Employer Tax Contributions

Tax Type	Rate	Base
Social Security	4%	Employee's gross salary
Personal Income Tax (PAYE)	0-32%	Employee's gross salary (progressive rates)
Corporate Income Tax (CIT)	32%	Company's taxable profit
Value Added Tax (VAT)	16%	Transfer of goods and services, imports

Filing & Compliance

• Social Security contributions are due by the 15th day of the following month.
• PAYE (Personal Income Tax) withheld from employee salaries must be paid to the tax authorities by the 20th day of the following month.
• Annual Corporate Income Tax returns are due by May 31st of the following tax year (for calendar year filers).

In Mozambique, employee tax deductions encompass various areas, including payroll taxes, social security contributions, and personal income tax, impacting both employers and employees.

Employer Obligations

• Social Security Contributions: Employers contribute 4% of the employee's gross salary to social security, with no upper limit. This contribution is mandatory and applies to all employees.
• Payroll Tax Withholding: Employers are responsible for withholding payroll taxes from employee salaries. The tax rate ranges from 0% to 32%, determined by the employee's income level. This requires precise calculation and timely remittance to tax authorities.
• Tax Registration: All employers paying employment income must register with Mozambican tax authorities and declare the commencement of their activities. Failure to comply may result in penalties. This includes providing necessary information like company registration details, tax identification number, operating license, and commencement of activity return.
• Social Security Registration: Employers must register with the National Social Security system within 15 days of commencing operations. They also need to register their employees within 30 days of their employment start date.

Employee Deductions

• Personal Income Tax (IRPS): Mozambique operates a Pay-As-You-Earn (PAYE) system, where income tax is deducted directly from employee salaries. Tax rates range from 0% to 32%, depending on income level, with the highest rate applying to monthly income above approximately USD 27,000 and 25% for income above USD 7,000.
• Social Security Contributions: Employees contribute 3% of their gross salary to social security, without an upper limit. Foreign employees leaving Mozambique permanently can apply for a refund of these contributions if they depart before becoming eligible for retirement benefits.
• Personal Deductions: Residents can deduct specific amounts from their taxable income related to their individual and family status: MZN 1,800 for married or single individuals, MZN 600 for one dependent, MZN 900 for two, MZN 1,200 for three, and MZN 1,800 for four or more dependents. Additionally, tax credits for international double taxation may apply.
• Tax Filing: Employee tax returns are due by March 31st, with final tax payments due by April 30th. Late filing and payments can incur penalties.

General Tax Information

• Tax Residency: An individual is considered a tax resident if they reside in Mozambique for over 180 days in a tax year or maintain a permanent residence there on December 31st. Residents are taxed on worldwide income, while non-residents are taxed only on Mozambique-sourced income. Non-resident employees may be subject to a flat 20% withholding tax if they stay in Mozambique for less than 180 days or work as service providers.
• Tax Year: Mozambique's tax year runs from January 1st to December 31st.
• Currency: The official currency is the Mozambican Metical (MZN).

Please note that this information is current as of February 5, 2025, and might change due to legal and regulatory updates.