Corporate - Deductions

Last reviewed - 24 July 2021


Depreciation is a deductible cost for CIT purposes according to the regulations of the CIT Code, subject to restrictive and specific rules.

The main legal principles regarding depreciation are as follows:

  • The establishment of the applicable rates falls under the competence of the Ministry of Finance.
  • The calculation is carried out on a straight-line basis in accordance with the rates applicable.

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

A basic principle regarding acceptance of costs and expenditures requires that these are necessary for the company’s/branch’s activity (i.e. indispensable to generate the profits and gains obtained by the company). This concept includes, among others, interest and other financial costs that are, in principle, also deductible for tax purposes unless the tax authorities assume that the interest rate applicable in one transaction is higher than the applicable rate applicable in the market, with the exceeding amount being subject to taxation.

Interest and other types of remuneration above the Maputo Interbank Offered Rate (MAIBOR) plus two percentage points at time of payment on the shareholders’ loans are not tax-deductible costs.

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.
  • Depreciation of stock.
  • 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.

Bad debt

With regards to provisions for bad debts, companies are only allowed to deduct 1.5% per year (and 6% accumulated) of the provisions created for bad debts.

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.

Fines and penalties

Fines and other penalties paid due to any infringement, which do not have a contractual basis, including interest, are not accepted as tax-deductible costs.


Taxes paid in relation to the activities of a company are tax deductible, excluding CIT itself.

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).