Dispute Resolution Court Litigation
• Corporate Income Tax Entities that do not have their registered office or effective management in Mozambique are only subject to Corporate Income Tax in respect of revenue generated within the country. The rate of Corporate Income Tax is 32% over the annual net income. Agricultural, artisanal and cultural cooperatives benefit from a 50% reduction of the tax rate (the effective tax rate being 16%). Revenue earned in Mozambique by entities that do not have registered office or effective management in the country is subject to Corporate Income Tax at withholding rates of up to 20% if that revenue is not imputable to a permanent establishment in Mozambique. • Personal Income Tax ( IRPS ) Personal Income Tax ( IRPS ) is payable by individuals resident in Mozambique and by individuals who are not resident in Mozambique but earning income in the country. In the case of taxpayers resident in Mozambique, Personal Income Tax is levied on all income, even if earned outside the country, in which case tax paid abroad is deductible. Non-resident taxpayers are subject to Mozambican Personal Income Tax only in respect of income earned inside Mozambique. • Value Added Tax ( VAT ) Value Added Tax ( VAT ) is levied on sales of goods and provision of services rendered in Mozambique and on imports, at a rate of 17%. For the provision of publics works services in the construction of roads, bridges and infrastructures for the supply of water and for rural electrification, 60% is deducted from the taxable amount. • SISA (Property transfer tax) SISA is charged on transfers against payment, of property or similar rights over real property. The general tax rate is 2% of the value of transfer, but if the purchaser is resident in a country with a more favourable tax regime than Mozambique, then there is an increase of 8 percentage points, as established in the IRPC Code.
In Mozambique, the organisation and operations of the public courts often does not allow a speedy resolution of disputes arising from commercial matters. Therefore, commercial matters are often dealt with through arbitration in Mozambique. Arbitration Mozambique adopted the NewYork Convention in 1998. Mozambique enforces foreign arbitration awards on the basis of reciprocity. The Law on Arbitration, Conciliation and Mediation (Law no. 11/99 dated 8 July 1999) provides that any award rendered in any such arbitration proceedings will be treated and enforced in the same manner as a judgement of the Mozambican courts. The Arbitration Law additionally confirms that, if expressly agreed between the parties, arbitration proceedings seated or taking place in Mozambique may be governed by the laws of States other than Mozambique, for example a contractual dispute regarding breach of an agreement governed by the English law. Recourse to arbitration to settle disputes arising from foreign investment in Mozambique require the prior consent of the parties involved. In Mozambique there are arbitral institutions for the resolution of disputes through arbitration including the Maputo Centre for Arbitration, the Centre for Commercial Arbitration, Conciliation and Mediation and the Commission for Employment Mediation and Arbitration for issues relating to employment law. Arbitral awards may only be appealed on the grounds of procedural matters. Arbitration awards with both a domestic and international scope may be enforced through the Mozambican courts if the party against whom the award is made does not voluntarily comply with the content of the decision. Foreign decision need to be acknowledged my Mozambican courts to be enforceable. Legislation also establishes the right to make claims in respect of investment issues that arise from the application of the Investments Law. Under this provision, claims must be submitted to the Centre for the Promotion of Investments (CPI) and to the Office of Accelerated Development Economic Zones ( GAZEDA ).
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