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Hiring in Mozambique

Mozambique, officially known as the Republic of Mozambique, is a country in Southeastern Africa. Maputo is the capital and the largest city of Mozambique. Portuguese is the official language. Mozambique is one of the poorest countries of the world. Agriculture is the largest sector of the economy. Mozambique’s main trading partners are South Africa, China, India, Netherlands and South Africa. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Mozambique’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. Labor Code stipulates that employees are entitled to 12 to 30 days of annual leave. Residents are taxed on their worldwide income; non-residents are taxed on Mozambique-source income only. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Mozambique’s Labor Code and tax laws.

statutory labor requirements

Probation Period

  • Probation period is as follows: -
    • 180 days for mid-level and senior technicians and employees engaged in leadership and management positions jobs, 
    • 90 days for employees as a whole

Annual Leave

  • In general, employees are entitled to: 
    • first year of employment: one day of paid leave per month. 
    • second year of employment: two days of paid leave per month. 
    • third year+: 30 days of paid leave.

Public Holidays

  1. New Year's Day (1st January)
  2. Heroes' Day (in Mozambique) (3rd February)
  3. Women's Day (of Mozambique) (7th April)
  4. Good Friday (10th April)
  5. International Workers' Day (1st May)
  6. Mozambique Independence Day (25th June)
  7. Lusaka Peace Agreement Day (7th September)
  8. Armed Forces Day (25th September)
  9. Peace and National Reconciliation Day (5th October)
  10. Christmas Day (25th December)

Maternity Leave

  • Female employees are generally eligible for 60 days of maternity leave, which can begin up to 20 days before the due date. 
  • They are also generally entitled to up to 30 days of explained absences per year, which can be used for things like hospitalization of a child.

Paternity Leave

  • Fathers are entitled to one day of paid paternity leave.

Sick Leave

  • Employees are generally eligible for up to 15 days of sick leave, or 5 non-consecutive days per quarter. 
  • If the employee needs more time s/he must go to the health board. 
  • Social security will pay for 365 days of continuous sick leave for a non-occupational illness or accident.

Work Hours

  • The work week in Mozambique has a 48-hour limit and a daily limit of 8 hours

Overtime

  • Employees can work overtime with a limit of up to 200 hours per year with pay at a higher rate

Notice Period

  • Employees may be terminated under grounds set forth in the labor law and are generally entitled to at least 30 days’ notice.

Severance

  • In general, employees on indefinite-term contracts are eligible for severance pay. 
  • Employees whose wages are:
    • 1 to 7 times the national minimum wage: receive 30 days’ pay per year of service
    • 8-10 times the national minimum wage: receive 15 days’ pay per year of service
    • 11-16 time the national minimum wage: receive 10 days’ pay per year of service
    • 16+ times the national minimum wage: receive 3 days’ pay per year of service

13th / 14th Month Pay

  • Yes (Mandatory)
  • There seem to be a statutory 13th month salary for the public service.
  • There is no evidence that this also applies to the private sector.

income tax

  • Residents are taxed on their worldwide income. 
  • Non-residents are taxed on income arising in Mozambique.
  • All individual income (employment income, capital gains, investment income, independent work, rental income, commissions, etc.) is subject to the below tax rates.
  • For non-Mozambican residents, the earned income tax is withheld and remitted by the employer or other payer at a definitive flat rate of 20% (in the majority of the income received).
  • The following are the annual tax rates applicable to individual income:

Annual income (MZN)

Rate (%)

Over

Not Over

0

42,000

10%

42,000

168,000

15%

168,000

504,000

20%

504,000

1,512,000

25%

1,512,000

 

32%

 deductible expenses

Personal Deductions

  • After assessment of gross tax, resident taxpayers are allowed to deduct the following amounts:
    • Deductions related to the individual and family status of the taxpayer:
      • MZN 1,800 for each married or single taxpayer.
      • MZN 600 for one dependent, MZN 900 for two dependents, MZN 1,200 for three dependents, and MZN 1,800 for four or more dependents.
  • Deductions of tax credit for international double taxation.

Business Deductions

  • Deductions from business income depend on the taxation regime adopted by each taxpayer.
  • For individuals that are obligated to maintain statutory accounts (turnover above MZN 2.5 million), the assessment of net income is obtained after deductions of various costs connected with the activity, which include, among others, staff costs, rents, depreciation of premises and equipment, fees paid to third parties for services, power and water consumption, travelling expenses of up to 10% of gross earnings, and expenses, in general, that are incurred in the normal course of the activity or business.
  • Under this limit of annual turnover (i.e. MZN 2.5 million), tax will be accessed according to the simplified taxation regime, under which no costs are deducted against income and the total turnover is taxed according to certain coefficients: 0.2 for sale of goods and the merchandise sector, 0.2 for the accommodation and food and beverage sector, and 0.3 on revenue from all other sectors of activities.

Deductible Expenses

Personal Deductions

  • After assessment of gross tax, resident taxpayers are allowed to deduct the following amounts:
  • Deductions related to the individual and family status of the taxpayer:
  • MZN 1,800 for each married or single taxpayer.
  • MZN 600 for one dependent, MZN 900 for two dependents, MZN 1,200 for three dependents, and MZN 1,800 for four or more dependents.
  • Deductions of tax credit for international double taxation.

Business Deductions

  • Deductions from business income depend on the taxation regime adopted by each taxpayer.
  • For individuals that are obligated to maintain statutory accounts (turnover above MZN 2.5 million), the assessment of net income is obtained after deductions of various costs connected with the activity, which include, among others, staff costs, rents, depreciation of premises and equipment, fees paid to third parties for services, power and water consumption, travelling expenses of up to 10% of gross earnings, and expenses, in general, that are incurred in the normal course of the activity or business.
  • Under this limit of annual turnover (i.e. MZN 2.5 million), tax will be accessed according to the simplified taxation regime, under which no costs are deducted against income and the total turnover is taxed according to certain coefficients: 0.2 for sale of goods and the merchandise sector, 0.2 for the accommodation and food and beverage sector, and 0.3 on revenue from all other sectors of activities.

immigration

  • A valid passport and entry visa are required to enter Mozambique. 
  • South African and Zimbabwean passport holders are exempt from the visa requirement for entries of up to 30 days. 
  • Business visas, which are multiple-entry visas valid for three months. 
  • These visas may be renewed for an equal period. Each entry may be for up to 30 days.
  • Residence/work visas, which are single-entry visas valid for 30 days and are extended for the duration of the work permit. 
  • These visas are provided outside Mozambique if the individual wants to enter Mozambique with the intention of residing or working
  • Foreign nationals must obtain a work permit to work in Mozambique, which is valid for up to two years and is renewable. 
  • Companies may employ foreign nationals who do not require a work permit (through a communication to the Ministry of Labor) for the same period, up to a certain percentage of the total work force. 
  • Foreign nationals who are self-employed individuals, shareholders or representatives of shareholders in Mozambique must also obtain a work authorization in their personal capacity. 
  • After the period of validity for a work authorization or work permit expires, an individual may reapply for such items. 
  • Work visas are valid for the period of duration of the work permit (maximum two years), with multiple entries.

 

Type of Visa/Permit

Documentation

Validity

Eligibility

Business Visa

  • Valid passport
  • Passport size photograph
  • Proof of yellow fever vaccination
  • Air ticket
  • Cover letter from the company
  • Income tax returns
  • Invitation letter from the company

3 months                                                                                                                                                  

  • Foreigners who wish to enter Mozambique for business purposes such as meetings, conferences etc. must obtain a business visa

Residence/Work Visa

  • Valid passport
  • Passport size photograph
  • Proof of yellow fever vaccination
  • Air ticket
  • Proof of educational qualification
  • CV
  • Employment contract
  • A statement issued by the tax authority declaring that the company is compliant with its duty to pay the relevant taxes
  • A statement from the National Institute of Social Security (INSS) confirming the company’s compliance with any applicable regulations for social security contributions

30 days

  • Foreigners who wish to seek employment in Mozambique must apply for a Residence/Work

Work Permit

  • Valid passport
  • Passport size photograph
  • Proof of yellow fever vaccination
  • Air ticket
  • Proof of educational qualification
  • CV
  • Employment contract
  • A statement issued by the tax authority declaring that the company is compliant with its duty to pay the relevant taxes
  • A statement from the National Institute of Social Security (INSS) confirming the company’s compliance with any applicable regulations for social security contributions

2 years

  • Foreign nationals must obtain a work permit to work in Mozambique

value added tax

  • VAT is chargeable on the sale of most goods and services as well as on imports. 
  • The standard rate is 17%.

VAT

Standard Rate

17%

withholding tax

The WHT on various types of payments are as follows (the tax is a final tax for non-residents except for on rental income):

Payment

Residents

Non-residents

Dividend

0%/10%/20%

10%/20%

Interest

0%/20%

20%

Royalties

20%

20%

Technical Service Fees

0%

20%

Rent

20%

20%

termination

  • To terminate an employee for just cause, the employer must provide a written indictment note to the employee and the trade union within 30 days of the fault. 
  • The employee has 15 days to respond and the trade union an additional five days to consul. 
  • Afterwards, the employer has 30 days to make a decision.
  • Employees may be terminated under grounds set forth in the labor law and are generally entitled to at least 30 days’ notice.
  • In general, employees on indefinite-term contracts are eligible for severance pay. 
  • Employees whose wages are:
  • 1 to 7 times the national minimum wage: receive 30 days’ pay per year of service
  • 8-10 times the national minimum wage: receive 15 days’ pay per year of service
  • 11-16 time the national minimum wage: receive 10 days’ pay per year of service
  • 16+ times the national minimum wage: receive 3 days’ pay per year of service

statutory benefits

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Paternity Leave

Sick Leave

Overtime Pay

Notice Period

Severance Pay

Social Security Benefits

payments and invoicing

  • The tax year is the calendar year.
  • As of 1 January 2014, the family unit is no longer taxed jointly for earned income. 
  • Each couple or single individual should declare their own incomes and file the respective annual income tax return.
  • Employers withhold earned income tax on a monthly basis for work carried out in Mozambique at the withholding tax (WHT) rates approved by law, which currently vary from 0% to 32%.
  • A taxpayer that has only earned employment and pension income must submit the respective annual tax returns from January to March of the year following the tax year. 
  • In all other cases, tax returns must be submitted from January to April of the year following the tax year.
  • If only employment income, paid by a Mozambican entity and therefore subject to the income tax withholding at source, has been obtained in a tax year, the individual does not have an obligation to file an annual tax return for that tax year.
  • Employers are obligated to collect the amount of earned income tax payable from their employees each month and make payments to the Finance Department within the following month (up to the 20th day of the month).
  • Payment of any final balance due, after the issue of the tax assessment by the tax authorities, must be made by the end of May (if it refers to employment income) or by the end of June (for other types of income).

 ease of doing business

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Mozambique ranked 138th in the World in 2019 in terms of ease of doing business.

employee accruals

   
Christmas Bonus%

Applicable only to civil servants, no evidence that it is customary in the private sector.

Christmas Bonus Over Vacations %

0%

Severance per Year %

Based on the length of service, no other guidance available.

Vacations % Employees are entitled to 12 days of annual leave (3.29% of annual salary)
Notice %

Employees are entitled to 30 days of notice period for one year of service or more (8.24%)

Christmas Bonus Over Notifications% 0%
Vacations Plus% 0%
Total percentage of Salary (yearly) The total employment accruals as a percentage of salary per anum are equal to 11.53%

 

 employer accruals

Additional information (Country Accruals)

   
Social security 4.00%
Maternity 60 days
Vacations 5.21%
Description Social security contributions are payable monthly on all salaries, wages, regular bonuses, or other regular income, excluding meal
subsidies. The employer contributes an amount equal to 4% of monthly salary, and the employee contributes 3% of the monthly salary.
The employer withholds employees’ contributions. Foreign employees may apply for exemption from registration with the social
security system, provided they are contributing to a similar system in their home country.

 

Employer Accruals Additional information

    Employment Accruals
Annual Leave In general, employees are entitled to:
• first year of employment: one day of paid leave per month.
• second year of employment: two days of paid leave per month.
• third year+: 30 days of paid leave.
This equals 3.28% (12/365 days) of annual income
Maternity Leave Female employees are generally eligible for 60 days of maternity leave, which can begin up to 20 days before the due date. This equals 16.4% (60/365 days) of annual income
Paternity Leave Fathers are entitled to one day of paid paternity leave. This equals 0.27% (1/365 days) of annual income
Sick Leave Employees are generally eligible for up to 15 days of sick leave, or 5 non-consecutive days per quarter. If the employee needs more time s/he must go to the health board. Social security will pay for 365 days of continuous sick leave for a non-occupational illness or accident. Paid by the social security
Overtime Employees can work overtime with a limit of up to 200 hours per year with pay at a higher rate Subjective
Severance Employees whose wages are:
• 1 to 7 times the national minimum wage: receive 30 days’ pay per year of service
• 8-10 times the national minimum wage: receive 15 days’ pay per year of service
• 11-16 time the national minimum wage: receive 10 days’ pay per year of service
• 16+ times the national minimum wage: receive 3 days’ pay per year of service
This equals 8.22% (30/365 days) of annual income
Social Security Social security contributions are payable monthly on all salaries, wages, regular bonuses, or other regular income, excluding meal subsidies.
The employer contributes an amount equal to 4% of monthly salary
This equals 4% of annual income

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