INDIVIDUAL TAXES
SIGNIFICANT DEVELOPMENTS
The significant changes that have occurred in Mozambique during the last
year are related to earned income taxation. Different progressive rates
were established.
TERRITORIALITY AND RESIDENCE
Residence and/or domicile are irrelevant for Mozambique individual tax
purposes. Individual tax is levied and payable only where
Mozambique-source income is earned.
Income tax on individuals is applicable both for Mozambican and foreign
workers earning profits/remuneration received from employment in
Mozambique and for those providing services on an independent or freelance
basis. Income tax is also applicable to outside resident individuals
providing permanent services to entities based in Mozambique.
A complementary tax is levied on the global earnings of individuals not
taxed under earned income tax.
GROSS INCOME
Employee gross income/Income tax is levied on income from all sources,
including salaries and other benefits in money or in kind owed to national
or foreign workers in Mozambique, income earned by independent
professinals, income from freelance work, income from business activities,
and other source.
In addition to the activities referred above, the following are also
considered as taxable earnings.
1. Salary received by members of a company's corporate bodies(e. g., for
the members of the board of directors)
2. Income received as salary by the owners of individual ventures.
3. Travel and entertainment payments.
4. Tax expenses of the employee assumed by the employer.
According to the earned-income tax regulations, there are no concessions
to short-term residents.
Capital gains and investment income/As mentioned above, complementary tax
is levied on capital gains from the disposal of the shares, including
amortization, at a flat withholding tax of 18%.
DEDUCTIONS
Business deductions/No deductions are allowed in calculating the
earned-income tax rate.
Nonbusiness expenses/In computing the net aggregated income for
calculation of the complementary tax, individuals are allowed to deduct
the following items.
1. Corporate tax.
2. Contributions to social security entities and to public health,
charity, education, scientific, artistic, and other related entities-Up to
15% of the income from the previous year.
3. Contributions to state entities, and foreign taxes paid.
Personal allowances/None.
Tax credits/None.
OTHER TAXES
Social security taxes/Social security contributions are payable monthly on
all salaries, wages, regular bonuses or other regular income, excluding
meal subsidies. The employer contributes an amount equal to 4% of monthly
salary and the employee contributes 3% of monthly salary. The employer
withholds employees' contributions.
Local taxes on income/None
TAX ADMINISTRATION
Returns/The tax year is the calendar year.
Husbands and wives are taxed separately on earned income.
Employers withhold earned income tax for work carried out in Mozambique,
on a monthly basis. In January, taxpayers must file returns for
earned-income tax covering income from the previous year. The balance of
tax due is payable by July.
In July, taxpayers must file declarations of the previous year's income
subject to complementary tax. The balance of tax due is payable by
November.
Payment of tax/As stated above, the employer is obliged to collect the
amount of earned income tax payable from its employees each month and make
such payments to the Finance Department within the following month.
TAX RATES
Earned income tax/The following are the general rules on salaried.
(In MZM'000s)
NET INCOME
OVER NOT OVER RATE DEDUCTION*
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