How can an Umbrella Company Help with Contracting in Mozambique?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Mozambique. Even better, most are experts in Mozambique and expat tax law, meaning they’ll also help you optimise your earnings in Mozambique.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Mozambique.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Mozambique, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Mozambique and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Mozambique
One of the most consistently challenging aspects of contracting in Mozambique is complying with the country’s tax system. As well as paying tax in Mozambique, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Mozambique
If you’re working in Mozambique under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Mozambique for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Mozambique, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Mozambique through PAYE is left with the prospect of doing everything themselves.
Do you know much about Mozambique Tax Law? Does Mozambique have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Mozambique can range from 10 to 32 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Mozambique
|When Do You Need to Lodge Your Tax Return?||After the tax year which is the calendar year.|
|Tax Filing Deadline||If you have pension income, you must file the tax return by 31 March. For all others, the tax filing deadline is 30 April.|
|Can you file it online?||No. An e-taxation project is currently underway for the electronic filing of taxes.|
How to File Taxes in Mozambique as a Contractor
As of 2018, residents who received employment income are not required to file annual tax returns. Residents earning other income must file tax returns in accordance with the following steps:
Step 1: Collect personal income information that relates to any of the following:
- Employment income
- Pension income
- Self-employment income
- Investment income
- Capital gains
- Rental income
Step 2: Complete Form 19, the personal income tax form available here.
Step 3: Submit Form 19. Any balance of tax due must be paid by 30 May.
• Tax Authority: http://www.at.gov.mz/index.php/eng
• E-taxation: http://e-tributacao.blogspot.com/
Tax Figures in Mozambique
|Currency||MZN (Mozambican Metical)|
|Tax-free Threshold in Mozambique||None|
|Income Tax Rates|
Tax Residency in Mozambique
When do you become a tax resident in Mozambique
You become a tax resident in Mozambique when:
Individuals are considered a resident of Mozambique if:
- They are present in Mozambique for more than 180 days in a tax year, regardless of whether the days are consecutive, OR
- They maintain a residence in Mozambique that indicate an intention to maintain and occupy the residence as a permanent residence, OR
- They perform functions of a public nature abroad for the Republic of Mozambique, OR
- They are crew members of a ship or aircraft that are at the service of entities that have their residence, head office or effective management in Mozambique.
Does the 183 day rule apply in Mozambique
The 180 day rule applies in Mozambique.
Am I taxed on my global income in Mozambique
Yes, if you are resident. Non-residents are taxed only on income arising in Mozambique.
Can you set up your own Limited Company in Mozambique?
|How long does it take to set up||17 days|
|How much does it cost||MZN 1,850 + 0.4% tax on the company’s capital up to MZN 5 million and 0.03% tax on capital exceeding MZN 5 million.|
|Is it easy?||Starting a Business Rank: 135 https://www.doingbusiness.org/content/dam/doingBusiness/country/m/mozambique/MOZ.pdf|
Tax Calculator in Mozambique
If you are a contractor and want a calculation on your tax and net retention in Mozambique, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Mozambique
Contractors in Mozambique are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Mozambique umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Mozambique taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Mozambique tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Mozambique
We work with numerous umbrella companies in Mozambique, many of whom are experts in tax and immigration laws. If you have any questions about tax in Mozambique, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Mozambique work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Mozambique but without the overhead of directly dealing with the Mozambique tax authorities. Get in touch with us today for some reliable advice on tax in Mozambique!
A Contractor’s Guide to Work Permits in Mozambique
Immigration is one of the primary concerns for any contractor hoping to start working in Mozambique. Permanent employees will find it easy to get their Mozambique work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Mozambique work permit is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Mozambique is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Mozambique (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Mozambique. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Mozambique and match contractors with the right company for them. If you’ve already secured a contract in Mozambique, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).