The tax reform in force since 1 January 2026 introduces significant changes to the concept of tax residence under IRPS (Personal Income Tax), with a direct impact on the scope of taxation and compliance obligations for individuals. Under the previous regime, the determination of tax residence was mainly based on a strong connection to Mozambican territory. Until 2026, individuals were considered tax residents if they stayed in Mozambique for more than 180 days, as well as those who, even if they did not meet this threshold, had a dwelling under conditions that suggested an intention to use it as a permanent residence.
With the tax reform, the IRPS Code now adopts a broader concept of tax residence. Individuals are now considered residents if they have their main residence in Mozambique, if they carry out their main professional activity in the country—whether paid or unpaid (unless they can prove it is a secondary activity)—or if they maintain their centre of economic interests in Mozambique. Physical presence is no longer an autonomous and decisive criterion, shifting the focus instead to the jurisdiction with which the individual has substantial economic ties.
The new concepts introduced by the law still require clarification, which is expected to be provided through regulations to be published by 30 June. In particular, the criteria for determining what constitutes a “main residence,” the means of proving that a given activity is secondary, and the definition of “centre of economic interests” still need to be regulated.
“There is an increased risk of unintended tax residency situations, particularly for individuals physically outside the country.”
However, it is already possible to identify that the broadening of the residence concept may have significant implications. First, it increases the margin of discretion of the tax authority, expanding the scope for case-by-case interpretation and for the classification of borderline situations.
On the other hand, there is a higher risk of involuntary tax residency status, particularly for individuals physically outside the country whose economic ties to Mozambique may, under the new framework, be considered sufficient to establish tax residence. Additionally, the new concept may lead to more frequent activation of double taxation treaties, which continue to prevail over domestic law, but with increased complexity and administrative burden.
From a practical perspective, the new framework requires a more comprehensive assessment of each individual’s situation, taking into account the nature of their activities, the location of income sources and the existence of economic interests in Mozambique, in a context where the obligation to submit an Annual Income Tax Return—previously exempted—now becomes mandatory.
In summary, the new concept of tax residence represents a significant structural shift, moving away from essentially physical criteria towards a more substantive assessment of taxpayers’ economic ties to Mozambican territory, requiring increased monitoring by potentially affected individuals.
