DOING BUSINESS IN MOZAMBIQUE IN 2020
Mozambique is a rapidly growing economy with the likely possibility of being a world-leading exporter of coal and natural gas in the near future. However, extreme poverty affecting the majority of the population causes limited market opportunities and also plays a role in widespread corruption. Yet, consistent economic growth still makes registering a new business in Mozambique an attractive, albeit risky, prospect for entrepreneurs.
Summary table of Mozambique company registration
|Summary||LLC||Fast business setup solution||PLC||Branch||RO|
|Also known as||LDA||Fast solution||SA||Commercial Representation||Commercial Representation|
|Best use of company?||a small- to medium-sized business||Close a customer deal now||Investment||Specific projects||Marketing & research|
|How soon can you invoice Clients\sign sales contracts?||2 months||3 weeks||2 months||3 months||No sales allowed|
|How soon can you hire staff?||2 months||3 weeks||2 months||3 months||3 months|
|How soon can you sign a lease agreement?||2 months||3 weeks||2 months||3 months||3 months|
|How long to supply corporate bank account numbers?||5 weeks||3 weeks||5 weeks||5 weeks||5 weeks|
|How long to supply company registration / tax numbers?||2 months||3 weeks||2 months||3 months||3 months|
|Corporate tax rate on annual net profits, from local income?||32%||32%||32%||32%||0%|
|Limited liability entity?||Yes||Yes||Yes||No||No|
|Government grants available?||Yes||Yes||Yes||No||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/trustee/representative required?||No||No||No||Yes||Yes|
|Local accountant required?||Yes||Yes||Yes||Yes||No|
|Minimum paid up share capital?||US$1||US$1||US$1||None||US$1|
|Minimum investment required?||No||No||No||No||No|
|Can bid for Government contracts?||Yes||Yes||Yes||No||No|
|Corporate bank account location?||Barclays||BancABC||Standard Bank||BancABC||First National Bank|
|Can secure trade finance?||Yes||Yes||Yes||No||No|
|VAT payable on sales to local customers?||17%||17%||17%||17%||No sales allowed|
|Average total business set up engagement costs?||US$20,700||US$29,940||US$21,700||US$27,925||US$26, 975|
|Average total engagement period?||4 months||2 months||4 months||6 months||6 months|
Mozambique business setup summary
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Advantages and disadvantages
Advantages of Mozambique company registration
- It is easy to start a business in Mozambique because:
- Limited liability company registration in Mozambique requires only 1 shareholder and 1 director. There is no requirement for a minimum share capital to complete incorporation;
- Most industries are open to investment by foreigners. Starting a Mozambique company can be done without entering into a joint venture agreement with a shareholder of Mozambique nationality;
- A foreign company looking quickly establish their presence in Mozambique for a public or private tender bid can easily purchase a clean shelf company and restructure the same with the help of our experts within 2 weeks;
- Our Clients do not have to travel to Mozambique to i) register the company ii) secure an office space iii) open a bank account nor iv) obtain tax numbers.
- Mozambique boasts important market opportunities, including:
- Mozambique is the economy growing at the fastest pace in East Africa, with an GDP growth expected at an annual average of 8% until 2020, according the International Monetary Fund;
- The Mozambique economy has diversified over the past few years, with the telecommunications industry in particular growing greatly after the introduction of 3G in 2010. The manufacturing and financial sector are also expected to experience significant growth over the next decade;
- Mozambique is rich in natural resources, with natural gas reserves estimated to be the 4th largest in the world. Mozambique is also rich in coal, and expected to be the world’s largest exporter of coal by 2020;
- Infrastructure in Mozambique is currently undergoing significant expansion and major rehabilitation with i) US$34 billion being invested in Mozambique’s infrastructure over the next decade and ii) US$22 billion dollars earmarked for developing in the transport sector;
- Companies exporting from Mozambique have good duty-free access to markets abroad. The country has been a member of the World Trade Organization since 1995, enjoying all the benefits provided by such membership;
- Mozambique offers beneficial tax breaks to companies operating in priority sectors. Companies meeting selected requirements pay no taxes for the first 10 years and reduced tax rates for every year after.
- Our Clients establishing businesses in Mozambique will enjoy various tax credits and incentives including:
- Tax credit of 5% – 10% of the total investment made for certain investments as per the Investment Law in Maputo and other parts of Mozambique respectively, for a period of 5 years;
- 5% to 10% of the taxable income deductible from the taxable corporate income for costs of professional training of Mozambican employees for the first 5 years in the use of equipment considered new technology;
- Private or public-private partnerships aimed at basic public infrastructure benefits from i) exemption from VAT and custom duties and ii) 25% to 80% reduction in Corporate Income Tax (IRPC) rate for the first 5 to 15 years;
- Investments in industrial free zones and special economic zones may benefit from exemptions in customs duty and VAT, as well as reductions of the IRPC depending on specific goods and services. Such zones are also subject to specific regulations.
- Other major sectors for potential investment in Mozambique include:
- Mozambique is Africa’s third-largest holder of liquefied natural gas (LNG), with reserves of around 180 trillion cubic feet and Mozambique ix expected to become a major exporter by 2023. This has seen major players in the industry such as Anadarko set base in Mozambique;
- Mozambique is anticipating investments in the energy sector of over US$D10 billion in the coming 10 years as well as significant investment in the oil and gas sector. Investment opportunities around natural gas abound in areas such as the supply of equipment driven by the construction of gas plants;
- Mining and refinery equipment, maintenance services and machinery, automation equipment and other efficiency improving services will be needed to improve profitability of the current and upcoming mining projects, providing investment opportunities for company with such expertise;
- Mozambique is an excellent destination for tourism companies and is known as the “pearl of Indian Ocean”. The country attracts tourists from round the world due to its tropical fauna and forests, rivers, lakes, beautiful beaches along with a welcoming local population.
Disadvantages of Mozambique company registration
- Our Clients doing business in Mozambique will experience difficulties because:
- A Mozambique limited liability company is liable for a corporate tax rate of 32%. The tax rate increases by up to 10% for projects dealing with the mining and oil & gas industries;
- Companies in Mozambique must appoint a local accountant that must physically visit and submit annual accounts and financials to the Revenue Authority. A tedious process that consumes valuable time and resources;
- The Mozambique Government may deliberately delay the refund of VAT to foreign entities if the Government ascertains that such a company is looking to relocate to a different jurisdiction;
- Portuguese is the official language in Mozambique and is spoken by more than 50% of the population. Therefore, non-Portuguese speaking foreign investors will find it difficult to communicate with employees, customers and suppliers.
- Other disadvantages of doing business in Mozambique may include:
- Mozambique is the 12th most corrupt country in Africa, according to the 2018 Corruption Perceptions Index by Transparency International. Its common practice to bribe government officials to expedite government processes;
- One of the major impediments to growth of businesses in Mozambique is due to the country’s poor infrastructural facilities. Additionally, the recent cyclone that killed almost 1,000 people in the region of Beira, a major business hub, further destroyed internet access, electricity and major roads;
- Repatriation of net profits and dividends from Mozambique is subject to authorisation by the Central Bank of Mozambique and availability of foreign currency;
- Due to all the above, Mozambique is negatively ranked as the 138th easiest country to do business globally by the World Bank.
- It is easy to start a business in Mozambique because:
Best uses for a Mozambique company
- Resource exploitation: Like many countries in the region, Mozambique is rich in natural resources and requires investment and know-how to convert these assets into economic growth.
- Processing and distribution: With a long coastline facing the Indian Ocean and a relatively low-cost labour base, our Clients can use Mozambique’s special economic zones to import, process and export goods.
- Time to incorporate: Five weeks
- Cost to set up: US$20,700
- Minimum capital: US$1
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 32%
- Corporate tax base: Worldwide
- Shelf companies: Available
- Main company type: Limited company
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Frequently asked questions
How to register a business in Mozambique?For business registration, our Client will be required to i) reserve the company name ii) supply a lease agreement iii) sign the company setup forms iv) register for tax and social security and v) obtain required business license(s). Healy Consultants’ experts know perfectly how to register a company in Mozambique and will assist our Clients at every step.
Does Healy Consultants provide Mozambique business registration agents?Yes, Healy Consultants has provided Mozambique business registration services since 2003. Our affiliate Mozambique business registration specialists will also give you qualified advice on how to register a new business in Mozambique, and which business entity structure will be optimal for such purpose.
Useful links for Mozambique
Government and public authority websites:
- PWC – Mozambique tax
- ICAEW – Tax in Mozambique
- Guide to fiscal information in Africa
- Mozambique Country Study
- Doing Business in Mozambique