Transfer Pricing in Mozambique

The legal framework

Mozambique's transfer pricing rules sit in one instrument: Decreto n.º 70/2017, de 6 de Dezembro, approving the annexed Regime de Preços de Transferência. Published in the Boletim da República of 6 December 2017 (pp. 2512-2523), it took effect on 1 January 2018 and has never been amended. It is made under article 49 of the Corporate Income Tax Code (Lei n.º 34/2007, as amended by Lei n.º 19/2013), which empowers the AT to correct taxable profit where special relations have produced conditions different from those between independent persons and defines those relations by reference to significant influence over management decisions. Article 49 carries no documentation power: that obligation rests on articles 21 to 24 of the Regime and article 40 of the IRPC Regulation (Decreto n.º 9/2008). Article 49 survived the December 2025 reform intact.

Article 4(1) requires terms agreed with a party in a situation of special relations to be substantially identical to those independent parties would agree. Article 4(2) demands transaction-by-transaction testing, with aggregation only for closely interlinked or continuous supplies and bundled intangible licences.

Scope is wide. Article 3 catches residents dealing with related parties wherever situated, Mozambican permanent establishments, and transactions routed through an unrelated interposed person that deals abroad with a related party. Purely domestic dealings are in scope, and article 29 lets the AT correct distortions between activities of one taxpayer taxed under different regimes, exposing mining, petroleum, free-zone and incentive-code holders.

Relatedness is broadly drawn. Article 5 follows IAS 24 concepts; article 6 then deems significant influence at a 10 per cent direct or indirect holding of capital or voting rights, and extends to overlapping boards, family links, group contracts and economic dependence through licensed IP, raw materials, sales channels or contractual price-setting.

Methods, comparables and benchmarking

Article 8(1) sets a two-tier hierarchy, not a best-method rule: CUP, resale price minus and cost plus come first, with profit split, transactional net margin or another appropriate method available only where those cannot be applied or do not give the most reliable measure.

Two features defeat imported methodology. First, the decree prescribes arithmetic: articles 11 and 12 write the resale price and cost plus formulae into law, article 15 makes the price practised the weighted average of comparable prices, and article 17 prescribes in twelve paragraphs how to locate the median at (n+1)/2, interpolate and derive the quartiles. A file reporting whatever quartiles a commercial database returned is not applying Mozambican law.

Second, the range is engineered. Article 16(1) makes the median and interquartile range mandatory with two or more comparables and 16(2) accepts any result inside it. But an outlier is not moved to the nearer quartile: below the first quartile it goes to the median less 5 per cent, above the third to the median plus 5 per cent, and articles 16(4)-(5) force the quartiles themselves to at least median plus or minus 5 per cent. Article 16(6) is the only de minimis, no adjustment where comparable and actual price differ by up to 5 per cent.

Commodities are ring-fenced: article 18 makes CUP compulsory for commodity imports and exports against recognised exchange quotations at the transaction date, adjusted by average market premium and little else. The listed commodities mirror the export base: coal, gas, aluminium, gold and graphite.

Comparability is conventional, six factors in article 9; data is the constraint. There is no local-comparable requirement and no geographic hierarchy, so regional sets with adjustments are the norm, and article 10(5) concedes further by allowing a comparable from either of the two preceding years, adjusted for exchange-rate movement. No provision names a tested party, but the one-sided methods are drafted around the Mozambican entity: articles 11(1), 12(2)-(3) and 14(1) all anchor on the sujeito passivo.

Documentation: what the AT expects

Mozambique does not use the OECD three-tier model: master file, local file and country-by-country report have no place in its law. Chapter IV imposes a single processo de documentação fiscal under article 21, with content set by articles 22 to 24. The threshold is very low: article 21(4) exempts only taxpayers whose preceding-year net sales and other income fell below MZN 2,500,000, about USD 40,000.

Article 22 is demanding. It wants the special-relations analysis and shareholding history, each counterparty's activity with transaction values by nature over five years, the functional analysis on both sides, the transfer pricing policy and comparable-gathering procedures, and the contracts themselves including price calculation bases and multi-year adjustment mechanics. Article 23 adds the supporting file, including a production-cost statement from the foreign supplier, and makes Portuguese the working language, translation waivable only on application.

The dossier is not filed; it is retained and produced on request, and must exist by the last day of the sixth month after the fiscal year-end, under the processo de documentação fiscal rules of the IRPC Regulation to which article 21(2) cross-refers. Article 21(3) then requires the taxpayer to say whether related-party transactions occurred and, if so, to identify counterparties, declare amounts by product or service and state the adjustment position and method used. That is done on Modelo 20 Anexo I, filed through e-Declaração by the last working day of June for calendar-year taxpayers — a month after the Modelo 22 return, which is due by the last working day of May. The sequencing runs the other way from the filing dates: the dossier and its conclusions must be settled before the Modelo 22, because that is the return in which any self-adjustment is made.

Audits, penalties and the enforcement climate

The decree contains no penalty article; sanctions come from Título IV of Lei n.º 2/2006, under which omission infringements crystallise when the deadline expires. Reported penalties run from roughly MZN 3,000 to MZN 2,000,000, but that range traces to no Mozambican legal text and is best treated as indicative. The real exposure is the adjustment, interest and unrelieved double taxation.

There is no penalty protection: a compliant file is no shield and no good-faith defence is codified. The asymmetry runs the other way, since article 8(8) lets the AT price the transaction from documents in its own possession wherever the taxpayer has not indicated a method or has produced inadequate documents. Only one production period is fixed by the Regime itself: under article 8(7), where an inspection disqualifies the method or a calculation criterion, the taxpayer has thirty days at most to present a fresh calculation under another method. The file must nonetheless already exist by the last day of the sixth month after year-end; the period for handing it over is set in the audit notice.

Assessments must be validly notified within five years from the start of the year following the taxable event, with lapse recognised ex officio; records run to ten years. Enforcement is modernising faster than the law: since May 2025 taxpayers upload monthly invoice data from certified billing software to e-Declaração, with SAF-T (Moz) pending. Cross-read with M/20 Anexo I, that lets the AT test declared related-party volumes and raise corrections without visiting the taxpayer. Attention has concentrated in coal, gas and heavy sands, where the commodity CUP rule bites.

Dispute resolution and advance certainty

There is no advance pricing agreement programme, unilateral or otherwise, and nothing since 2017 has introduced one. Advance certainty is unavailable, leaving the documentation file as the only pre-emptive instrument.

Relief from double taxation is treaty-dependent. Article 25 permits a correlative adjustment only where it results from a convention, on that convention's terms. The gateway is article 26, a pedido de revisão da situação tributária founded on corrections made or proposed by a foreign competent authority, evidencing transactions, periods and precise corrections. Article 27 conditions relief on proof of double taxation contrary to the convention, timely lodgement, cooperation and the other State agreeing to consult; once agreement is reached and the foreign decision is final, article 28 requires the adjustment within 120 days.

The treaty network is the binding constraint: nine conventions, with Botswana, India, Italy, Macau, Mauritius, Portugal, South Africa, the United Arab Emirates and Vietnam. Mozambique has not signed the Multilateral Instrument and is not an Inclusive Framework member: no Action 14 commitment, no MAP peer review, no arbitration backstop. Investors from outside those nine jurisdictions have no correlative relief route at all.

Domestically the taxpayer lodges a reclamação graciosa within 60 days on any ground of illegality; rejection goes to the hierarchical superior within 90 days, for decision within 60, then to the tax courts within 90 days, ending at the Tribunal Administrativo. No Mozambican transfer pricing judgment has been reported, which reflects poor indexing as much as an absence of disputes; the statutory text carries the whole argument. Note too that only primary and correlative adjustments exist; no secondary adjustment follows a correction.

Pillar Two and what changes in 2026

Mozambique has not enacted Pillar Two: no income inclusion rule, no undertaxed profits rule, no domestic minimum top-up tax, and nothing in the December 2025 package. Non-accession to the Inclusive Framework is the structural reason, and it equally explains the absence of any position on Amount B. At a 32 per cent headline rate top-up tax is unlikely, though mega-project and free-zone beneficiaries can sit below 15 per cent effectively.

What changes in 2026 is the taxpayer population: Lei n.º 12/2025, in force from 1 January 2026, cuts the construction and installation permanent establishment threshold from six months to 90 days and creates a services permanent establishment where services are supplied for more than 90 aggregate days in any twelve-month period, with no physical presence requirement.

The transfer pricing consequence is direct: articles 3(2)(a)-(b) bring permanent establishments and inter-establishment dealings within the Regime, and article 7(7) applies the adjustment rules to head office dealings. A provider that never sets foot in Mozambique can now have an establishment there, and with it a profit attribution question, a documentation obligation and an M/20 Anexo I filing. Treaty definitions still govern where one of the nine conventions applies, which makes that protection materially more valuable. One open point deserves care: reports that Lei n.º 12/2025 revoked article 47 of the IRPC Code suggest the 2:1 thin capitalisation safe harbour may have gone with it, while leading commentary still treats it as live. Resolve that against the gazette before pricing related-party debt.

How practitioners should respond

Three disciplines separate a Mozambican file that survives audit from one that does not.

Rebuild the arithmetic locally. A study prepared to OECD conventions is usually defensible on economics and wrong on computation. The weighted average in article 15, the quartile positions in article 17 and the median plus or minus 5 per cent mechanics in article 16 must be run as the decree specifies, with the working shown and any divergence from the group's global range reconciled rather than left for the auditor to find.

Test the relatedness perimeter before testing prices. At 10 per cent, with influence deemed from board overlaps, family links and economic dependence, the list from a group consolidation rarely matches the Mozambican one. The same review should isolate commodity flows, because article 18 removes method choice and a TNMM applied to a coal or gas export will not be accepted.

Treat M/20 Anexo I as the file's index. The AT holds monthly invoice data and can compare it against declared related-party volumes without opening an audit, so inconsistency between annex, accounts and file is the likeliest trigger for enquiry. With no APAs, no penalty protection and only nine treaties behind which to seek correlative relief, contemporaneous documentation in Portuguese, reconciled to the return, is not a formality. It is the defence.