Value-added tax (VAT)
VAT is chargeable on the sale of most goods and services as well as on imports. The standard rate is 17%. Usually, VAT is recoverable by corporate entities, except for those engaged in special business activities (e.g. financial and insurance operations, leasing [exemption with restrictions], sale of immovable property, some exempt activities).
Customs duties are charged on importation of goods into Mozambique, and the applicable rates vary from 0% to 20%. Mozambique is part of the Southern African Development Community (SADC) protocol on commercial trade that exempts from customs duties some goods produced within the SADC region. However, in order to benefit from the exemption, the importer should provide proof of the origin of the said goods through the presentation of the certificate of origin of goods.
Mozambique also has signed agreements with the European Union (EU) based on which preferential rates are applicable on certain goods imported from such region.
Excise duties are levied on certain goods manufactured locally or imported, which are identified in a specific table that is an integrant part of the Excise Duty Act and indicates the applicable rates. Amongst others, the said table includes goods such as tobacco, beer and other alcoholic beverages, vehicles, cosmetics, cloths, airplanes, boats, etc.
Examples of excise duty rates include the following:
- Alcoholic beverages: 40% (55% for wine of fresh grape).
- Tobacco: 75%.
- Air vehicles without engines: 35%.
- Boats and other recreational or sportive crafts: 35%.
- Cloths and respective accessories: 30%.
Property transfer taxes (SISA)
In Mozambique, a property transfer tax is charged on transfers of real estate, excluding the land, which is owned by the state. The rate of tax is 2% of the selling price of the building. When the beneficiaries live in a country with a privileged tax regime, the applicable rate is 10%.
Stamp duties and service charges
Various documents require the payment of stamp duties. Service charges are payable for the performance of certain services for official purposes, such as those rendered by public notaries. These duties vary generally from 0.03% to 50% on the amount of the transaction supported by the document to be stamped. In some other cases, the stamp duty comprises fixed amounts, ranging from MZN 0.50 to MZN 5,000.
All remunerations paid to employees are subject to monthly withholding as per the tax rates that are established in a specific schedule approved by law, depending on the gross monthly amounts received and number of dependents of the taxpayer. The employer is obligated to withhold at source the tax due by the employees.
The monthly withholding rates vary from 0% to 32%, being withheld definitively at source if the individual has only received employment income throughout the year and has already been subject to taxation at source by a Mozambican company. In all the other situations, and/or if the individual opts to file one’s annual tax return, monthly income tax withholdings are deemed as payment on account for the final annual tax.
The amounts withheld by the company shall be delivered to the tax authorities up to the 20th day of the following month.
In case any tax is paid by the company on behalf of employees, such cost will not be accepted as a deductible cost unless this is treated as part of the remuneration cost and taxed at the hands of the employee as employment income.
Social security contributions
Social security contributions are payable by employers and employees on monthly remuneration. The aggregate rate of contribution is 7%, with 4% paid by the employer and the remaining 3% by the employee. No ceiling is applicable.
Municipality taxes that should be considered for corporate purposes include the following:
Municipality tax on real estate
The municipality tax on real estate is levied annually on the value of immovable assets situated within the municipality and owned or possessed by corporate entities. Effective tax rates range from 0.4% (for housing purposes) to 0.7% (for office purposes or mixed activities) of the building value, depending on the municipality.
Municipality tax on economic activities
The municipality tax on economic activities is levied on commercial or industrial activities carried out within a municipal territory. The tax depends on the activity being carried out, adjusted by coefficients, which are based on the zone and total area of the premises in square metres. In Maputo, this tax is calculated based on the following formula:
Maputo tax on economic activities = Basis rate x Index of category x Index of location x Index of area occupied
Where the basis rate is the applicable maximum amount of the national minimum salary of the specific activity sector (for the year 2018, the highest minimum wage varies from MZN 4,150 to MZN 11,897.60).
Where the index of category varies from 1.3 to 3.0, depending on the activity sector (e.g. commercial sector, industrial, rendering of services).
Where the index of the location varies from 1.3 to 1.5, depending on the location of the premises within the municipality.
Where the index of the area occupied varies from 1.2 to 1.5, depending on the nature of the activities and the space occupied by the premises.
Municipal vehicles tax
The municipal vehicles tax is levied on the use of specific vehicles (e.g. light and heavy vehicles less than 25 years old, motorcycles less than 15 years old, aeroplanes, and boats for private use). This tax is due by the owners who are residents of a municipality, regardless of the place of registration of the vehicle owned.
The rate varies, depending on specific criteria, such as type of fuel, engine capacity, period of registration, and weight.
This tax must be paid between January and March or within 30 days after the acquisition of the vehicle.