Individual - Income determination

Last reviewed - 24 July 2021

Employment income

The individual income tax code has a very broad concept of remuneration that covers all payments in connection with work carried out in Mozambique, regardless of where payments are made or their nature (e.g. salaries, wages, earnings, rewards, percentages, commissions, partnership earnings, allowances or bonuses, attendance fees, emoluments, participation in penalties/fines, other accessory remunerations, and any type of remunerations in general).

Travel and accommodation paid by the employer that are not connected with the functions of the employee and taxes and other legal costs due by the employee and paid on their behalf by the employer are also considered employment income for tax purposes. All fringe benefits in cash or in kind, including housing allowances and the use of company-paid houses and vehicles, are also taxable pursuant to the law.

Capital gains

Gains resulting from the following are considered capital gains:

  • The transfer of rights regarding immovable property and similar acts.
  • The transfer of shareholdings and other securities.
  • The selling of intellectual and industrial property and know-how.
  • The transfer of contractual positions or other rights inherent in contracts regarding immovable property.
  • Net income from operations in regard to financial instruments.

Capital gains are taxed as follows:

  • 50% of the positive or negative balance resulting from the onerous transfer of rights or contractual positions regarding immovable property and intellectual and industrial property, including know-how, is taxable.
  • In the case of gains or losses resulting from the onerous transfer of shareholdings, the percentage of the value to be considered for tax purposes is proportional to the time the taxpayer has held the shareholdings, namely:
    • 100% of value if held for up to 12 months
    • 85% of value if held between 12 and 24 months
    • 65% of value if held between 24 and 60 months, and
    • 55% of value if held for more than 60 months.

Capital gains are taxed at the year end, jointly with other income, at the annual tax rates established, which vary from 10% to 32%.

Capital investment income

The following income is considered as capital investment income:

  • Interest and other remuneration from capital.
  • Interest and premiums on the write down or disposal of securities.
  • Interest on shareholders loans and on profits not distributed to shareholders.
  • Income from shareholdings.
  • Income from intellectual property and from know-how if not earned by the original owner.
  • Income from life insurance contracts.

Most capital investment income is taxed through withholdings by the paying entity at 20% with exceptions for income from debit bonds and interests from bank deposits, which are taxed at 10%.