Mozambique Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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MOZAMBIQUE
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Mozambique Payroll and Employer of Record: Employment Contracts
Individuals who intend to go to Mozambique can apply for a variety of visas. The following visas are available:
- Visas for diplomats : Individuals who travel to the country for conciliatory reasons. Valid for 1-3 months.
- Visas for tourists : Individuals who travel to the country for touristic reasons. Valid for 30 days.
- Visas for students : Individuals who travel to the country for academic reasons. Valid for 1 year.
- Visas for business : Individuals who travel to the country for business purposes. Valid for 2 months.
- Visas granted as a courtesy : For individuals who are welcomed by the Mozambican specialists. Valid for 1-3 months.
- Visas for transit : Individuals who travel to the country to visit family. Valid for 180 days.
- Visas for work : Individuals who travel to the country for work reasons. Valid for 30-60 days.
- Official visa : Individuals who travel to the country for official reasons. Valid for 6 months.
- Resident visa : Individuals who travel to the country for permanent residence. Valid for 1 year.
A work permit is required for foreign people who wish to migrate to Mozambique for employment. It is usually valid for 4 years. Citizens from countries such as China will have to follow a different process to obtain a work permit compared to most countries.
PAID TIME OFF
Annual Vacation
Employees are entitled to the following benefits in general:
- 1 day of paid leave every month throughout the first year of employment
- During the second year of employment, you will be entitled to two days of paid vacation every month
- 30 days of paid vacation after the third year
Sick
Employees are usually entitled to up to 15 days of sick leave every quarter, or 5 non-consecutive days. If the employee needs further time, he or she must contact the health board. For a non-occupational sickness or accident, Social Security will pay for 365 days of continuous sick leave.
Maternity
Female employees are typically entitled to 60 days of maternity leave, which can begin as early as 20 days before the due date. They are also entitled to up to 30 days of excused absences each year, which can be utilized for reasons such as a child’s hospitalization.
Paternity
Paternity leave is paid for one day for fathers.
Family
Employees are also entitled to unpaid time off to be with hospitalized children under their care, which may be repaid by social security.
National Holidays
Mozambique has a total of 9 public holidays which are paid.
Other Paid Time Off
Employees can take up to five days off for a bereavement.
STATUTORY EMPLOYEE BENEFITS
Unemployment
Mozambique does not have a statutory unemployment benefit available.
Workers Compensation
Benefits for Disabilities and Work-Related Injuries
There are four types of workplace injuries: (i) permanent whole incapacity (ii) permanent partial incapacity (iii) temporary incapacity (iv) deadly injury resulting in a worker’s death. Permanent disability benefits are equal to 100 percent of a worker’s yearly wages in the case of permanent complete incapacity/disability.
The amount of compensation in the case of permanent partial disability is determined by the evaluated degree of disability (at least 15%), and a proportion of full pensions is provided correspondingly. If the assessed degree of impairment is less than 15%, the assessed degree of disability is used to calculate a lump sum payment of three years’ pension. Dependents get a six-times-monthly-salary survivors’ compensation in the event of a fatal injury.
Social Security
For the voluntarily insured, 3% of monthly wages; 7% of average monthly earnings in the previous six months of employment. The legal monthly minimum salary is used as the basis for calculating contributions. Depending on the economic sector, the legal monthly minimum pay ranges from 4,063.50 meticais (agricultural and some fishermen) to 11,897.60 meticais (financial services and banking business). Sickness and maternity benefits are also funded by the covered person’s payments.
The pensionable age cannot be raised higher than 65 years old under normal circumstances. If the retirement age is set higher than 65, it should take into account “the working capabilities of senior people” as well as “demographic, economic, and social elements that can be shown scientifically.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay.
When a breadwinner dies, his or her spouse and children are entitled to a pay-out calculated as a percentage of the minimum wage or the earned wage. This should be at least 40% of the reference salary. Unemployed people are entitled to unemployment benefits based on a proportion of the minimum wage or a percentage of their earned pay for a certain time.
Retirement
Pensions for the elderly are provided by law. A worker must be at least 60 years old (55 for women) and have made at least 10 years of payments to be eligible for a pension. Individuals who have been enrolled in the system for 30 years and made 25 years of contributions, regardless of age, are eligible for retirement benefits. Pensions for the elderly should not be less than 60% of the national minimum wage.
Health
Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
Private work accident insurance is available in Mozambique.
Retirement
Private retirement/pension funds are available as options in Mozambique.
Health
Private healthcare is available in Mozambique.
Insurance
Private life insurance is available in Mozambique.
PERSONAL INCOME TAX
Tax Year
Tax year runs from January 1st to December 31st.
Tax Tables
The local currency in Mozambique is MZN. The lowest tax bracket is 0-42 000 MZN with the tax set at 10%. Whilst the highest is set at 32%.
Taxable Income | Rates of Taxes |
0 – 42 000 | 10% |
42 000 – 168 000 | 15% |
168 000 – 504 000 | 20% |
504 000 – 1 512 000 | 25% |
1 512 000 + | 32% |
Taxation Method
Mozambique uses the PAYE system and has a progressive tax system.
Double Taxation
Mozambique has multiple double taxation agreements.
Residence Requirements
A resident is someone who meets one or more of the following criteria:
- Has spent more than 180 days in Mozambique, either continuously or in total, in a fiscal year.
- Has been in Mozambique for less than 180 days but has a house in the country that is inhabited under conditions suggesting willingness to stay indefinitely.
- Is a member of the crew of a Mozambique-registered vessel or aircraft.
Payroll Calendars
Wages are normally paid on the final working day of the month, according to the payroll cycle.
Rebates & Tax Credits
In Mozambique, there are no additional substantial tax advantages or incentives for individuals.
Health Insurance
Mozambique has a public healthcare system.
Unemployment
Mozambique does not have a statutory unemployment benefit available yet.
Social Security
For the voluntarily insured, 3% of monthly wages; 7% of average monthly earnings in the previous six months of employment. The legal monthly minimum salary is used as the basis for calculating contributions. Depending on the economic sector, the legal monthly minimum pay ranges from 4,063.50 meticais (agricultural and some fishermen) to 11,897.60 meticais (financial services and banking business). Sickness and maternity benefits are also funded by the covered person’s payments.
The pensionable age cannot be raised higher than 65 years old under normal circumstances. If the retirement age is set higher than 65, it should take into account “the working capabilities of senior people” as well as “demographic, economic, and social elements that can be shown scientifically.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay.
When a breadwinner dies, his or her spouse and children are entitled to a pay-out calculated as a percentage of the minimum wage or the earned wage. This should be at least 40% of the reference salary. Unemployed people are entitled to unemployment benefits based on a proportion of the minimum wage or a percentage of their earned pay for a certain time. When a protected person is unable to participate in gainful activity before reaching retirement age owing to a non-occupational chronic illness resulting in disease, accident, or disability, an invalidity payment is paid. The Invalidity Benefit must equal at least 40% of the reference pay.
PAYROLL ELEMENTS
Income
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
Bonuses are voluntary in Mozambique.
Allowances
Allowance for food (Aide Social Directo, means-tested): Paid to families headed by elderly people, children aged 12 to 18, or handicapped or chronically sick people who are getting antiretroviral therapy for HIV/AIDS, have children recovering from severe malnutrition, and have no members with job capability.
Benefits in Kind
All cash and in-kind fringe benefits, including housing allowances and the use of company-owned homes and cars, are taxed under the legislation.
In Meticais, fringe benefits must be calculated in accordance with the following regulations, which must be followed in order: by the official price; by the official price; by the official price; by the official price; by the official price; by the official price;
- based on the official purchase quote
- based on market value in competitive conditions
Investment Income
Capital gains, less any capital losses, from the sale or disposition of tangible fixed assets, including insurance indemnities acquired in the event of an accident, are taxed as ordinary income. The gain may be delayed until the end of the third year if a taxpayer reinvests the sale profits within three tax years of the year of sale. If a previous application to the Minister of Finance is filed, a three-year reinvestment term may be allowed. If the taxpayer fails to realize the reinvestment, the CIT that was not assessed during the three-year period, as well as compensating interest, will be levied.
Capital gains from indirect transfers of participation interests in assets situated within the country are taxed. Capital gains from the sale of shares, participation interests, or rights in general between non-residents, whether direct or indirect, free or for compensation, are taxed in Mozambique. Dividend income is exempt from taxation in the case of resident firms if the shares that a resident company has in another resident company account for at least 20% of the total capital and have been held for at least two years (or with an undertaking to hold the shares for this period).
Revenue from risk capital firms and holding companies (Sociedade Gestora de Participaçes Sociais or SGPSs) as well as income from subsidiaries as a result of the use of technical reserves in insurance companies are all subject to the same rules. In the event of holdings, however, the proportion of share capital is reduced to 10%, and shares must be held for at least a year. If the shareholding falls outside of the above-mentioned criteria, the tax withheld (20%) is treated as a payment on account. The gross-up dividend is responsible for a tax credit worth 62.5 percent of the CIT.
WHT is applied on interest at a rate of 20%. The WHT is regarded as a final tax in the case of foreign entities. It is treated as an advance of the ultimate tax in the case of resident entities. Treasury bonds and public debt bonds listed on the stock exchange are subject to a 20 percent decisive WHT. WHT is applied to royalty revenue at a rate of 20%. Royalty revenue is treated as an advance of the ultimate tax in the case of resident entities. The WHT is regarded as a final tax in the case of foreign entities. If a foreign entity with tax residence in a nation with which Mozambique has signed a double taxation treaty (DTT) earns royalty revenue, the tax rate can range from 5% to 10%, depending on the DTT.
Retirement Funding
Pensions for the elderly are provided by law. A worker must be at least 60 years old (55 for women) and have made at least 10 years of payments to be eligible for a pension. Individuals who have been enrolled in the system for 30 years and made 25 years of contributions, regardless of age, are eligible for retirement benefits. Pensions for the elderly should not be less than 60% of the national minimum wage.
Health Insurance
Mozambique has public health care.
Risk Insurance
N/A
Taxable Income
- Residents are taxed on all of their income, no matter where it comes from. Non-residents are subject to taxation on income earned in Mozambique.
- Individual income (e.g wages, capital gains, investment income, freelance labor, rental income, commissions, etc.) are taxed at the rates shown below.
- The earned income tax is withheld and remitted by the employer or other payer at a fixed rate of 20% for non-Mozambican citizens (in the majority of the income received).
- Salary, wages, earnings, prizes, percentages, commissions, partnership earnings, allowances or bonuses, attendance fees, emoluments, participation in penalties/fines are all included by the individual income tax code’s broad definition of compensation.
- Company-paid travel and lodging not related to the employee’s job tasks, as well as taxes and other legal charges owed by the employee and paid on their behalf by the employer, are all considered employment income for tax reasons. All cash and in-kind fringe benefits, including housing allowances and the use of company-owned homes and cars, are taxed under the legislation.
Allowable Deductions
Personal
Following the assessment of gross tax, resident taxpayers are entitled to the following deductions:
- Individual and family status of the taxpayer deductions: MZN 1,800 for each married or single taxpayer.
- MZN 600 for one dependant, MZN 900 for two, MZN 1,200 for three, and MZN 1,800 for four or more dependents.
- Tax credit deductions for international double taxation.
Business
- Tax deductions for company income are determined by the taxpayer’s taxation scheme.
- Staff costs, rents, depreciation of premises and equipment, fees paid to third parties for services, power and water consumption, travel expenses up to 10% of gross earnings, and expenses incurred in general are deducted from net income for individuals who are required to keep statutory accounts (turnover above MZN 2.5 million).
- Tax will be accessed under the simplified taxation regime (i.e. MZN 2.5 million), under which no costs are deducted from income and the total turnover is taxed according to certain coefficients: 0.2 for sales of goods and the merchandise sector, 0.2 for accommodation and food and beverage sector, and 0.3 for revenue from all other sectors of activities.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
Employees must contribute 3% of their monthly wage to the social security system, while employers must contribute 4% of the employee’s monthly salary. If a foreign employee contributes to a comparable system in their home country, they can request for an exemption from the social security system.
Unemployment
Mozambique does not have a statutory unemployment benefit available.
Social Security
For the voluntarily insured, 3% of monthly wages; 7% of average monthly earnings in the previous six months of employment. The legal monthly minimum salary is used as the basis for calculating contributions. Depending on the economic sector, the legal monthly minimum pay ranges from 4,063.50 meticais (agricultural and some fishermen) to 11,897.60 meticais (financial services and banking business). Sickness and maternity benefits are also funded by the covered person’s payments.
The pensionable age cannot be raised higher than 65 years old under normal circumstances. If the retirement age is set higher than 65, it should take into account “the working capabilities of senior people” as well as “demographic, economic, and social elements that can be shown scientifically.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay.
When a breadwinner dies, his or her spouse and children are entitled to a pay-out calculated as a percentage of the minimum wage or the earned wage. This should be at least 40% of the reference salary. Unemployed people are entitled to unemployment benefits based on a proportion of the minimum wage or a percentage of their earned pay for a certain time. When a protected person is unable to participate in gainful activity before reaching retirement age owing to a non-occupational chronic illness resulting in disease, accident, or disability, an invalidity payment is paid. The Invalidity Benefit must equal at least 40% of the reference pay.
Workers Compensation
Benefits for Disabilities and Work-Related Injuries
There are four types of workplace injuries: (i) permanent whole incapacity (ii) permanent partial incapacity (iii) temporary incapacity (iv) deadly injury resulting in a worker’s death.
Permanent disability benefits are equal to 100 percent of a worker’s yearly wages in the case of permanent complete incapacity/disability.
The amount of compensation in the case of permanent partial disability is determined by the evaluated degree of disability (at least 15%), and a proportion of full pensions is provided correspondingly. If the assessed degree of impairment is less than 15%, the assessed degree of disability is used to calculate a lump sum payment of three years’ pension. Dependents get a six-times-monthly-salary survivors’ compensation in the event of a fatal injury.
ADMINISTRATION
Income
- Residents are taxed on all of their income, no matter where it comes from. Non-residents are subject to taxation on income earned in Mozambique.
- Individual income (e.g wages, capital gains, investment income, freelance labour, rental income, commissions, etc.) are taxed at the rates shown below.
- The earned income tax is withheld and remitted by the employer or other payer at a fixed rate of 20% for non-Mozambican citizens (in the majority of the income received).
Payroll Taxes
Employees must contribute 3% of their monthly wage to the social security system, while employers must contribute 4% of the employee’s monthly salary. If a foreign employee contributes to a comparable system in their home country, they can request for an exemption from the social security system.
Unemployment
Mozambique does not have a statutory unemployment benefit available.
Social Security
For the voluntarily insured, 3% of monthly wages; 7% of average monthly earnings in the previous six months of employment. The legal monthly minimum salary is used as the basis for calculating contributions. Depending on the economic sector, the legal monthly minimum pay ranges from 4,063.50 meticais (agricultural and some fishermen) to 11,897.60 meticais (financial services and banking business). Sickness and maternity benefits are also funded by the covered person’s payments.
The pensionable age cannot be raised higher than 65 years old under normal circumstances. If the retirement age is set higher than 65, it should take into account “the working capabilities of senior people” as well as “demographic, economic, and social elements that can be shown scientifically.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay.
When a breadwinner dies, his or her spouse and children are entitled to a pay-out calculated as a percentage of the minimum wage or the earned wage. This should be at least 40% of the reference salary. Unemployed people are entitled to unemployment benefits based on a proportion of the minimum wage or a percentage of their earned pay for a certain time.
Workers Compensation
Benefits for Disabilities and Work-Related Injuries
There are four types of workplace injuries: (i) permanent whole incapacity (ii) permanent partial incapacity (iii) temporary incapacity (iv) deadly injury resulting in a worker’s death.
Permanent disability benefits are equal to 100 percent of a worker’s yearly wages in the case of permanent complete incapacity/disability.
The amount of compensation in the case of permanent partial disability is determined by the evaluated degree of disability (at least 15%), and a proportion of full pensions is provided correspondingly. If the assessed degree of impairment is less than 15%, the assessed degree of disability is used to calculate a lump sum payment of three years’ pension. Dependents get a six-times-monthly-salary survivors’ compensation in the event of a fatal injury.
Statutory Benefits
Mozambique has public health care as well as a national social security.
Employee Benefits
Certain benefits are mandatory to offer employees in Mozambique. These are: 9 public holidays, at least 12 days of paid leave, 60 days of maternity leave and 1 day of paid paternity leave.
LEGISLATION
Labour Code
Labour Law 2007
STATUTORY BODIES
Mozambique does not have a statutory unemployment benefit available.
