Special Economic Zones (SEZ) and Industrial Free-Trade Zones (IFZ) are not new in Mozambique.
However, its potential and growth capacity has been overlooked and unexploited by several foreign investors setting-up their businesses in the country, many times for lack of knowledge of their existence, geographic proximity and perks (v.g., tax and customs benefits).
From north to south, SEZ and IFZ are spread across the vast Mozambican coastline. In Nampula province, more than US$ 2.5 billion has been invested, since 2009, in the SEZ of Nacala and the IFZ of Lucone and Minhuene.
In Zambezia province, the SEZ and IFZ of Mocuba are home to the first solar power plant in Mozambican, with 40 MWs of power capacity. In Sofala, the SEZ of Beira (Manga-Mungassa) accommodates investment plans of the Chinese company Dingsheng International Investment close to US$ 500 million. In Maputo, the SEZ and IFZ of Beluluane Industrial Park, Mozambique’s largest SEZ, hosts the largest Mozambican company, Mozal S.A.R.L.
In general, companies based in SEZ benefit from a corporate income tax exemption in the first 3 tax years of operation, from a 50% reduction in the corporate income tax rate from the 4th to the 10th tax year, and from a 25% reduction from the 10th to the 15th tax year.
On the other hand, companies and developers based in IFZ benefit from a corporate income tax exemption in the first 10 tax years of operation, from a 50% reduction in the corporate income tax rate from the 11th to the 15th tax year, and from a 25% reduction for the remaining life of the project.
Companies based in SEZ and IFZ are exempt from customs duties on imports of construction materials, machinery, equipment, accessories, spare parts and other goods essential to the pursuit of the licensed activity. This exemption is extended to Value-Added Tax (VAT), including VAT over acquisitions on the internal market, as well as inside of SEZ.
Imports of goods for SEZ and IFZ are also exempt of customs tariffs and other customs impositions. Such goods can also be exempt of the pre-shipment inspection.
Transfers of goods and services within the SEZ and IFZ, are equally exempt of VAT, as long as they remain within SEZ and IFZ.
Transfers of goods and services from SEZ and IFZ to the internal market are deemed as imports, being subject to the payment of customs tariffs rights and applicable taxes.
The exit of goods from SEZ or IFZ to external markets is not subject to the customs tariffs and impositions, if directly exported in accordance with customs transit regulations.
The industrial waste intended to be treated as waste by municipal authorities may leave the SEZ or IFZ without legal bureaucracies.
Furthermore, companies based in SEZ and IFZ may benefit from lenient legal frameworks applicable to its operations, liabilities and public inspections
Article by Duarte Marques da Cruz
Duarte Marques da Cruz is partner of the Portuguese law firm MC&A, specialized in international business advisory, with a special focus in Lusophone markets. With extensive experience in the Energy sector (Renewables and Oil & Gas) and in International Taxation, he has supported international companies in major upstream, midstream transactions and projects, including in implementing, exploration and development programs. Duarte has also supported international clients in other areas of practice, namely, Mining, Transport & Logistics, Regulatory Compliance and Mergers & Acquisitions in Mozambique, Angola and Portugal.