Corporate Taxation in Mozambique
Corporate Income Tax (IRPC): The standard corporate income tax rate in Mozambique is 32%, applicable to both domestic and foreign companies. However, as part of a targeted fiscal policy, a significantly reduced rate of 10% is in effect for businesses engaged in agriculture, livestock, aquaculture, and urban transport activities until December 31, 2025. This is a clear signal that the government is utilizing its tax policy to direct capital towards sectors crucial for food security and domestic infrastructure development.
Value-Added Tax (VAT): The standard VAT rate is 16% on the sale of most goods and services, as well as on imports. 1 A temporary VAT exemption on essential products, such as sugar and edible oils, has been extended until the end of 2025.
Withholding Tax (WHT): A standard WHT rate of 20% is applied to payments made by a resident entity to a non-resident for specific categories of income, including dividends, interest, royalties, and capital gains on shares. This rate constitutes the final tax liability for non-resident entities without a permanent establishment in Mozambique. Reduced WHT rates of 10% apply to certain income streams, such as those from shares listed on the Mozambique Stock Exchange, telecommunications services, or rural electricity distribution projects.
Social Security Contributions
Social security contributions are mandatory for both employers and employees and are managed by the National Institute of Social Security (INSS). The total contribution rate is 7%, with the employer paying 4% and the employee contributing 3% of their monthly salary. Foreign employees who can provide proof of contributions to a similar system in their home country may apply for an exemption
Investment Incentives and Special Regimes
Mozambique offers a wide range of investment incentives that vary based on the project's amount, location, and sector. The existence of this tiered framework demonstrates a highly nuanced approach to attracting and retaining high-impact capital. Key incentives include:
Tax Credits: A carry-forwardable tax credit of 5% to 10% on the total investment in assets can be offset against gross income tax for five years.
Accelerated Depreciation: New or rehabilitated buildings, machinery, and equipment used in industrial or agro-industrial activities can benefit from a 50% increase in normal depreciation rates.
Special Economic Zones (SEZs) and Industrial Free Zones (IFZs): Companies operating in these zones can benefit from significant tax reductions and exemptions. For example, IFZs offer a corporate income tax exemption for the first ten fiscal years, followed by discounted rates of 50% for the next five years and 25% for the life of the business.
Large-Scale Projects: Investments exceeding MZN 12.5 billion (approximately US$200,000) may receive a bespoke package of generic income tax incentives and exemptions on customs duties and VAT for the import of essential materials and equipment.