Mozambique

Foreign tax credit

Resident companies are allowed to deduct a credit correspondent to a tax paid abroad. The tax credit to be deducted should be equal to the lower of the amount of Mozambican CIT imputed to income obtained abroad or the amount of foreign tax effectively paid.

Credit for domestic economic double taxation

When the taxpayer is not eligible for the participation exemption mechanism, they are required to include the profits distributed by resident entities in their taxable profits. In such cases and in order to mitigate the impact of economic double taxation, those taxpayers benefit from a tax credit to be deducted from the tax assessed, which corresponds to 60% of the CIT of the distributed profits that are included the taxable profits.

General tax benefits and incentives

In addition to the guarantees of ownership and remittance of funds abroad, the Mozambican government also guarantees the concession of tax and customs incentives. The incentives vary depending on whether a company is starting a new venture or rehabilitating one and also on the nature of the project to be developed. The incentives discussed in this section are the generic benefits applicable to standard projects. Certain specific benefits also may be applicable depending on the activities of the industry for the investment project (e.g. agriculture, mining).

Income taxes

Accelerated depreciation

Accelerated depreciation of new buildings used in the pursuit of the investment project, as well as rehabilitated buildings, machinery, and equipment intended for industrial or agro-industrial activities, by increasing the normal depreciation rates by 50%.

Tax deductible expenditures

• The amount corresponding to 110% or 120% of the actual cost (depending on the location of the project) incurred with infrastructure considered to be of public utility for a period of five years.
• The amount corresponding to 50% of the actual cost costs incurred with the acquisition of Mozambican art or cultural work for a period of five years.

Deductions to taxable income

Deductions to the taxable income of the amounts invested in (i) professional training of Mozambican employees and (ii) the modernisation and introduction of new technologies, up to a limit of 5% and 10%, respectively, during the first five years.

Investment tax credit

A carry-forwardable investment tax credit of 5% to 10% of the total investment realised on assets directly associated with the production activity of the operating company (depending on which location the project is implemented in), for a period of five years, to be offset against the gross income tax, up to its total amount.

Taxes and duties on import of goods

An exemption from customs duties and VAT applies upon the importation of capital equipment listed in Section K of the Customs Tariff Schedule.

Sector-specific tax benefits and incentives

Processing industry

Exemption from payment of customs duties on imports of materials for the industrial production process.

Agriculture and fisheries

• 10% reduction in the CIT rate until 2025.

Upstream petroleum and mining

• Reduction of withholding tax rate from 20% to 10% for income derived by non-residents for tax purposes in connection with services related to upstream petroleum and mining activities.
• Exemption of customs duties on the import of equipment or exploration operations, classified under class K of the Customs Tariff Schedule, as well as on import of pre-determined goods intended for upstream petroleum and mining activities, equivalent to goods of class K of the Customs Tariff Schedule, provided such equipment/goods are not produced in Mozambique or, if produced, do not meet the specific characteristics of the required purpose or are not inherent to the nature of the activity to be developed.

Gambling

The gambling concession holders and their shareholders are exempt from CIT. The casino concession holders are also exempt of payment of customs duties, excise duties, and VAT on imports of equipment and materials for the implementation, rehabilitation, expansion, or modernisation and business start-up.

Project-specific tax benefits and incentives

Investment in Science and Technology Parks

The following benefits and incentives apply to investments in scientific investigation, development of information and communication technologies, and R&D:

• Exemption of CIT in the first five fiscal years.
• Discounted CIT rate of:

• • 50% from the sixth to the tenth fiscal year.
  • 25% from the 11th to the 15th fiscal year.
• Exemption of customs duties and VAT on the import of scientific, academic, and laboratory material and equipment, including software and the means that support it, destined for education and technical-scientific research, as well as on construction materials, machinery, equipment, accessories, and spare parts.

Investment in creation of basic infrastructure

The following benefits and incentives apply to investments that have as their exclusive purpose the establishment of basic public infrastructure that is essential for the promotion and attraction of investments, for the conduct of specific activities in sectors of the national economy, such as the construction and rehabilitation of roads, rail lines, airports, water supply, electricity, telecoms, and others:

• Discounted CIT rate of:
  • 80% in the first five fiscal years.
  • 60% from the sixth to the tenth fiscal year.
  • 25% from the 11th to the 15th fiscal year.
• Exemption from payment of customs duties and VAT on the importation of equipment classified in class K of the Customs Tariff Schedule.

Large scale projects

The following benefits and incentives apply to investments that exceeds MZN 12.5 billion:

• Generic income tax incentives.
• Exemption of customs duties and VAT on the import of construction materials, machinery, equipment, accessories, spare parts, and other goods destined for the pursuit of the activity.

Specific tax benefits and incentives based on special geographical areas

Investment carried out in Special Economic Zones (SEZ)

The package includes:

• Exemption of CIT for the first three or five fiscal years, depending on whether it is an SEZ company or the SEZ operator, respectively.
• Discounted CIT rate of:

• • 50% from the fourth to the tenth fiscal year or from the sixth to the tenth fiscal year, depending on whether it is an SEZ company or the SEZ operator, respectively.
  • 25% from the 11th to the 15th fiscal year or for the life of the business, depending on whether it is an SEZ company or the SEZ operator, respectively.

• Exemption from payment of customs duties and VAT on the importation of materials and goods.

Investment carried out in Industrial Free Zones (IFZ)

The package includes:

• Exemption of CIT for the first ten fiscal years.
• Discounted CIT rate of:
  • 50% from the 11th to the 15th fiscal year.
  • 25% for the life of the business.
• Exemption from payment of customs duties and VAT on the importation of materials and goods.