Mozambique Personal Income Tax

Residents of Mozambique are subject to tax on their worldwide income. Nonresidents are subject to income tax on income arising in Mozambique. Individuals are considered to be resident if they satisfy any of the following conditions:

  • They are present in Mozambique for more than 180 days in a tax year, regardless of whether the days are consecutive.
  • They are present in Mozambique for less than 180 days in a tax year, but they maintain a residence in Mozambique under circumstances that indicate an intention to maintain and occupy the residence as a permanent residence.
  • They perform functions of a public nature abroad for the Republic of Mozambique.
  • They are crew members of a ship or aircraft that are at the ser­vice of entities that have their residence, head office or effective management in Mozambique.

Individuals must inform the tax authorities of their residence.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Income tax is levied on employment income paid in cash or in kind.

Directors’ fees. Directors’ fees are taxed in the same manner as employment income.

Self-employment income. Individuals carrying out business activi­ties independently, providing consulting services or engaging in technical, artistic or scientific projects are subject to tax on income derived from such activities.

Investment income. Investment income is subject to withholding tax at a rate of 20%. Resident taxpayers include investment income in their annual taxable income, which is subject to tax at progressive rates (see Rates), and a credit is granted for the tax withheld. Investment income derived from shares listed on the Mozambican Stock Exchange is subject to a final withholding tax of 10%.

Other income. Other income is subject to withholding tax. Resident taxpayers include other income in their annual taxable income, which is subject to tax at progressive rates (see Rates), and a credit is granted for the tax withheld. Income from gam­bling is subject to withholding tax at a rate of 10% as a final tax.

Taxation of employer-provided stock options. Income derived from employer-provided stock options is taxed in the same manner as employment income on exercise of the options.

Capital gains. Capital gains are subject to withholding tax at a rate of 20%. They are included in annual taxable income subject to tax at progressive rates (see Rates), and a credit is granted for the tax withheld.

The tax base for capital gains derived from the transfer of shares decreases according to the length of the holding period for the shares. It is taxed in the annual income tax return.

Capital losses may offset capital gains only.

Exempt income. The following items are exempt from income tax:

  • Meal subsidies not exceeding the minimum salary in force
  • Other allowances and similar payments that do not exceed the legally established limits
  • Pensions
  • Compensation received within the scope of a dismissal process

Deductions

Deductible expenses. Expenses that may be deducted include compensation paid by the employee to the employer.

Personal deductions and credits. Each individual may deduct 36 minimum salaries (the highest minimum salary in force on 31 December of the relevant tax year) in computing taxable in­come. Currently, the highest minimum monthly salary is MZN8,750 (approximately USD175).

The following amounts may be claimed as tax credits:

  • MZN1,500 for each married taxpayer
  • MZN1,800 for each single and judicially separated taxpayer
  • MZN600, MZN900, MZN1,200 and MZN1,800, for one, two, three or four or more dependent children, respectively

Rates. The following are the tax rates applicable to annual tax­able income.

Annual taxable income    
Exceeding Not exceeding Rate Rebate
MZN MZN % MZN
0 42,000 10
42,000 168,000 15 2,100
168,000 504,000 20 10,500
504,000 1,512,000 25 35,700
1,512,000 32 141,540

Tax credits. In addition to the personal tax credits (see Personal deductions and credits), advance payments of tax and tax with­held at source may be claimed as a credit against annual tax due, except for income from employment which is subject to a final tax on a monthly basis.

A tax credit is also allowed for foreign taxes paid (see Section E).

Relief for losses. Losses incurred in business or professional activities may be carried forward and offset against profits from the same type of activities in the following five years. Losses may not be carried back.

Nonresidents. Nonresidents are subject to withholding tax on their income derived in Mozambique. The general rate of with­holding tax is 20%. However, the rate is 10% for income derived from artistic work or social entertainment, gambling, competi­tions, lotteries and similar contests. The withholding tax is final for all income except for property income. Capital gains derived by nonresidents are subject to tax at a rate of 32%.

Other taxes

Property tax. Municipal property tax is paid on an annual basis and is calculated at rates ranging from 0.2% to 1% of the total value of the property. The transfer of immovable property is sub­ject to property transfer tax (SISA) or municipal property trans­fer tax at a rate of 2%.

Inheritance and gift taxes. Mozambique imposes inheritance tax and gift (donations) tax. Inheritance and gift tax is payable at rates varying from 2% to 10%, depending on the relationship of the heirs or beneficiaries to the deceased or donor.

Social security

Social security contributions are payable monthly on salaries, wages, bonuses and other compensation income, such as produc­tivity premiums and housing allowances. The contribution rates are 4% for employers and 3% for employees. The employer with­holds the employee contributions monthly. Resident foreign employees are exempt from social security contributions provid­ed that they prove that they are contributing to a similar scheme in another country.

Tax filing and payment procedures

The tax year in Mozambique for individuals is the calendar year.

Residents who received only employment income must file their tax returns by 31 March of the following year. Residents earning other income may file their tax returns by 30 April of the follow­ing year and pay any balance of tax due by 30 May.

Double tax relief and tax treaties

Resident individuals who derive income abroad may claim a tax credit for foreign tax paid, up to the amount of the tax due on such income in Mozambique.

Mozambique has entered into double tax treaties with the follow­ing jurisdictions.

Botswana                     Mauritius                         United Arab

India                             Portugal                           Emirates

Italy                              South Africa                    Vietnam

Macau SAR

Temporary entry visas

A valid passport and entry visa are required to enter Mozambique.

Mozambique offers the following types of temporary visas to foreign nationals:

  • Transit visas, which are valid for a maximum of seven days.
  • Student visas, which are valid for 12 months and are renewable.
  • Tourist visas, which are single-entry visas valid for 30 days. These visas are renewable for up to an additional 90 days.
  • Business visas, which are multiple-entry visas valid for three months. These visas may be renewed for an equal period. Each entry may be for up to 30 days.
  • Residence/work visas, which are single-entry visas valid for 30 days. These visas are provided outside Mozambique if the indi­vidual wants to enter Mozambique with the intention of resid­ing or working.

A fee is payable for the issuance of each type of visa.

Tourist visas for citizens of countries where Mozambique does not have consular services may be obtained at the point of entry.

Work permits and self-employment

Foreign nationals must obtain a work permit to work in Mozambique, which is valid for up to two years and is renewable. Companies may employ foreign nationals who do not require a work permit (through a communication to the Ministry of Labour) for the same period, up to a certain percentage of the total work force.

Foreign nationals who are self-employed individuals, sharehold­ers or representatives of shareholders in Mozambique must also obtain a work authorization in their personal capacity.

After the period of validity for a work authorization or work permit expires, an individual may reapply for such items.

Employment visas are valid for the period of duration of the work permit (maximum two years), with multiple entries.

Residence permits

Precarious Residence Permit authorization is granted to foreigners who are not tourists, visitors or businesspersons and wish to re­main in Mozambique for a period exceeding 90 days. This autho­rization is renewable annually.

Temporary residence permits are valid for a maximum period of one year and renewable for one-year periods. They are granted to foreigners who have had precarious residence for at least five years and to foreigners who enter the country for residence purposes.

Foreign nationals who reside in the country for more than 10 years may obtain permanent resident status, which is renew­able every 5 years.

The following documents must be submitted with the application for residence permit for work:

  • Completed application form
  • Passport and a copy of the passport
  • Medical certificate
  • Work authorization issued by the Ministry of Labour
  • Deposit with the immigration authorities of an amount equal to the value of the return ticket to the country of origin
  • Applicant’s criminal record issued within the preceding three months

In addition to the above, foreigners coming to work in the oil and gas and mining sectors require a pre-approval by the Minister of Foreign Affairs, based on the work permit and no objection from the ministry that supervises the respective sector of activity.

Family and personal considerations

Family members. Entry visas and residence permits are granted automatically to family members of a foreign national who holds a valid work authorization or permit. However, an expatriate’s spouse who is an employee must file an application for a resi­dence permit through his or her employer.

Marital property regime. The default marital property regime in Mozambique is community property for assets acquired during the marriage. A prenuptial agreement or the law (where there are children from previous marriages) may amend the default regime.

Forced heirship. Forced heirship rules apply in Mozambique, and a legal share of the estate automatically devolves to the surviving spouse, descendants, ascendants, brothers and their descendants and other relatives.

Driver’s permits. Expatriates may not drive legally in Mozambique using their home country driver’s licenses, except for driver’s licenses from Southern African Development Community (SADC) member states. Holders of residence permits must apply for local temporary driver’s licenses.