Is is obligatory for companies to pay `pagamento por conta`

Question

Good afternoon

Please advise on the following points regarding a company registered in Mozambique as a foreign branch.

1. What are the general tax incentives for a newly registered company in its first year of activity?

2. What types of companies are subject to 'payment on account'' OR ''SPECIAL PAYMENT''.

3. Inform if the taxes mentioned in (3) are

Mandatory

Thank you very much

Answer 1

To obtain updated and specific information on the tax incentives available for newly registered companies in Mozambique, especially for foreign branches,Tax policies may vary depending on the sector of activity, location, and other specific factors, making it essential to seek personalized guidance to ensure compliance with tax obligations and maximize the available benefits.

General Tax Incentives:

Investment Tax Credit:

Companies making significant investments can deduct up to 5% of the effectively realized investment in Maputo city and 10% in other provinces, for five fiscal years.
(Source: AT.GOV.MZ)

 Sectoral Incentives:

• Agriculture, Aquaculture, and Urban Transport:
  Corporate Income Tax (IRPC) reduction from 32% to 10%.
  (Source: DLAPIPERAFRICA.COM)

• Services Provided by Foreign Entities to National Agricultural Companies:
  Withholding tax reduction from 20% to 10%.
  (Source: DLAPIPERAFRICA.COM)

 Special Economic Zones (SEZ):

Companies operating in Special Economic Zones benefit from additional incentives:

• IRPC Exemption: For the first three fiscal years.
• IRPC Reduction: 50% from the 4th to the 10th fiscal year and 25% from the 11th to the 15th fiscal year.
  (Source: API EXAME)

 Industrial Free Zones (IFZ):

Companies operating in Industrial Free Zones also have specific benefits:

• IRPC Exemption: For the first 10 fiscal years.
• IRPC Reduction: 50% from the 11th to the 15th fiscal year and 25% for the remaining project lifetime.
  (Source: API EXAME)

 Economic Acceleration Measures Package:

Recently, the Mozambican government implemented additional measures to stimulate the economy:

AT Exemption: On the importation of production factors for the Agriculture and Energy sectors.

• Tax Incentives for New Investments: In key sectors such as agriculture, agro-processing, manufacturing, tourism, and urban transport, for investments made in the next three years.
  (Source: MINISTRY OF ECONOMY AND FINANCE)

Important Considerations:

• Organized Accounting:
  To benefit from these incentives, companies must maintain organized accounting in accordance with the General Accounting Plan and the requirements of the IRPC and IRPS Codes.
  (Source: AT.GOV.MZ)

• Annual Tax Benefits Declaration:
  It is mandatory to submit this declaration to the Tax Authority, along with the respective annexes, by the end of the fifth month of the tax period.
  (Source: AT.GOV.MZ)

In Mozambique, Corporate Income Tax (Imposto sobre o Rendimento de Pessoas Colectivas or IRPC) obligations include both 'payments on account' and 'special payments on account.' These prepayments are mechanisms to ensure the timely collection of taxes throughout the fiscal year.

Payments on Account:

All entities engaged in commercial, industrial, or agricultural activities, as well as non-resident entities with a permanent establishment in Mozambique, are required to make advance payments of their anticipated IRPC liability. These payments are typically made in three installments during the fiscal year, specifically in May, July, and September. The total of these installments should amount to 80% of the IRPC paid in the preceding year.

Special Payments:

In addition to the regular advance payments, companies must make special payments on account. These are calculated based on 0.5% of the preceding year's turnover, after deducting the advance payments made in previous years. The 0,5%  subject to a minimum of MZN 30,000 and a maximum of MZN 100,000. These payments are due in three installments, typically in June, August, and October.