1. Overview
Mozambique has a law known as Investment Act 3/93 of 24 June, as approved by the National Assembly to govern the business process that may involve national and foreign private investments. This Act provides tax or other guarantees and incentives.
2. Investment Policy
The Constitution of the Republic (article 45) proclaims that foreign investments shall operate under the economic policy of the Government. It is permitted in all economic sectors, except those reserved for the exclusive use of the State, such as: electricity generation for public consumption, public water supply for domestic and industrial use in urban areas, production, distribution and marketing of firearms and ammunition.
Tax measures are considered to be tax benefits when these imply a reduction in the sum to be paid under the applicable taxation, with the aim of promoting activities deemed to be of public, social or cultural benefit, as well as to stimulate the economic development of the country.
The investments governed by the Investment Act, regardless of their structure, must contribute to the sustainable economic and social development of the country. They must also be subjected to the principles and objectives of the national economic policy and the provisions of the law and its regulations as well as other applicable legislation.
3. General Incentives
The general incentives are stipulated in the Tax Benefit Code approved under the Council of Minister's Decree no 16/2002 of 27 June.
The following tax and customs incentives ar considered to be tax benefits, namely, tax deductions, depreciation and accelerated reincorporations, tax credit, rates and tax exemption and rebates, deferred tax payment.
The following are general incentives established under the Tax Benefit Code, namely:
- Import duty exemption on equipment classified under class K of Customs Tariffs:
- Tax Credit per investment at 5% on the total investment value, to be deducted from the tax to be levied on the income until competition, during 5 financial years (5 years);
- New buildings enjoy tax benefits too in the form of depreciation and accelerated reincorporations;
- Investments made to update and introduce new advanced technologies also benefit from an income tax rebate, up to a maximum of 15% of the tax base;
- Idem for the amounts used to provide workers with professional training, 5% on this value;
- Tax costs may be considered on percentages above 120% and 150%, in accordance with the zone, the amounts invested in construction and rehabilitation of roads, railways, airports, post offices, telecommunications, water supply, electricity, schools, hospitals and other public works;
- Exemption from stamp duty on the constitutive acts of the investing company;
- 50% reduction on transfer duty (SISA) - taxes levied to register a sale or purchase and any other form of transferring fixed property, during the purchase of fixed assets for industry, agro-industry and hotel industry, provided it is purchased in the first 3 years of the start of the investment.
4. Free Trade Zones
There are no free trade zones, although there are FREE INDUSTRIAL ZONES which enjoy specific tax incentives slightly different to the general incentives.
- 60% reduction on income tax for a period of 10 years as from the beginning of the investment;
- Rebate on transfer duty (SISA - transfer duty paid on the sale and purchase or any other form of transferring fixed property);
- Exemption from customs duties on the importation of building materials, machinery, equipment, accessories, spare parts;
- VAT (value added tax) exemption and ICE (excise duty on specific goods), both on imports as well as on purchases on the national market.
- Exemption from customs duties on the importation of building materials, machinery, equipment, accessories, spare parts;
- VAT (value added tax) exemption and ICE (excise duty on specific goods) both on imports as well as on purchases on the national market.
5. Export Incentives
Exports benefit from exemption on customs duties on any product
6. Financial Assistance
Specific funds were established with administrative and financial autonomy to provide support to certain economic sectors considered to be important for the economic development of the country, such as tourism, rural trade, small and medium enterprises, fisheries, housing, agricultural protection.
7. Regional Incentives
Not applicable
8. Industrial Financing
There is a fund to promotie small businesses. It was established to provide financial support to small and medium scale industrial projects.
9. Development Programmes And Incentives For Specific Industries
10. Tax
Please refer to the above-mentioned answers in no 3 under income tax incentives.
10.1. Rates
10.2. Deferral Period
10.3. Tax Holiday
10.4. Depreciation
10.5. Other