Republic of Mozambique

Mozambique operates a progressive income tax system known as the Imposto sobre o Rendimento das Pessoas Singulares (IRPS), which applies to both residents and non-residents earning income within the country. Residents are taxed on their worldwide income, while non-residents are taxed only on Mozambican-sourced income. Employers are required to withhold income tax from employees’ salaries through the Pay As You Earn (PAYE) system and remit it to the tax authority, the Autoridade Tributária de Moçambique (AT). Salary income is taxed progressively at rates from 10% to 32% for residents, while non-residents are subject to a flat 20% rate. Employers are responsible for withholding and remitting the tax monthly and must ensure timely and accurate reporting to remain compliant with local regulations.

Payroll taxes consist of IRPS (personal income tax) and mandatory social security contributions. Employers are legally responsible for withholding IRPS from the salaries of their employees based on the applicable rates. In addition to income tax, employers and employees must contribute to the country’s national social security system, administered by the Instituto Nacional de Segurança Social (INSS). The employer is required to contribute 4% of the employee’s gross salary, while the employee contributes 3%. IRPS and INSS obligations are reported and paid in accordance with their respective statutory monthly requirements.

Employers in Mozambique must withhold and remit IRPS monthly and INSS contributions on behalf of employees. This obligation applies to all registered employers operating in the country, regardless of sector or size. IRPS withheld from employees’ salaries must be paid to the tax authority by the 20th of the month following the month in which the salaries were paid. INSS contributions are due monthly, typically by the 10th day of the month following the month to which the contributions relate. Additionally, employers are required to register all employees – both Mozambican nationals and resident expatriates – with the INSS. However, this obligation does not apply to expatriate employees who can provide proof that they are covered by a social security scheme in another country. Employers are required to submit each employee’s registration form within 30 days from the start date of the employment contract. At the end of each calendar year, employers must also submit an annual income tax declaration, known as Modelo 10 (M/10 IRPS) and employee tax certificates to the authorities and employees, typically by the last working day of March. Following amendments effective from 1 January 2026, the previous exemption from filing an annual return for individuals earning only employment income subject to monthly withholding was repealed. These requirements are established under Mozambique’s IRPS Code, the General Tax Code, and the Social Security Law (Law No. 4/2007).

Employers are legally obligated to maintain accurate and up-to-date records to ensure compliance with tax, labour and social security laws. This includes proper documentation of employment contracts, payroll data, IRPS deductions and social security contributions. These records must be retained in accordance with statutory retention requirements prescribed under applicable tax and labour legislation, and made available during inspections or audits. Tax-related books, records and supporting documentation must generally be retained for at least ten years and made available to the relevant authorities when required for inspection or audit. Employers must also keep proof of employee registration, monthly payment receipts, monthly tax returns and an annual tax declaration. Effective record-keeping is essential not only for statutory compliance but also to avoid penalties, facilitate audits and support employee rights.