Mozambique

Individual - Income determination

Last reviewed - 25 June 2022

Employment income

The tax concept of employment income is very broad, including salary and any fringe benefits (in kind or in cash) paid or granted by the employer to its employees. In general, all economic advantages provided to the employee arising from the employment or equivalent relationship are considered remuneration and, therefore, taxed as employment income under the PIT Code.

With the exception of housing allowances, use of company paid houses, private use of a company car (if a written agreement is signed) attributed on an uncertain and irregular basis and the gratifications paid by an entity other than the employer, all employment income is subject to monthly withholding on a definitive and final basis through application of tax rates from 10% to 32%, depending on the gross monthly amounts received and number of dependents, as follows:

Monthly income (MZN)

# of dependents

Coefficient applicable to every additional amount to the lower amount of income

0

1

2

3

4+

Up to 20,249.99

-

-

-

-

-

-

From 20,250.00 to 20,749.50

-

-

-

-

-

0.10

From 20,250.00 to 20,749.99

0

-

-

-

-

0.10

From 20,750.00 to 20,999.99

50

0

-

-

-

0.10

From 21,000.00 to 21,249.99

75

25

0

-

-

0.10

From 21,250.00 to 21,749.99

100

50

25

0

-

0.10

From 21,750.00 to 22,249.99

150

100

75

50

0

0.10

From 22,250.00 to 32,749.99

200

150

125

100

50

0.15

From 32,750.00 to 60,749.99

1,775

1,725

1,700

1,675

1,625

0.20

From 60,750.00 to 144,749.99

7,375

7,325

7,300

7,275

7,225

0.25

More than 144,750.00

28,375

28,325

28,300

28,275

28,225

0.32

The PIT withheld by the employer shall be delivered to the MTA up to the 20th of the following month.

Individuals that only earn employment income that is subject to Mozambique withholding tax on a definitive basis are not required to file annual income tax return, meaning that there is no additional payment or reimbursement of PIT in respect to employment income (if paid by a Mozambique resident entity). 

Individuals that earn employment income that is not subject to definitive withholding tax and/or another type of income (rental, freelance income, capital gains, etc.), PIT is assessed on a yearly basis through the completion of the annual tax return (Form 10), in respect to the income obtained in the previous civil year and based on the annual tax rates varying from 10% to 32%, depending of the level of their annual taxable income.  The annual tax return must be filed from January to April of the following year, that income relates to.

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 withholding by the paying entity at 20% with exceptions for income from debit bonds and interests from bank deposits, which are taxed at 10%.