The tax year is, as a general rule, the calendar year. A different tax year may be applied (if previously authorised by the Ministry of Finance) for companies that carry out activities that justify a different year (e.g. held at more than 50% by a company with a different year) or non-resident companies with a PE in Mozambique.
CIT assessment must be prepared by the companies on annual returns, based on the accounting records and on adjustments prescribed by the tax regulations.
The submission of the annual tax return is due by the last working day of May for companies using the calendar year as their tax year. For companies with a tax year that is not coincident with the calendar year, the presentation of the tax return is due by the last day of the fifth month subsequent to the respective year-end.
Payment of tax
Mozambican companies and non-resident companies with a PE in Mozambique must pay CIT as follows:
- In three advance payments (based on 80% of the preceding tax year’s CIT), due in May, July, and September of the respective tax year; or, if the tax year chosen is not coincident with the calendar year, in the fifth, seventh, and ninth months of the respective tax year.
- In three special advance payments (based on 0.5% of the preceding year’s turnover less the advance payments made in previous years, which cannot be less than MZN 30,000 or more than MZN 100,000) due in June, August, and October of the respective tax year; or, if the tax year chosen is not coincident with the calendar year, in the sixth, eighth, and tenth months of the respective year.
Final tax should be paid by the last working day of May or the fifth month after the tax year-end in cases where a different tax year is adopted.
Tax audit process
The tax authorities may carry out an inspection whenever necessary. Normally, the inspection occurs after the taxpayer files a refund application or on a random basis.
Statute of limitations
The statute of limitations period is five years, but the company documents must be kept for ten years.
Topics of focus for tax authorities
Based on our experience and through assistance provided to several clients during audit reviews, we noted that the Inspectors are focusing their attention on the following aspects:
- Confirmation of the amounts reported on the monthly VAT forms and the annual tax return to determinate if the figures are the same or not or if there are non-declared sales.
- Confirmation of whether the non-deductible costs were added back to the tax computation for CIT purposes.
- Deductibility of VAT.
- Analysis of supplier invoices to confirm the right of deduction of VAT.
- Analysis of the company’s sales for verification of whether there are undisclosed sales.
- Authorisation for electronic invoicing.
- VAT on self-assessment.
- Mandatory books, namely, ledger (diário), day book (razão), and inventory and balance (inventário e balanço).
- WHT on payments to non-resident entities.
- Thin capitalisation.