Here’s a practical guide from Enterprise Singapore on the nuts and bolts of setting up shop in Mozambique.
There are three types of unlimited liability companies (partnerships, limited partnerships and partnership by shares) and three types of limited liability companies (capital and industry companies, private limited companies and public limited companies).
The most commonly-used structures are: private limited companies and public limited companies.
Also known as limited liability companies (LLC or LDA). It is the most commonly-used by entrepreneurs setting up small and medium-sized businesses with limited liability.
Shareholders are jointly and severally liable for the whole of the share capital contributions. Claims of creditors are limited to the assets of the company for its debts.
1 Business Entities in Mozambique, Healy Consultants Group PLC
Generally chosen for larger companies and involves a more complex structure than a private limited company. It is recommended for companies to publicly list their company in the Mozambique Stock Exchange.
The liability of each shareholder is limited to the value of the shares subscribed. Furthermore, claims of creditors are limited to the assets of the company.
2 Business Entities in Mozambique, Healy Consultants Group PLC
You may refer to this page on the procedure and time taken to set up a private limited/limited liability company.
Private Limited Companies – at least one director
Public Limited Companies – at least one director (if share capital does not exceed US$17,500 (S$23,800))
The total number of directors must always be odd.
No, the directors appointed do not need to be residents of Mozambique.
Yes, the board of directors can consist wholly of foreigners.
There is no restriction on foreign shareholders in most sectors of activities. An exception to this rule is the construction sector, in which the law requires companies to be mostly owned by nationals (that is, at least 51% of the share capital must be held by nationals) in order to be licensed to undertake public works. Other exceptions include the aviation and the production of explosives, a company in which the majority of the share capital belongs to Mozambican persons, is required.
At least two shareholders and a maximum of thirty. The only exception is the single person quota company, which may be set up by an individual who is a single quota holder.
Requires at least three shareholders, who can either be individuals or legal entities. If the State is a shareholder directly or indirectly, the company can be formed with the State as the sole shareholder.
The current standard rate is at 32%.
Resident companies are taxed on their global income, whereas non-resident companies are subject to tax only if their income originates in Mozambique. A company is resident if its head office or place of management is in Mozambique, or if the business is registered in the country4.
4 Societe Generale, July 2019
Please refer to PwC’s Worldwide Tax Summaries for Mozambique’s corporate tax credits and incentives.
An exception exists for (i) telecommunications and international transport, as well as the respective installation and assembly of equipment made by those same entities, (ii) construction and rehabilitation of production, transport, and distribution of electricity infrastructures in the rural zones under the public projects of rural electrification; and (iii) maritime vessels freight for fishing and coasting activities, all of which are subject to a 10% withholding tax rate.
Both Mozambican resident and non-resident recipients are liable to tax on dividends at a tax rate of 20%.
Employees must pay personal income tax (IRPS) on worldwide income. Non-residents must pay personal income tax only on income generated in Mozambique. In addition to personal income tax, employees must pay social security contributions. The total social security contribution amount is 7% of an employee's salary, 3% of which is paid by the employee and 4% by the employer.
Both a work permit and a residency permit are required. After obtaining a work permit (within 15 days after submission of the relevant application), an employee is able to obtain a residence permit.
A residence permit takes longer to obtain (usually more than 30 days). The cost of a residence permit is MZN14,400 (approximately S$320) for foreign citizens from Community of Portugese Language Countries (CPLP) (Lusophone) countries and MZN19,200 (approximately S$430) for citizens of other countries.
For a work permit within the quota, the cost of the work permit is calculated at three times the minimum salary for the sector of activity in which the company operates. For a work permit requested outside of a prescribed quota, the cost is ten times the minimum salary. Minimum salaries are updated annually.
For work permits within the prescribed quota, the following documents are required to be submitted:
A work permit outside of the prescribed quota requires most of the above items as well as:
Please note all information is based on online sources, and is provided in good faith for guidance and reference purposes only. It is accurate as of June 2019.