Mozambique investment law
The new Law No. 08/2023, which governs investments in Mozambique, came into effect on September 8, 2023, reflecting a significant update to the previous law that had been in force for nearly 30 years. This new legislation aims to create a more favorable environment for both national and foreign investments by offering various guarantees and tax incentives, while simultaneously addressing the need for clarity in land use rights and investment processes.
Expanded Scope of the Law
The new Investment Law broadens its applicability beyond domestic and foreign investments to include public-private partnerships, major projects, and concessions. It specifically targets sectors such as oil, gas, and mineral extraction, as well as public investments financed through state budgetary allocations. This adjustment highlights a commitment to facilitating investment in critical areas crucial to national development.
Eligibility and Investment Types
This law classifies investments according to their origin (national, foreign, or mixed) and type (direct or indirect). Significant changes include the generalization of the Direito de Uso e Aproveitamento da Terra (DUAT), allowing direct investors greater access to land use rights. The law also emphasizes incorporating technologies and know-how that can be financially evaluated, thus incentivizing foreign tech transfer alongside capital investment.
For foreign companies, registration in Mozambique is mandatory to access DUAT rights. Notably, the inclusion of mixed investment options combines both domestic and foreign direct or indirect investments, making the landscape more flexible for incoming capital.
Investor Guarantees
The law outlines several vital guarantees for investors, ensuring equal treatment and non-discrimination among both national and foreign business entities. Key principles include the protection of property rights, free market competition, and security for investments. Additionally, it provides freedom for companies to manage their operations, retain existing licenses, and import necessary goods for project execution without hindrance from internal market rules.
Responsibilities of Investors
The new legislative framework introduces obligations for investors, such as their duty to contribute to social responsibility policies in the areas where they operate. This initiative reflects a growing emphasis on corporate social responsibility and community engagement in investment practices.
Sanctions and Compliance
The law establishes a regulatory framework for addressing violations of imperatives with corresponding penalties. This aspect points towards a more structured approach to enforcement, aiming to ensure compliance among all stakeholders involved in the investment landscape.
Tax Incentives and Special Zones
Investors are still eligible for various tax incentives under this new law, as outlined in the Tax Benefits Code. The legislation also facilitates the creation of industrial parks, special economic zones, and free trade zones, where specific favorable tax, customs, labor, and currency regimes may be applied.
Pending Regulations
The effective implementation of Law No. 08/2023 requires further regulation, anticipated to be finalized within 120 days post-publication. Until these new regulations are enacted, the existing rules from the previous investment law will remain in effect. This transitional period is crucial for ensuring that investors have clarity and certainty as they navigate the changing political and economic landscape.
Transitioning Projects
Projects submitted for approval before the law came into force and not yet decided upon will remain subject to the previous law's provisions. This clause ensures that investors have a clear understanding of how ongoing applications will be treated under the new framework.
Dispute Resolution Mechanisms
The new law offers investors the right to defend their interests through national courts and international entities. Additionally, alternative dispute resolution options like conciliation, mediation, and arbitration are encouraged, providing investors with multiple avenues for resolving disputes. The law enables investors to choose their preferred international institutions without limitation, fostering more adaptive and flexible dispute management.
In summary, Law No. 08/2023 represents a significant step towards enhancing the investment climate in Mozambique. It aims to balance state interests with the needs of investors while ensuring broader engagement with local communities. For potential investors, this new framework presents an opportunity to engage in Mozambique's evolving market while navigating the established legal landscape more effectively.