Overview
VAT on electronically supplied service (ESS) was introduced by Law no. 13/2016 of 30 December, which amends and republishes Law no. 32/3007 of 31 December, which approves the VAT Code. This regulation was effective from 1 January 2017.
The changes extended the scope of VAT by including specific electronic services in cases where the supplier is a non-resident entity and the customer is a resident entity/person duly registered for VAT purposes in Mozambique.
Supplies of electronic services by non-resident suppliers are subject to VAT in Mozambique through the reverse charge mechanism, provided the customer is a taxable person (the same supplies would not be VATable if the customer is a foreign entity).
Release date: April 2024
Key provisions applicable to VAT on ESS |
| Table 1 |
Services in scope |
By law, i.e. the VAT Code, electronic services include electronic or digital content supplied electronically (no distinction is made between B2B and B2C). Examples of electronic services:
|
Registration and compliance |
Non-resident taxable persons for VAT purposes are required to register for VAT and appoint a resident tax representative to comply with their respective VAT obligations. In practice, however, it is not expected to find non-residents registering themselves for VAT purposes, as the ability to claim input VAT on upstream transactions is limited, and the Mozambique Tax Authority (MTA) creates practical hurdles for registrations for VAT purposes (e.g., by forcing the interpretation that registration for VAT purposes creates an automatic permanent establishment in Mozambique). Where a non-resident entity does not register for VAT purposes and does not appoint a tax representative in Mozambique, the entity that purchases the services or the recipient of the services becomes responsible for compliance with the VAT obligations through application of the VAT reverse charge mechanism. It is important to note that the VAT amount may only be added to input VAT if 90 days have not passed from the date of issuance of the invoice and the date on which the VAT is reported (timeframe to claim input VAT). If this timeframe is not respected, the VAT amount may no longer be added to the input VAT or, if added, may be disallowed, resulting in additional VAT being payable. |
Invoicing |
Where a non-resident supplier appoints a tax representative (which is not common, as mentioned above) to comply with its VAT obligations (e.g. register for VAT purposes and issue an invoice on behalf of the non-resident supplier), the invoice must be in Portuguese, although the MTA does accept them if English is used alongside Portuguese. The amounts must be indicated in Mozambican Meticais (MZN), although the MTA does accept a reference to the counter value in a foreign currency being used alongside the local currency. In addition, the invoice will only be valid for VAT purposes if it is printed by a local printing company authorised by the Ministry of Economy and Finance (MEF) or issued using invoicing software authorised by the MEF. VAT invoices must contain the following information:
|
VAT on costs
|
Technically, a non-resident can recover input VAT incurred in Mozambique through a tax representative on services that are not excluded from the right of deduction by the VAT Code. However, non-residents do not commonly register to recover VAT incurred in Mozambique due to the practical hurdles created by the MTA (e.g. by forcing the interpretation that registration for VAT purposes creates an automatic permanent establishment in Mozambique). |
Other considerations |
| The appointment of the representative is made through a power of attorney and must be communicated to the other contracting party before the operation is carried out. |
Particulars |
Description |
Scope |
Non-residents supplying electronic services to a Mozambican entity/person (no distinction is made between B2B and B2C) |
Liability to remit VAT |
Tax representative appointed by the non-resident supplier or the customer/recipient of the services in case no tax representative is appointed. Please refer to the comments later for more details. |
VAT rate |
16% |
Taxable value |
The price payable by the customer/recipient of the services |
Effective date |
Introduction of ESS regulation: 1 January 2017 VAT current rate application: 1 January 2023 |
VAT registration threshold |
Not applicable |
Tax invoice |
There is no requirement to issue an electronic tax invoice, but it is a requirement to issue an invoice or equivalent document for each supply of services that proves the VAT paid (if any) by the Mozambican consumer. |
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