Corporate - Deductions

Last reviewed - 28 February 2024

Depreciation and amortisation

As a rule, all fixed assets subject to wear and tear and which repeatedly suffer loss of value resulting from their usage over time, technical progress, or any other causes can be depreciated or amortised for tax purposes. 

The right to depreciate or amortise fixed assets belongs to the owner of the assets or the entity that bears the risk of loss or deterioration of the assets.

The acquisition or production cost of fixed assets is tax deductible in accordance with their expected useful life, from the moment that they are put in operation. 

Depreciation of fixed assets should generally be charged to the profit and loss account, using the straight-line method, although taxpayers may elect to apply the reducing-balance method. The reducing-balance method cannot be applied to building properties, passenger vehicles for private use, or furniture and social equipment. 

The depreciation rates are established by law, and deductions above such rates are not deductible for tax purposes.

Depreciation and amortisation made under the following circumstances are not accepted as costs and must be added back in the tax computation:

  • Not reflected in the statutory accounts.
  • Beyond the maximum period of useful life.
  • Elements of fixed assets that are not subject to depreciation.
  • Land.
  • Light passenger vehicles beyond the amount of MZN 800,000, considering the acquisition or revaluation amount (this item is also applicable to boats, helicopters, and aeroplanes used for tourism if these assets are not to be rented by the owner or are not used on a public service activity).
  • Reinvestment of the sale value.

The main depreciation rates are:

Assets Rate (%)
Tangible assets:  
Industrial buildings 2.00
Residential buildings 10.00
Office and administrative buildings 2.00
Machinery and installations, air conditioning, and telephone equipment 12.50
Lifts 8.33
Tools 25.00
Laboratory equipment 12.50
Telex and interior equipment 10.00
Furniture and filing systems 10.00
Typewriters and accounting machines 16.66
Computers and printers 25.00
Computer servers 20.00
Warehouse and filing installations:  
Of concrete 5.00
Of wood 6.66
Of steel 8.33
Trucks 20.00
Automobiles 25.00
Intangible assets:  
Pre-operating expenses incurred prior to the commencement of business 33.33
Deferred expenses arising in connection with increases in share capital, changes in form of business enterprises, issuance of debentures, marketing and other studies, and financial expenses incurred for the acquisition or own production of fixed assets prior to completion 33.33
Patents 10.00
Manufacturing licences, concessionaire agreements, and similar rights 5.00 (1)
Trademark or premium of taking over leases of real estate (2)


  1. Subject to certain conditions set forth by the tax authorities.
  2. Depreciation is only allowed in cases of effective reduction of value within the limits regarded as reasonable by the tax authorities.

Accelerated depreciation

New immovable assets, used for the furtherance of the business, may be depreciated by increasing to 50% the normal depreciation rates approved by law. This benefit is also granted to rehabilitated immovable assets, machinery, and equipment used in agro-industrial activities, provided there is an investment project duly approved by the government.


Although goodwill is considered for accounting purposes in Mozambique, there is no provision for goodwill in the tax legislation. Consequently, goodwill should be regarded as an intangible asset for tax amortisation purposes.

Interest expenses

In respect to interest deductibility, taxpayers are allowed a tax deduction in respect of interest incurred on related-party debt. The following are, however, exceptions to the rule:

Limitations Comments
Interest barrier rule The portion of interest on shareholders’ loans that exceeds the Prime Rate (which replaced the Maputo Interbank Offered Rate [MAIBOR - 12 months]) provided by the Bank of Mozambique (BoM) at the date of settlement, added by 2 percentage points is not deductible for tax purposes. The Prime Rate currently stands at 23.50%, and therefore, the interest limit referred to herein amounts to a rate of 25.50% per annum.
Thin capitalisation The thin capitalisation rules adopted by Mozambique follow the 'safe harbour' approach. This approach restricts the amount of debt for which interest is tax-deductible by defining a debt-to-equity ratio of 2:1. Interest accrued on debt exceeding this set ratio is not deductible for tax purposes. However, for the interest that is deemed excessive to be disallowed for tax purposes, the following requirements needs to be in place:
  • The creditor of the interest must be a non-tax resident entity in Mozambique.
  • There must be a special relationship between the debtor and the creditor, as defined by the CIT Code.
  • The debtor of the interest is unable to present evidence that it would have gotten the same level of indebtedness and under similar terms and conditions if they were to obtain the loan from an independent third party.
Transfer pricing The interest rate charged on related-party transactions is not deductible if it is not within the arm’s-length parameters in terms of the Mozambican transfer pricing regime (please see Transfer pricing in the Group taxation section for further guidance).

Provisions and impairment losses

In Mozambique, companies are able to create all the provisions necessary and relevant for the normal course of business. However, for tax purposes, only the provisions and impairment losses listed below can be deducted as a cost:

  • Bad debts, provided they are limited to 1.5%, with the accumulated limit of 6%, of the value of the credits resulting from the normal activities of the taxpayer at the end of the financial year.
  • Actual losses in value of inventory.
  • Ongoing judicial procedures.
  • Credit institutions/Insurance companies.
  • Reconstruction of mines.
  • Rehabilitation of land.

Any other provisions reflected in the company’s accounts will not be accepted as tax-deductible costs.

Charitable contributions

Donations can be deducted as costs for tax purposes, provided specific requirements are met and the beneficiaries thereof are:

  • Social and cultural organisations that, acting without lucrative intent, carry out actions in art, education, science, health, preservation and restoration of cultural patrimony, or social activities: Donations can be deducted up to the limit of 5% of the previous year’s taxable income.
  • The Mozambican state: Donations can be fully deducted.

It is important to note that this deduction is not applicable automatically, as it is necessary to present proof that the donation was previously communicated to and approved by the Ministry of Finance.

Other non-deductible items

Not all costs or losses that meet the aforesaid requirements are deductible for CIT purposes and must be added-back to the net accounting profit of the year for purposes of determining the taxable profit. 

These include, amongst others, the costs or losses resulting from the following:

  • Medical-aid and personal accidents insurance, as well as 'life' insurance and contributions to pension funds and to any complementary social security scheme, unless within the terms set forth in the CIT Code and provided they are considered employment income for purposes of PIT.
  • The application of the equity method to value investment in affiliates.
  • Fair value deductions, except in relation to biological assets.
  • Irrecoverable debts, unless so determined by a court decision following a foreclosure, insolvency, or bankruptcy proceeding.
  • CIT, autonomous taxation, and other taxes levied on profits paid by the taxpayer.
  • Taxes and other charges levied on third parties that the taxpayer is not legally authorised to bear.
  • Penalties, fines, late payment, and other compensatory interests paid.
  • Compensations paid when the respective risk can be insured.
  • 50% of per diem expenses and compensations for the use of employee’s own vehicle for the benefit of the employer and not charged to clients, unless taxable under PIT at the employee level.
  • 80% of expenses incurred with entertainment of clients, suppliers, and similar.
  • 50% of expenses and costs incurred with light passenger cars, including leases or rents, fuel, maintenance, and repairs.
  • Fuel expenses on the part that the taxpayer fails to present evidence that the same pertain to assets owned or leased by the taxpayer and provided the normal consumptions are not surpassed vis-a-vis the business carried out by the taxpayer.
  • Confidential and illicit expenses, as well as any expenses without proper supporting documentation.
  • Reductions of the market value of investment tangible assets. 
  • Alterations of the market value of assets and of financial liabilities, except when this value is proven with reference to a stock exchange market variation.
  • 25% of expenses incurred with pre-professional internships.
  • Deferred taxes.
  • Unrealised capital losses.
  • Unrealised foreign exchange rate losses.
  • Rents deriving from finance lease, in relation to the lessee on the part of the rent that is destined for financial amortisation.

Net operating losses

Carryback of losses is not allowed in Mozambique. On the other hand, losses may be carried forward for a period of five consecutive years.

Payments to foreign affiliates

Any payments to non-residents are allowed as deductible expenses, provided that the amount does not exceed normal rates and that the taxpayer is able to prove that a business transaction was carried out with the non-resident company. The tax authorities may redetermine taxable income if, due to a special relationship between the Mozambican and non-resident companies, certain conditions existed that allowed a calculation of profit that differed from the profit that would have been calculated without the existence of such relationship (i.e. the arm’s-length principle).