Any non-resident entity carrying out economic activities in Mozambique, without being registered as a taxpayer, is liable, in general, to a final and definitive 20% WHT that is applied on all income earned. An exception exists for (i) telecommunications and international transport, as well as the respective installation and assembly of equipment made by those same entities, (ii) construction and rehabilitation of production, transport, and distribution of electricity infrastructures in the rural zones under the public projects of rural electrification; and (iii) maritime vessels freight for fishing and coasting activities, all of which are subject to a 10% WHT rate.
Not all gains sourced from Mozambique by non-resident corporate entities are subject to taxation through WHT. This is the case, for example, of:
- capital gains derived from immovable property located on Mozambican territory or from the disposal of shares in entities with head office or effective management in the Mozambican territory or other movable assets issued by non-resident entities; and
- capital gains derived from the disposal of shares, participating interests, or rights in general between non-resident entities involving, direct or indirectly, assets located in Mozambique.
In such cases, the non-resident entity is required to register itself as a non-resident taxpayer, appoint a tax representative in Mozambique and subject the gain to 32% CIT. On disposal of immovable property (other than petroleum and mining assets), only 50% of the gain is taxable.
In accordance with Mozambique's DTTs, the following tax rates are applicable to dividends, interest, and royalties:
|Dividends||Interest||Royalties||Capital gains on shares|
|Botswana||0/12 (4, 5)||10||10||0|
|Mauritius||8/10/15 (1, 2, 3)||8||5||0|
|South Africa||8/15 (1, 3)||8||5||32(6)|
|United Arab Emirates||0||0||5||32(6)|
- The 8% rate applies if the recipient of the dividends is a company that has more than 25% of the share capital in the company that distributes the dividends.
- The 10% rate applies if the recipient of the dividends is a company that has less than 25% of the share capital in the company that distributes the dividends.
- The 15% rate applies in all other cases.
- The 0% rate applies if the recipient of the dividends is a company that has more than 25% of the share capital in the company that distributes the dividends.
- The 12% rate applies in all other cases.
- Gains are only taxed in the other state if assets of the entity sold are composed of more than 50% immovable assets. In the case of Vietnam, the threshold is 30%.