SIGNIFICANT DEVELOPMENTS
The significant changes that have occurred in Mozambique during 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.
A resident is defined as a person who fulfills the following criteria.
1. Resides permanently in Mozambique.
2. Has resided in Mozambique for more than 180 days in a fiscal year or
has resided in Mozambique for 180 days or less, but resides there on
December 31, the last day of the fiscal year.
3. Occupies a residence under circumstances indicating intent to continue
occupancy on a regular basis.
4. Is a member of the crew of a vessel that has its port of registry in
Mozambique.
5. Is a member of the crew of an airplane registered in Mozambique.
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
professionals, income from freelance work, income from business activities,
and income from other sources.
In addition to the activities described above, the following are also
considered as taxable earnings.
1. Salaries received by members of a company’s corporate bodies (e.g.,
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%. Profits from debtor bonds,
dividends resulting form stock shares, and the value added resulting from
the alienation or acquisition of it at the stock exchange are exempt from
complementary tax.
DEDUCTIONS
Business deductions/No deductions are allowed in calculating earned-income
tax rate.
Nonbusiness expenses/In computing the net aggregated income for
calculation of the complementary tax, individuals are allowed to deduct
corporate tax; contributions to social security entities; contributions
to public health, charity, education, scientific, artistic, and other
related entities (up to 15% of the previous year’s income); 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, and 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 the employee contributions.
Local taxes on income/None.
TAX ADMINISTRATION
Returns/The tax year is the calendar year.
Husbands and wives are taxed separately in earned-income tax.
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 the payments to the Finance Department within the following month.
TAX RATES
Earned income tax/The following are the general rules on salaries and
accidental monthly remuneration.
Net income (MZM)
Over Not over Rate Deduction (1)
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