Following the introduction of the Transfer Pricing Regime (RPT) by Decree 70/2017 of 6 December, transfer pricing has been a topic of discussion for economic agents who, by virtue of their business strategies or strategic alliances, find themselves linked to one or more entities resident or not in Mozambique. And because tied transactions involve the transfer of prices with the potential risk of erosion of the tax base, the Tax Administration introduced this regime which aims to regulate transactions between related companies, ensuring that the prices charged are in line with the principle of full competition.
This issue gained more momentum in August 2020, with the approval of the Annual Declaration of Transfer Pricing Income (Privileged and Undercapitalised Tax Regime) – M/20 Annex I, which must be submitted by taxable persons who, in the previous financial year, had a net sales volume and other income of 2.5 million meticals, and must declare transactions with entities with which they have special relationships. In cases where the taxable person did not have operations with related entities, they must mention this fact in field 10 of the declaration.
Alongside the above obligation to declare, as part of the tax documentation process, the taxable person must also keep the following documents:
- Documents relating to the PT policy;
- Contracts and supporting documents;
- Information on entities with which they have special relationships;
- Functional analysis;
- Financial analysis, including related party costs; and
- Other relevant information.
It follows that the preparation of the transfer pricing dossier is an important declaratory obligation that supports and carries with it other obligations that the taxable person must fulfil. However, in a world undergoing rapid technological change, it is essential to reflect on how these changes may shape the future of transfer pricing in Portugal.
The current transfer pricing landscape in Mozambique
In Mozambique, transfer pricing rules were implemented to prevent abusive practices that could result in the erosion of the tax base and the artificial transfer of profits to jurisdictions with more favourable taxation. Companies are obliged to justify that intra-group transactions follow the principles of full competition, i.e. the open market, using methods such as the comparable market price, cost plus and resale price minus, among others provided for in the transfer pricing regime.
As this is a matter of some technical complexity, many companies face significant challenges in its application, including the difficulty of obtaining reliable comparable data and the need to prepare extensive documentation to fulfil legal requirements. In addition, tax scrutiny of these practices has increased, putting additional pressure on taxpayers, which is expected to grow given the current economic context which has largely conditioned tax revenue collection.
The impact of technological change on transfer pricing
Technology has played a transformative role in global tax management, and Mozambique cannot remain on the sidelines of this revolution. Tools such as big data and analytics are enabling more detailed analyses of intra-group transactions, making it easier to identify discrepancies and tax risks. Specialised software is automating complex processes such as comparability modelling and benchmarking, significantly reducing the time and costs associated with complying with tax obligations.
In addition, emerging technologies such as blockchain and artificial intelligence could transform the tax authority. Blockchain offers greater transparency in financial transactions, while artificial intelligence can be used to predict tax risks and monitor patterns in real time. These innovations have the potential to improve not only companies‘ compliance with transfer pricing rules, but also the tax authorities’ efficiency in enforcing them.
Global trends influencing Mozambique and the tax authority in particular
Technological changes do not occur in isolation; they are closely linked to global tax trends which, sooner or later, will end up impacting the legislative framework in Mozambique. One example is the global tax reform led by the OECD, which introduced a global minimum tax of 15 per cent for large multinationals. This reform aims to combat practices such as aggressive tax planning and has direct implications for transfer pricing.
In addition, countries such as China and India are leading efforts in tax digitalisation, using advanced electronic systems to monitor commercial transactions and ensure greater tax transparency. Although Mozambique is still at an early stage in this process, it is inevitable that these global trends will influence local tax policies in the near future, not least because, as we know, the Tax Authority is in the preparation phase for implementing the SAF-T (Moz) standardised tax audit file.
In fact, according to notice no. /AT/DGI/2025, as of May, taxable persons must submit the invoices issued and, via a compressed file, download invoice data extracted monthly by their respective invoicing programmes onto the Tax Authority’s e-declaration Portal, duly certified by the Tax Administration under the terms of the Ministerial Order of 29 February 2012.
With this measure, the Tax Authority now has information on all company invoices which, together with the information contained in the Annual Statement of Transfer Pricing Income (Privileged and Undercapitalised Tax Regime) – M/20 Annex I and other information whose submission is mandatory, such as the Annual Statement of Accounting and Tax Information (M/20 A), will certainly be in a position to assess whether or not the linked transactions carried out by taxable persons are in line with the principles of full competition and promote any tax corrections, without having to go to the taxpayers’ offices as part of the exercise of its internal supervisory powers.
Benefits of technology in transfer pricing management
With the growing wave of digitalisation and the need to manage tax risks, the adoption of advanced technologies can bring numerous benefits to Mozambican companies in the area of transfer pricing. For example
- Reducing tax risks: digital tools make it possible to identify discrepancies in intra-group transactions before they are questioned by the tax authorities.
- Simplification of documentation: Specialised software can automate the preparation of reports required by law, reducing human error and saving time.
- Strategic monitoring: Integrated technological solutions help companies to continuously monitor their tax risks and adjust their strategies as necessary.
Technological and tax challenges in Mozambique
Despite the opportunities offered by technology, Mozambique faces significant challenges in its implementation. One of the main obstacles is the lack of means and poor training of the tax authority’s technicians to keep up with global technological advances. An example of this is the difficulty the tax authority faces in identifying and taxing operations that take place in the tourism sector via online platforms. Therefore, keeping up with the digital world will require heavy investment in technical training and the acquisition of equipment (including software). Without a solid base of technical knowledge, it will be difficult to adopt advanced tools or interpret the data they generate.
In addition, many small and medium-sized enterprises (SMEs) in Mozambique have limited access to the technologies needed to fulfil modern tax requirements. The lack of robust technological infrastructure, as well as the absence of mobile telecommunications coverage in some of the country’s administrative posts, also poses a significant risk to progress in this area.
Proposals for the future
To ensure that Mozambique makes the most of the advantages of technology in transfer pricing, some strategic measures should be considered:
- Investment in tax technology: The government should prioritise investments in modern technological systems that facilitate both compliance by companies and efficient oversight by the Tax Authority.
- Technical training: It is essential to invest in the continuous training of Tax Authority employees to ensure that they are equipped to deal with advanced digital tools.
- Public-private partnerships: Private companies can play an important role in collaborating with the government to implement tax digitalisation on a large scale.
- Incentives for digitalisation: Tax policies that encourage Mozambican companies to adopt modern technologies can speed up this process.
Conclusion
The success of policies associated with transfer pricing in Mozambique (which manifests itself in greater transparency and efficiency in the tax system) is closely linked to the country’s ability to adapt to global technological changes. Digitalisation is not just an opportunity, it is an urgent necessity in order to guarantee competitiveness in the international market and avoid abusive practices that harm national tax collection.
With strategic investments in technology and technical training, Mozambique has the potential to transform the current challenges into significant opportunities to strengthen its tax system and attract sustainable foreign investment in the long term.
