Capital Gains Taxation in Mozambique
In Mozambique, the taxation of capital gains is governed by the Income Tax Code (Código do Imposto sobre o Rendimento das Pessoas Singulares e Colectivas), specifically Article 14. Capital gains are defined as the profits or gains derived from the transfer of assets or rights, including:
- Real estate properties
- Stocks and shares
- Bonds and other financial instruments
- Business assets
The distinction between short-term and long-term capital gains is not relevant for tax purposes in Mozambique.
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula for calculating capital gains is as follows:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, including expenses related to the sale (e.g., brokerage fees, legal fees) and any improvements made to the asset during ownership.
Tax Rates
Capital gains in Mozambique are taxed at a flat rate of 20%. This rate applies to all categories of capital gains, regardless of the nature of the asset or the holding period.
Legal Framework
The legal framework governing the taxation of capital gains in Mozambique is outlined in the following articles of the Income Tax Code:
- Article 14: Definition of capital gains and calculation of taxable gains
- Article 15: Tax rates applicable to capital gains
These provisions aim to ensure that individuals and businesses contribute their fair share of tax on profits realized from investments and asset disposals. By applying a flat tax rate to capital gains, Mozambique seeks to simplify the tax system and promote investment while generating revenue for the government.
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