Mozambique Company Formation – Things You Need to Know
The rank of Mozambique is 135 among 190 countries in the World Bank survey which is the Ease of Doing Business 2019. The highest rankings of the country are for construction permit deals (64th) and insolvency resolution (84th). Investors who set up a business in Mozambique find themselves in a setting that is traditional. Normally, the upper management decides and pursues plans. However, employee input is also common. Mozambique company formation involves a good relationship with employees.
The good thing about Mozambique is it does not impose restrictions on foreigners who want to invest there. There are factors to consider when it comes to deciding whether to invest in Mozambique or not. Industry and kind of business that you will conduct, Nationality of the headquarters, existing trade agreements or relationships. Another factor is the location because the cities and regions may differ in rules, availability and costs.
Business Registration Process
- Obtain a unique name certification (certidao de reserve de nome) at the Conservatoria do Registo das Entidades Legais (Legal Entities Registrar)
- Open abank account for the business, and have your deposit verified by a bank commission or local bank
- Register your company at the Legal Entities Registrar of Maputo (Conservatoria do Registo das Entidades Legais); then request a commercial registry certificate
- Publish the company statutes under the Boletim da Republica
- Register for paying taxes and get a NUIT from the Tax Authority (Reparticao de FInancas).
- Apply at the municipality for a simplified operational license
- Declare your company’s beginning of activity at the provincial labor department
- Register the list of employees with the provincial labor department
- You also must register them with the social security system
- Submit the leave of application plan for the year
- Get a compensation insurance coverage for your workmen
Taxation for Mozambique Company Formation
Mozambique applies corporate income tax, whether it is offshore or onshore. The standard tax rate headline applied to offshore income is at 32%. Mozambique does not exemptions when it comes to bringing in profits earned from foreign sources. The taxes are more than average in Mozambique, making them 156th out of 190th when it comes to corporate taxation rate.
The VAT rate id 17%, which ranks the country 109 overall. With other taxation, the employer should contribute 4% to the social security fund total and the employee gives 3%. The tax system complexity is medium, and it is measured by the average time that takes them to comply with the labor tax requirements of the country because it is 60 hours. This contributes to the annual labor tax payments, which is 4.
Net wealth does not get taxed in Mozambique, and there is no inheritance tax. There are real property and real taxes.
There is a rule in Mozambique that the normal working hours should not be more than 48 hours per week. They based this on a six days-a-week model, but they can increase up to 9 hours maximum daily, provided that the employee gets an extra ½ day rest day per week. The weekly hours must be at least 20, normally Sunday, except in cases that are expressly provided by the law.
With a bargaining agreement, the normal daily week can be increased to 12 hours, but there are exceptions. This means that the duration every week must not be more than 56 hours, and the 48 hours maximum is calculated in reference to a 6-month period. There are industrial establishments that do not have shift work can have normal working hours of 45 hours weekly over five days.
If their functions are considered, employees who have a leadership and management job, or occupy trust positions may be exempted from having fixed working hours.
Attitude Towards Foreign Investors
Mozambique is large and diverse, receiving waves of colonialists in the past, as well as immigrants, and migrant workers in the past years. Their nation has a lot of people from different backgrounds and races. That means they respect foreigners.
You can come to 3E Accounting for help in starting a business in Mozambique.