If your business in Mozambique turned over between MT 2.5 million and MT 4 million last year, your tax life changed on January 1, 2026 — and you may only now be feeling it. Law No. 9/2025, of December 29, rewrote the Simplified Tax for Small Taxpayers (ISPC), raising the eligibility ceiling, replacing the old flat payment with progressive rates, moving assessment to a quarterly basis, and adding invoice and withholding duties that did not exist before. In late September 2026 the Council of Ministers approved a new ISPC Regulation to define the application procedures, revoking the 2009 decree — a signal that enforcement of the new paperwork duties is ramping up now.
Here is what changed, who qualifies, what you owe, and the compliance habits worth building before the next quarter closes.
What ISPC is, in one paragraph
The Imposto Simplificado para Pequenos Contribuintes, created by Law No. 5/2009, is a turnover tax for small businesses that replaces three taxes at once: corporate income tax (IRPC), personal income tax (IRPS), and VAT. Instead of computing profit and charging VAT, qualifying small taxpayers pay tax on gross business volume. Until the end of 2025 the deal was simple: businesses with annual turnover up to MT 2.5 million could opt in and pay either a fixed MT 75,000 per year or 3% of turnover. Law 9/2025 keeps the concept but rebuilds nearly every parameter.
The headline change: the ceiling is now MT 4 million
Eligibility now extends to businesses with annual turnover of up to MT 4,000,000 — about US$62,500 at recent exchange rates of roughly 64 meticais to the dollar — up from MT 2.5 million (about US$39,000). If your 2025 turnover landed above the old ceiling and pushed you into the standard IRPC/IRPS-plus-VAT system, check whether you now fall back inside the simplified regime.
The scope of covered activities widened too. Small-scale forestry, fishing, livestock, poultry, and beekeeping activities are now expressly included, alongside handicrafts — good news for rural producers and artisans who previously sat in a gray area.
Progressive rates replace the flat MT 75,000
The old choice — pay a fixed MT 75,000 a year or opt for 3% of turnover — is gone. In its place are progressive rates applied to annual turnover:
- 3% on annual turnover up to MT 1,000,000
- 4% on annual turnover above MT 1,000,000 up to MT 2,500,000
- 5% on annual turnover above MT 2,500,000 up to MT 4,000,000
As drafted, the rate appears to apply to your total turnover according to whichever bracket it falls in, rather than marginally band by band — but confirm the base calculation with your accountant or the Tax Authority, since the difference is material. On the whole-turnover reading, a market trader with MT 900,000 in annual sales owes 3%, or MT 27,000; a retail shop at MT 2 million owes 4%, or MT 80,000; and a wholesaler at MT 3.2 million owes 5%, or MT 160,000.
Two relief valves soften the edges. If applying the rates produces tax payable of less than MT 500 (under US$8), you are exempt from paying anything at all. And if your turnover breaches the MT 4 million ceiling during a period, the excess portion is taxed at 20% — expensive, but at least the rule is spelled out instead of leaving you in limbo.
Service providers face much higher fixed rates
The steepest surprise in the reform targets services. Fixed rates now apply to specific service activities regardless of the general brackets:
- 12% for individual or corporate providers of trade services such as plumbing, carpentry, masonry, electrical work, barbering, gardening, and mechanics
- 15% for liberal professions such as lawyers, economists, geologists, engineers, and accountants
- 20% on turnover exceeding the MT 4 million cap, as noted above
If you combine activities from more than one sector, the highest applicable rate governs. A carpenter who also runs a small retail counter pays 12% across the board, not 12% on joinery and 3–5% on shop sales. That single rule makes activity mix a genuine tax-planning question for the first time under ISPC.
Professionals should also note the new time limit: lawyers, engineers, accountants, and consultants may remain in the ISPC regime for a maximum of five years. If you are in one of these professions, the simplified regime is now explicitly a launchpad, not a permanent home — plan your migration to the standard system before the clock runs out.
Who is shut out of the regime
Law 9/2025 also narrows the door. ISPC no longer applies to taxpayers who:
- Hold shareholdings in other companies taxed under ISPC
- Hold shareholdings in public limited companies (sociedades anónimas) or other companies whose shareholders cannot be identified
- Carry on activities outside the listed set — forestry, fishing, livestock, agriculture, poultry, beekeeping, industrial, and commercial
- Operate across multiple establishments
- Provide services covered by the law to the same entity for more than 183 days in a year
That last exclusion deserves attention from freelancers and contractors. If one client accounts for more than half your working year, the law treats the arrangement as outside the simplified regime — an anti-avoidance rule aimed at disguised employment. Diversifying your client base is now a tax-compliance strategy, not just a business one.
Going the other direction, the concept of an ISPC taxable person was extended to individuals who carry out a taxable operation without exercising a business activity, as long as it meets the incidence requirements of personal income tax. Occasional taxable deals can now pull a private individual into the regime.
Quarterly taxation changes your cash-flow rhythm
The assessment period moved from annual to quarterly. Instead of one yearly computation, you now determine and pay ISPC four times a year. That is more paperwork, but it also spreads the liability across the year and forces a bookkeeping cadence many small businesses never had. If you previously scrambled each December to reconstruct twelve months of sales, the quarterly rhythm is worth embracing rather than resenting: reconcile sales every three months and the year-end exercise nearly disappears.
The new paperwork duties are the real enforcement story
The provisions most likely to generate penalties are the documentation rules:
Invoice every transaction. ISPC taxpayers must now issue an invoice or equivalent document for each sale of goods or provision of services, and record them. Equivalent documents must be in the national language and currency, dated, sequentially numbered, and show the name and tax ID (NUIT) of both parties plus the quantity, description, and price of what changed hands. For cash businesses that never issued a receipt, this is the single biggest behavioral change in the reform.
Invoice on behalf of unregistered suppliers — and withhold 5%. When you buy goods or services from individuals who are not registered for tax purposes, up to a global annual limit of MT 2.5 million in such purchases, you must issue the invoice on the supplier's behalf with all elements the VAT Code requires, withhold tax at a liberating rate of 5%, and remit it to the Tax Authority. If your supply chain runs through informal vendors — common in agriculture, fishing, and handicrafts — map those purchases now and budget the withholding into your prices.
Think twice before waiving the exemption. ISPC taxpayers are exempt from VAT, IRPS, and IRPC; if you opt out of that exemption, you are now locked into those taxes for three years. Do not waive it casually — for example, just to issue VAT invoices to one corporate customer — without modeling three years of full-system compliance costs first.
A practical checklist for the next quarter
- Confirm you still qualify. Check turnover against the MT 4 million ceiling, your activity against the listed set, and the five exclusion tests — especially shareholdings, multiple establishments, and the 183-day single-client rule.
- Recompute your liability under the new brackets. Compare with what you paid under the old MT 75,000-or-3% choice; some businesses owe less, service providers often owe much more.
- Set up quarterly tracking. Record sales continuously so each quarter's turnover is known within days of the quarter's end, not reconstructed months later.
- Start invoicing every sale. Numbered, dated documents with both parties' NUITs are now mandatory, not best practice.
- Audit your suppliers. Identify unregistered individual suppliers, prepare to self-invoice and withhold the 5%, and watch the MT 2.5 million annual cap on such purchases.
- Professionals: start the five-year countdown. If you are a lawyer, engineer, accountant, or consultant in ISPC, calendar your exit to the standard regime.
- Watch for the new Regulation's procedures. The September 2026 approval revoking Decree 14/2009 will spell out filing mechanics — follow Tax Authority guidance as it is published.
Keep Your Quarterly Numbers Ready Without the Scramble
Quarterly assessment, mandatory invoicing, and withholding on informal purchases all point the same way: the simplified regime now rewards businesses that keep continuous, complete records. A plain-text ledger that logs every sale, purchase, and withholding as it happens makes each quarter's ISPC computation a report rather than a reconstruction. Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data — no black boxes, no vendor lock-in. Get started for free and see why developers and finance professionals are switching to plain-text accounting.
