Africa Coronavirus Governance Health Law Legislation Mozambique Tax

Coronavirus Legal Guide – Mozambique

As long as Coronavirus pandemic spreads across the planet, National Governments take more measures. To acknowledge and accompany all policies daily adopted happens to be a difficult task. Considering this new reality, we present this Legal Guide, where companies and individuals may easily understand what are the most important laws and rules in force, regarding Coronavirus impact on economy and society.

 

State of Emergency Decree (Presidential Decree no. 11/2020, March 30)

State of Emergency takes effect between April 1st and 30th, although it has been extended until the 30th of May, on the 29th of April. Its declaration led to the implementation of several measures to mitigate the spread of the virus and safeguard public health, namely:

  • Mandatory domiciliary quarantine for 14 days to all people that recently travelled abroad and to those who had contact with confirmed cases of COVID-19. In these cases, it is strictly imperative to comply with preventive measures determined by the Health Ministry;
  • Prohibition of public events, namely, religious events and cultural, recreational, sports, tourism and political activities, except for unavoidable State or social events (such as funerals);
  • Closure or limitation of functioning hours for commercial and entertainment establishments. The following public or private essential services (among others) are still functioning: medical services, hospitals and pharmacies, water, energy and fuel provision services, food and essential goods, loading and unloading of animals and potentially perishable food, post offices and telecommunications services, waste treatment services and private security;
  • Circulation of people inside the country is limited and the borders have been partially closed (with consequent limitation of entries and exits of Mozambican territory), except for State matters, humanitarian support, health purposes and cargo transportation;
  • Monitoring of essential goods’ price, including those needed to prevent and combat the pandemic. Promotion and reorientation of the industrial sector, to the production of provisions required to combat COVID-19;
  • Implementation of sustainable tax and monetary policy measures to support the private sector.

The Government will execute these measures in line with proportionality principles and will limit the extension, duration and means used to the strictly necessary to ensure the return to normality. The execution of said measures may, if needed, be enforced by Security and Armed Forces.
The violation of these measures is considered a crime of disobedience and the individuals and companies must collaborate with the authorities.

State of Emergency Ratification (Law no. 1/2020, of March 31)

This Law ratified Presidential Decree 11/2020 and added provisions regarding access to justice and Courts. Regarding courts’ operation, the general rule is that all procedures are subject to the judicial vacations’ regime until further notice, which means that courts are only operating for urgent legal actions, such as protection of minors’ actions or legal proceedings regarding arrested or detained people. All procedural and administrative terms are suspended, including disciplinary procedures, during the State of Emergency.
All limitation periods are also suspended.

State of Emergency Execution (Decree no. 12/2020, April 2)

  • Following Presidential Decree 11/2020 and Law 1/2020, Decree 12/2020 implemented specific rules to execute the previous legislation.
  • Domiciliary quarantine was extended to those who entered the country in the last two weeks and those who had direct contact with confirmed cases of COVID-19 determined by health authorities. Those who refuse to comply may be subject to confinement at home or the adequate establishment, being the authorities authorized to check the location of such individuals through geolocation.
  • A special protection regime for high-risk citizens was created: citizens with more than 60 years old or citizens with health conditions (such as immunosuppressed individuals, diabetics, cancer patients, patients with respiratory diseases, among others) and pregnant women, are exempt of onsite work activities.
  • Issuance of official documents (for example visas and travel documents, vehicle registrations, drivers’ licenses and marriage certificates, etc.) and the cancellation of the issued visas is suspended.
  • The following documents are valid and effective until 30 June 2020, even if they were to expire in the meantime: Civil Identification Card, Driver’s License, DIRE (Document of Identification and Residence of Foreigners) and License to import automotive vehicles.
  • Administrative licenses, authorizations or other types of administrative acts are still valid, regardless of their initial deadline.
  • Entertainment establishments, including museums, theatres, libraries, bars, pools, clubs, sports fields, beaches and gyms are closed.
  • Public and private entities (except for those mentioned above) may continue to function, provided that the workforce on site is reduced to 1/3 (the rest of the employees may be working from home), and the following prevention measures are complied with: social distancing of at least 1.5 meters, respiratory etiquette, frequent hand washing, disinfection of equipment and facilities, non-sharing of personal use items, ventilation of the facilities, Reduction of the total number of people gathered to a maximum of 20 people (except for urgent situations crucial for the functioning of the State). The subject entities may reduce their activity, to comply with the above-mentioned reduction of employees to 1/3.
  • Authorities responsible for monitoring economic activities are still functioning. Inspection actions are to be reinforced in order to identify and sanction speculation practices.
  • Industrial entities are required to ensure that prevention measures are implemented, specifically, in ensuring the protection of personnel. The relevant authorities in the sector are competent to reorient the production to necessary goods.
  • Payment of taxes on import of food, medicines and other essential goods is subject to an a posteriori regularization regime.
  • On bank credits, interpellations, payment delays and legal procedures arising from non-compliance with contractual obligations legally imposed by the declaration of the State of Emergency have no effect, until the State of Emergency ends.
  • Collective transport of people is now limited to 1/3 of the vehicle capacity.
  • Termination of employment agreements on the grounds of absence to work, due to the measures implemented to prevent the spread of COVID-19, is forbidden (this does not affect the application of disciplinary measures, namely to employees who are required to work during the State of Emergency).
  • Citizens, public and private entities have a collaboration duty towards compliance with instructions provided by institutions responsible for the security and public health.

Health Preventions (Health Ministry’s Circular no. 6/GMS/2020, March 20)

This Circular intends to prevent contamination by individuals entering Mozambique from foreign territory. The measures implemented are:

  • Local health authorities will monitor and follow the quarantine of those affected every 2 days, by phone or in-person;
  • Authorities may show up at the home of those who are required to be in quarantine, to monitor compliance with quarantine rules.

Tax Authority Measures (Circular no. 03/GAB-DGI/90/2020, March 20)

This Circular has the purpose of establishing prevention measures to be taken by Mozambican Tax Authorities. The physical presence of the taxpayers in the Tax Authorities services is limited through the distribution of tickets. If needed, attendance of taxpayers to fulfil tax obligations regarding the month of March will be extended until April 10th.

Criminal Amnesty and Pardon (Law no. 2/2020, April 6)

This law aims to protect the life and the dignity of human beings. Due to the overcrowding of the prison establishments this law amnesty and pardon the sentences until one year of prison, with or without penalty. These sentences must be in the scope of the pandemic COVID-19.
This law does not exclude civil liability. At last, the law lists some violent crimes that are not in the scope of this law and therefore are not covered by the amnesty and pardon.

Social Security Contributions Pardon (Decree no. 22/2020, April 23)

This Decree grants a pardon of the penalties and a reduction in the default interests due for missed or delayed payments of the mandatory contributions, applicable to debts constituted before the entering into force of the Decree. It applies to (i) small and medium enterprises, as well as (ii) those that for any reason are not registered with the Social Security, and to (iii) those with debts’ proceedings and (iv) those with social security debts partially paid.
This pardon of the penalties and the reduction of default interests is granted on the assumption that the taxpayer will pay the due contributions. The taxable person who voluntarily settles the debt will benefit from a total pardon of the penalties and a reduction of 98% in default interests. The taxable person who requests instalment payment benefits from a total pardon of the penalties and a reduction of 75% in default interests. This instalment payments must be made until 31st December of 2020.

Customs and Taxes Facilities (Decree no. 23/2020, April 27)

On customs facilities, the Decree foresees that until 31 December 2020, customs clearance for import goods related with the prevention treatment of COVID-19 is temporarily authorized, and its regularization should occur within a maximum period of 90 days. On tax facilities, the Decree foresees the following benefits: (i) corporate income tax payments on account due in May, July and September of 2020 are waived; (ii) and corporate income tax special payments on account due in July, August and October of 2020 may be postponed to January, February and March of 2021.
These facilities solely apply to taxable persons whose business value has not exceeded 2.500.000,00 Mt in 2019 without tax debts.
Until 31 December 2020, the offsetting of claims concerning the Value-Added Tax is authorized.

Foreign Exchange Measures (Notice no. 06/GBM/2020, April 29)

This Notice amends the Notice no. 20/GBM/2017 and implements urgent and transitory measures to mitigate Coronavirus impact in the Mozambican economy.

Thirty per cent of residents’ profit repatriation arising from goods, services and foreign investments are now converted in Meticals. Foreign currency balances may be converted as payments to local entities are made. Tax clearance proof on current transfers payments to foreign countries has been waived if the payments are related with health, education and accommodation (directly paid to the service provider), maintenance allowances, family expenses, travels and tourism. This measure does not apply to foreign employees working in Mozambique.

Article by Duarte Marques da Cruz


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.

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