Why Your Business Needs Transfer Pricing Compliance Services in Mozambique

In today’s globalized business environment, transactions between related parties are common. However, these transactions must comply with Mozambique’s transfer pricing regulations to avoid severe financial and reputational consequences. As a business operating in Mozambique, it is crucial to ensure that your transactions with related parties are conducted at arm’s length and fully comply with local tax laws. This is where our Transfer Pricing Compliance Services come in.

 

What is Transfer Pricing and Why Does It Matter?

Transfer pricing refers to the pricing of goods, services, and intangible assets exchanged between related entities, such as parent companies, subsidiaries, or affiliates. Mozambique’s tax authorities require that these transactions be conducted at arm’s length, meaning the prices should be consistent with what would be charged between unrelated parties under similar circumstances.

Non-compliance with transfer pricing rules can lead to:

  1. Tax Adjustments: The tax authorities may adjust your corporate taxable income, resulting in higher tax liabilities. This includes additional taxes owed, along with fines and interest for late payment.

  2. Fines and Interest: Failure to submit required transfer pricing documentation can result in significant penalties and interest charges

  3. Damaged Relationships with Tax Authorities: Non-compliance can strain your relationship with the Mozambique Revenue Authority, potentially leading to increased scrutiny and audits.

  4. Inefficient Tax Management: Without proper transfer pricing documentation, your business may face unexpected tax burdens, compromising your financial planning and tax optimization strategies.

 

Who Needs to Comply?

The transfer pricing regime in Mozambique applies to:

» Corporate Income Tax and Personal Income Tax taxpayers with an annual turnover of MZM 2,500,000.00 or more.

» Taxpayers under the organized accounting regime.

» Businesses that engage in transactions with related parties or entities in low-tax jurisdictions or privileged tax regimes.

If your business falls into any of these categories, you are legally required to maintain proper transfer pricing documentation and submit the necessary reports.

 

Our Transfer Pricing Compliance Services

We offer comprehensive transfer pricing compliance services designed to help your business meet all legal requirements while optimizing your tax position. Our services include:

  1. Transaction Analysis: We analyze your transactions with related parties to ensure they comply with the arm’s length principle.

  2. Transfer Pricing Report Preparation: We prepare detailed transfer pricing reports that document your compliance with Mozambique’s tax laws.

  3. Documentation Management: We help you organize and maintain all necessary documentation, including benchmarking studies, Masterfiles, and other supporting documents.

  4. Submission of Required Tax Forms: We ensure timely submission of Form M20I (Annual Declaration of Transfer Pricing Income) and Form M22 to the tax authorities.

 

Transfer pricing compliance is not just a legal requirement; it’s a critical component of effective tax management. Non-compliance can lead to significant financial and operational disruptions. RSM can assist navigating the complexities of Mozambique’s transfer pricing regime and ensure your business remains compliant, efficient, and audit-ready.

 

Amós Guambe

 

 

For more information, please contact [email protected], [email protected] or [email protected].