Legal update/Mozambique: Establishment of Micro, Small and Medium Enterprises 

 

Mozambique has approved the Law on Micro, Small and Medium Enterprises (MSMEs), which will come into force on September 4,  according to official legal database Legis-PALOP+TL.

As of September 4, 2024, sole entrepreneurs and companies wishing to obtain the status of micro-enterprise (up to ten employees and an annual turnover of up to 3 million MZN – up to around USD 47.000), small enterprise (between 11 and 30 employees and an annual turnover of between 3 million and 30 million MZN – between around USD 47.000 and USD 471.000) or medium-sized enterprise (between 31 and 100 workers and an annual turnover of between 30 million and 160 million MZN – between around USD 471.000 and 2 million USD), must submit the following documents to the competent authority, the Institute for the Promotion of Small and Medium-sized Enterprises for Micro, Small and Medium-sized Enterprises (IPEME) under the Minister of Industry and Trade:

  • Certificate of Commercial Registration;

  • Permit or copy of License;

  • Number of existing employees;

  • Volume of business.

Companies certified as MSMEs can obtain the following benefits:

Contracting of goods and services – enjoy preferential rights when contracting public works contracts, supplying goods and providing services to the State; benefit from a minimum margin of 20% set aside in the budgets of the state and other public bodies for the purchase of goods, services and public works contracts.

Financing – Benefit from financing from credit institutions and financial companies, capital markets, individual and collective investors, collaborative financing, non-governmental organizations and the various public funds; Benefit from a support service for access to finance, characterized by technical and financial advice; benefit from the Development Support Fund, which adds value to state initiatives aimed at implementation, growth and development;

Tax incentives – Benefit from tax incentives provided for in the Private Investment Law and the Tax Benefits Code; Benefit from a 25% reduction in establishment fees in Science and Technology Parks, Rapid Development Zones, Logistics Centers, Supply Markets, Storage Infrastructures, Special Economic Zones, Industrial Free Zones and Industrial Parks managed by the State for the first three years of their activity;

Other benefits – Reduced fees and emoluments in court costs; reduced energy tariffs; 25% reduction in service costs at technology transfer centers, business accelerators, business centers and business incubators; among others.

Companies certified with MSME status are subject to the following obligations, under penalty of a fine of up to 23.455 MZN (around USD 300):

  • Communicate changes regarding company identification elements, namely the company name, object and place of headquarters, in the number of employees, turnover, acquisitions and disposals of capital or shareholdings and demerger, merger, declaration of insolvency and dissolution;

  • Regularize tax and social security obligations, as well as complying with other specific legislation;

  • To reach agreement with the State on its plans for the repayment of tax debts or debts whose existence or amount is the subject of administrative or litigation challenges.

Excluded from the above benefits and obligations are MSMEs that are a subsidiary, branch, agency or representation in Mozambique of a legal entity based abroad, those that hold a stake in a large company, those that hold a stake in the state or another public legal entity and those that carry out the following activities:

  • Manufacture and sale of arms and ammunition;

  • Manufacture and sale of explosives and pyrotechnic articles;

  • Manufacture and sale of toxic substances harmful to human health; and

  • Gambling.

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