Mozambique

Corporate residence is determined on the basis of a company’s place of incorporation or effective management. Thus, all companies with headquarters or effective management in Mozambique are considered tax residents and are liable for CIT on their worldwide income.

Permanent establishment (PE)

Under the relevant Mozambican tax law, a non-resident entity is deemed to have a PE in Mozambique if it has any fixed place of business in Mozambique through which industrial, trading, agricultural, rendering of services, or similar activities are totally or partially carried out.

A fixed place of business comprises, among others, a place of management, a branch, an office, a factory, a workshop, a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources.

A non-resident entity is also deemed to have a PE in Mozambique if one of the following circumstances exists:

• It has a construction, installation, or assembly site when the duration of works exceeds six months (time period may differ considering the applicable tax treaty), including the activities of coordination, inspection, and supervision connected to these sites.
• It has persons or hired personnel, acting and dealing in Mozambique, who are not independent agents in the terms of the law but rather acting on behalf of the company with legal capacity to conclude contracts on its behalf and its name within the scope of the company’s activities.
• Services are furnished, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project), within Mozambique for a period or periods exceeding, in the aggregate, 180 days, or in some cases 270 days, in any 12-month period commencing or ending in the fiscal year concerned (only relevant where a double tax treaty [DTT] applies).

Generally, PE is not created as a result of preparatory or ancillary activities, such as:

• Use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise.
• Maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display, or delivery.
• Maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise.
• Maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise.
• Maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character.
• Maintenance of a fixed place of business solely for any combination of activities mentioned above, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

Mozambique is among the few number of countries that is yet to accede to the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). Hence, the concept of PE is not aligned with BEPS Action 7 on Permanent Establishment Status.