

Visit www.acismoz.com

Read more articles from this issue:
Zambezi Traveller (Issue 09, June 2012)

Read more about the region in our destination guide:
Cahora Bassa & Tete