Mozambique Private Investment Law 2023

The Private Investment Law (Law No. 8/2023), effective from September 7, 2023, replaces the outdated Law No. 3/93 to modernize Mozambique's investment framework, aligning with the country's economic goals and global standards. It aims to enhance the business environment, attract foreign direct investment (FDI), and support Mozambique's projected 2.5% GDP growth in 2025, with US$5 billion in FDI approvals in the first half of 2025.

The Private Investment Law is highly relevant for foreign investors in Mozambique's dynamic market, ranked 4th in Africa for FDI inflows (UNCTAD 2024). Its key implications include:

Attractive Incentives: Offers tax holidays (5-10 years), customs exemptions, and accelerated depreciation, especially in SEZs/IFZs or for large projects (>MZN 12.5 billion/~US$200,000). These reduce costs in high-growth sectors like natural gas, agriculture, and renewables.

Robust Protections: Guarantees property rights, profit repatriation, and protection against unfair expropriation, with fair compensation transferable abroad. Double taxation agreements (e.g., with Portugal, South Africa) further enhance appeal.

Compliance Requirements: Mandatory APIEX approval for incentivized projects integrates with the Commercial Code's beneficial ownership rules (Decree-Law No. 1/2024), ensuring AML/CTF compliance. Social responsibility duties (e.g., local hiring, infrastructure) align with the pending 2025 Local Content Law, critical for extractive industries.

Streamlined Processes: The authorization regime and E-BAU platform reduce registration timelines (10-30 days), though Boletim da República publication delays (up to 90 days) require planning. APIEX coordination simplifies compliance.

Challenges: Portuguese-only documentation, sector-specific restrictions (e.g., mining), and social responsibility obligations necessitate local legal support (e.g., SAL & Caldeira) and APIEX guidance (www.apiex.gov.mz). Non-compliance risks sanctions like incentive loss.

Strategic Opportunities: The law supports Mozambique's FDI surge by signaling investment windows (e.g., PPPs, SEZs) and ensuring dispute resolution options (courts, arbitration), enhancing investor confidence.

Key Topics

General Provisions (Chapter I)

Purpose and Scope (Articles 1-2): Establishes the legal framework for private investments eligible for tax and non-tax incentives, covering domestic and foreign investments, public-private partnerships (PPPs), large-scale projects, and business concessions. It excludes public investments, non-profit ventures, and specific sectors like oil, gas, and mining (governed by separate laws), though processing, sale, and transport activities may fall under this law if not regulated elsewhere.

Definitions (Article 3): Provides a glossary defining terms like "investment," "foreign capital," "exportable profit," and "special economic zone" to ensure clarity and consistency.

Investment Policy (Chapter II)

General Principles (Article 4): Emphasizes equal treatment for national and foreign investors, respect for property rights, adherence to market economy principles, competition, ethics, and free movement of capital and goods, in line with international law.

Objectives (Article 5): Aims to create jobs, enhance worker skills, promote sustainability (economic, environmental, social), boost exports, reduce imports, introduce innovative technologies, develop infrastructure, support local businesses, and protect natural resources.

Guarantees, Rights, and Duties of Investors (Chapter III)

Guarantees (Articles 6-11): Ensures fair, non-discriminatory treatment, protection of property (including intellectual and land rights), and safeguards against expropriation unless for public interest with prompt, fair compensation (market value plus interest). Allows fund transfers abroad (profits, royalties, loan repayments) under foreign exchange rules, with Bank of Mozambique oversight. Guarantees freedom of company management and license stability.

Duties (Article 12): Requires compliance with tax, environmental, labor, accounting, and insurance laws, plus respect for local customs and social responsibility policies.

Social Responsibility (Article 13): Mandates contributions to environmental protection, gender equality, education, health, infrastructure (e.g., schools, roads), local hiring, and support for small Mozambican enterprises, especially for large projects.

Investment Operations (Chapter IV)

Types and Forms (Articles 14-17): Covers national, foreign, or mixed investments, either direct (e.g., cash, equipment, land rights, technology transfers) or indirect (e.g., loans, franchises, technical assistance). Allows flexibility in investment forms, provided they are quantifiable in monetary terms.

Freedom to Invest (Article 18): Permits investment in most sectors, except those reserved for the State (e.g., defense) or restricted by nationality under specific laws.

Incentives (Article 19): Grants irrevocable tax and customs benefits (e.g., holidays, exemptions) per the Code of Fiscal Benefits for compliant projects, particularly in special economic zones (SEZs) or industrial free zones (IFZs), with 10-year corporate tax exemptions for IFZs.

Development Poles (Article 20): Establishes SEZs, IFZs, industrial parks, and rapid development zones with special tax, customs, labor, and foreign exchange regimes to boost regional growth.

Procedures (Chapter V)

Administrative Principles (Article 21): Governed by transparency and public administration rules, with a shift toward electronic platforms (e.g., E-BAU) for efficiency.

Investment Regimes (Article 22): Offers a mere registration regime for smaller projects and an authorization regime for large-scale projects (>MZN 12.5 billion/~US$200,000), PPPs, or those impacting environment, safety, or public health (e.g., >10,000 hectares of land). APIEX coordinates processes.

Decision-Making (Article 23): Requires justified decisions, investor input within 10 days, and final decisions within 5 days.

Assignment of Rights (Article 24): Allows transfer of investment rights with APIEX approval, ensuring tax compliance for capital gains.

Dispute Resolution (Chapter VI)

Mechanisms (Articles 25-26): Guarantees access to national courts, amicable negotiations, or out-of-court methods (e.g., arbitration, mediation). International treaties may provide additional protections.

Offences and Sanctions (Chapter VII)

Infractions (Article 27): Includes non-compliance with project terms, unauthorized activities, false statements, or failure to implement projects on time.

Sanctions (Article 28): Ranges from warnings to loss of incentives or project cancellation, with investor hearings ensured.

Transitory and Final Provisions (Chapter VIII)

Regulations (Article 29): Council of Ministers to issue regulations within 120 days (by October 2023). Existing rules apply until new ones are enacted.

Transitional Rules (Article 30): Projects under the old 1993 law remain governed by it until transitioned.

Repeal (Article 31): Revokes Law No. 3/93 and conflicting legislation.

Entry into Force (Article 32): Effective 90 days after publication (September 7, 2023).