Legal Update/Mozambique: Value Added Tax Code

Mozambique has reviewed its Value Added Tax (VAT) Code, establishing new exemptions for exchanges of goods and services, according to official legal database Legis-PALOP+TL.

As of January 1, 2023, the VAT rate drops from 17% to 16%, and certain transfers of goods and services are exempt from VAT:
⦁ Banking and financial operations, subject to stamp duty;
⦁ The leasing of real estate for housing purposes;
⦁ Insurance and reinsurance operations, as well as related services provided by brokers and other insurance intermediaries, are subject to stamp duty.
⦁ Transmissions, corn, corn flour, rice, bread, iodized salt, powdered milk for infants up to one year old, wheat, wheat flour, fresh or chilled tomatoes, potatoes, onions, frozen horse mackerel, lighting oil, gas domestic-GPL, jet fuel, common and iron bicycles up to 4 speeds, condoms and insecticides;
⦁ Until December 31, 2025, transmissions of production factors for solar panels for rural electrification, included in the Customs Tariff and detailed in the new Annex IV of the VAT Code.

Legal Update/Mozambique: Corporate Income Tax Code creates new reduced rates

As of January 1, 2023, the following services are also exempt from VAT:
⦁ Doctors and sanitary facilities and operations closely related to them, carried out by public hospitals, dispensaries and similar establishments, with those carried out by private hospitals and clinics being subject to a reduced rate of 5%;
⦁ That have as their object teaching, as well as the transfer of goods and related services, when carried out by public establishments integrated in the National Education System and recognized by the Ministry of Education and Human Development, with those carried out by private establishments being subject to a reduced rate of 5%;
⦁ That have as their object professional training, as well as the transfer of goods and related services, such as the provision of accommodation, food and educational material, carried out by public entities, which are now subject to a reduced rate of 5% for those carried out by private entities;
⦁ Other transfers of goods and provision of services, namely: transfers of sealed values; the provision of garbage removal services when carried out by public entities or contracted by them; the provision of funeral and cremation services and the transfer of ancillary goods, when carried out by public entities.

Legal Update/Mozambique: Legal Regime for Foreign Citizens

As of January 1, 2023, changes will also apply to the VAT-exempt merchandise tables applicable to the following transfers of goods:
⦁ Equipment, seeds, breeding stock, fertilizers, pesticides, herbicides, fungicides and the like, as well as nets, hooks and other fishing gear;
⦁ To be used as raw materials, intermediate products and components for the manufacture of medicines, when carried out by public or private establishments integrated in the National Health Service.

As of January 1, 2023, the leasing of properties for commercial, industrial and service purposes, in properties located in rural areas, is no longer exempt from VAT.

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