Mozambique is an ideal country to expand a business to given its ties to a variety of ports and other African countries. However, before scaling your company there, you need to prepare for the more complicated aspects of hiring teams and running operations there, including setting up your Mozambique payroll, deciding which payroll option is best for you, and more.
Taxation rules in Mozambique
Both employers and employees need to contribute to a variety of tax funds in Mozambique. For example, employers contribute 4% of wages to social security, while employees give 3%. The country utilizes a progressive income tax scale for employees, where the tax rate increases as employees earn more. Corporations are also subject to a corporate income tax of 32%.
Mozambique payroll options for companies
Companies have more than one Mozambique payroll option. You can choose:
- Internal payroll: Companies that would rather run their own payroll out of their Mozambique subsidiary can, as long as they have the budget to hire additional HR team members and the expertise to stay compliant.
- Mozambique payroll processing company: Companies can also work with a Mozambique payroll processing company to outsource payroll. The company will still be held responsible for all payroll compliance.
- Employer of Record: A global EOR like G-P handles the complexities around setting up and managing compliant payroll so you can focus on building your team.
How to set up a payroll in Mozambique
Before companies can set up your Mozambique payroll, they have to incorporate in the country. The steps to set up a subsidiary are different for almost every corporation depending on what type of entity they choose and where they decide to incorporate. Since it can take weeks or months before they can legally operate in the country, leveraging the support and expertise of an Employer of Record can streamline the process.
With G-P, companies don’t have to deal with entity establishment or Mozambique payroll setup – we handle it all for them. We help ensure that payroll is set up seamlessly and compliantly, so teams can start working in a few minutes instead of a few months.
Entitlement/termination terms
Since termination and entitlement terms are often complex, it’s best practice to include entitlement and termination terms in the employment contracts before choosing a Mozambique payroll option. Employees are generally entitled to at least 30 days’ notice, and if they are hired under indefinite term contracts, they usually receive severance pay based on their wages.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay team members with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.