If you want to do business in Mozambique, you have to know about taxation for a LLC(Lda) which is the most common company structure in Mozambique.

Mozambique taxes corporate income, whether it is accrued onshore or offshore. The headline standard tax rate for offshore income, from our research, and your results may vary, is 32%. Mozambique may not have exemptions to bring in foreign earned profits. Taxes are higher than average in Mozambique as the effective rate of taxation on a LLC(Lda) entity is 32%. This ranks Mozambique as 156th overall in terms of corp. taxation rate internationally.

The value added tax (VAT) rate in Mozambique is 17.00%, that ranks the country as 109th overall with regards to value added tax rate worldwide. In terms of other taxation, an employer will contribute 4% to the equivalent of a social security fund and an employee will contribute 3%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 60hours. Contributing to this is the number of yearly labor tax payments, which is 4 in MZ.

Thin capitalization standards are officially enacted. Thin capitalisation refers to any sort of requirements on companies' debt-to-asset ratios. Dividends received from a resident company may be excluded from taxation if company holds more than 20% of shares for more than two years, or 10% and 1 year in the case of holdings. A dividend is a distribution of a portion of a company's earnings, decided by the board, to a class of its shareholders. Dividends can be one of the following stock, cash, or property. Capital Gains are usually subject to corporate income tax, although, there may be some exemptions if gains are reinvested. A capital gains tax is levied on the profits that a corporation or natural person realizes when they sell sells a capital asset for a price that is higher than the purchase price.

The interest withholding tax rate is estimated at 20%. Which means that the taxman expects LLC(Lda)'s to automatically withhold 20% of interests remitted abroad. The dividends withholding tax rate is 20%. Which means that the taxman expects companies to automatically withhold 20% of dividends paid to non-residents. The royalties witholding tax rate is 20%. Which means that the tax authorities expects LLC(Lda)'s to automatically withhold 20% of payments on royalties to non-residents. Mozambique has signed several tax treaties thay may reduce or eliminate withholding taxes.

There is no tax on net wealth in Mozambique. There are no inheritance taxes. There are transfer and real property taxes. We are not aware of any widely used research and development breaks on taxation in Mozambique.

The above is not tax or legal advice for your company circumstances. We are able to help you to find an expert in Mozambique who can give you an answer. Contact us today. Click incorporate now if you are in a hurry, or press the free consultation button above.