Mozambique Announces Economic Acceleration Package

The President of the Republic of Mozambique, Filipe Nyusi, launched in August 2022 the Economic Acceleration Measures Package (Pacote de Medidas de Aceleração Econômica – PAE), containing several changes that contribute to the country’s economic development. With these measures, the Government aims to diversify its economic activities, increase opportunities for its economic expansion and ensure the fulfillment of Mozambique’s unexploited potential.

Thus, the 20 measures that were instituted can be divided into four groups: (i) tax incentives; (ii) debureucratization; (iii) economic enhancement; and (iv) accountability. It is expected that all the respective legal instruments and regulations addressing each measure will be issued in the upcoming weeks.

Tax Incentives:

1 – Reduction of the Value Added Tax (IVA) rate from 17% to 16%;

2 – IVA exemption for the importing of agricultural and electric energy factors;

3 – Reduction of the Corporate Income Tax (IRPC) rate from 32% to 10%, in agriculture, aquaculture and urban transport;

4 – Acceleration of the amortizations for paid-up capital to half of the period established in the tax code, for investments made in company installations and equipment that result in the creation of at least 20 additional permanent jobs;

5 – Simplification of the procedure for repatriation of capital;

6 – Strengthening the supervision of natural resource exports;

7 – Reorienting the mission of the Housing Development Fund to develop land infrastructure for citizens and investors, as well as boosting the building materials industries;

8 – Allocation of 10% of tax revenues from natural resources for the development of provinces where such extraction occurs, exclusively for the financing of infrastructure projects and development programs;

Debureaucratization:

11 – Improving the performance of airports, ports and logistical models;

12 – Encouragement of national industrialization of goods acquired in bulk by the State;

13 – Exemption of visas for citizens of countries with low risk of migration and granting of investment visas with longer periods;

14 – Adjustment and revision of the Labor and Investment Laws;

15 – Simplifying administrative processes between the State, companies and citizens;

16 – Reforming justice administration;

17 – Simplification of public administration improving its efficiency and the quality of services offered to citizens;

Economic Enhancement:

19 – Creation and implementation of the Mozambique Sovereign Fund with a regulatory framework to ensure the use of oil revenues in a transparent manner and to protect the economy against external shocks.

9 – Creation of a Borrower Guarantee Fund to support small and medium-sized Mozambican companies;

10 – Obligation to blend imported fuels with biofuels.

Accountability:

17 – Supervision of social security funds, including the INSS, by the Insurance Supervision Institute (ISS);

20 – Reforming the State’s internal audit subsystem to reduce corruption and misappropriation of public funds.