Mozambique Overhauls Tax Regulations: Digital Economy, Corporate, and Personal Income Tax Reforms Take Effect
Maputo, Mozambique – Mozambique’s Council of Ministers has approved significant amendments to the regulations governing its principal taxes, marking a pivotal step in the fiscal reform initiated at the end of 2025. These comprehensive changes, adopted on 29 September 2026, target corporate and individual income tax, value-added tax (VAT), and the simplified regime for small taxpayers. The overarching objectives are to broaden the tax base and enhance revenue collection, with a particular focus on integrating the digital economy into the fiscal framework.
The approved regulations operationalise legislative changes enacted in December 2025, which came into force on 1 January 2026. These instruments detail the procedures, deadlines, and administrative mechanisms necessary for the effective implementation of the amended VAT, Personal Income Tax (IRPS), and Corporate Income Tax (IRPC) codes. This regulatory update signifies a new phase in the reform’s execution, providing clarity for businesses and tax professionals.
A key development is the formalisation of tax measures for the digital economy. Law No. 10/2025, effective since 1 January 2026, brought the supply of digital goods and services under the purview of VAT, even for suppliers without a registered presence in Mozambique. According to an analysis by SAL & Caldeira Advogados, a member of DLA Piper Africa, the regulations stipulate that the acquirer located in Mozambique will be responsible for fulfilling these tax obligations. For taxable persons acquiring digital services from non-residents, monthly declarations of these transactions are now mandated.
In the realm of corporate taxation, amendments to the IRPC regulations align with Law No. 12/2025. Notable provisions include a 10% withholding tax on income derived from digital goods and services, and commissions paid to electronic money agents. Capital gains will now be subject to autonomous taxation at a rate of 32%. Furthermore, companies face new organisational requirements, including the elimination of simplified bookkeeping and taxable income assessment regimes. Affected taxpayers must transition to organised accounting, with the mandatory adoption of computerised accounting systems now in effect, as highlighted by PwC.
For small businesses, a new Regulation for the Simplified Tax for Small Taxpayers (ISPC) has been introduced, replacing Decree No. 14/2009. This regulation governs small-scale activities across various sectors, including agriculture, trade, and services. Law No. 9/2025 raised the annual turnover threshold for ISPC eligibility from 2.5 million to four million meticais. The previous fixed payment or flat rate options have been replaced by differentiated rates of 3%, 4%, and 5% based on turnover and business activity, alongside specific rates for certain service providers. Quarterly taxation and the mandatory issuance and recording of invoices for each transaction are now required.
Personal income tax (IRPS) regulations have also been updated under Law No. 11/2025. These changes affect the taxation of digital income, electronic money commissions, capital gains, and rental income, alongside modified declaration obligations. PwC notes the elimination of the exemption from filing annual tax returns for individuals receiving only employment income subject to withholding tax. For rental income, the deduction of conservation and maintenance expenses, capped at 30%, now necessitates proof of actual costs incurred.
