MOZAMBIQUE Law and Practice Contributed by: João Afonso Fialho, Guilherme Daniel and Helna Vitoldás, VdA
4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects Gains resulting from the direct or indirect trans - fer (onerous or free of charge) of mining rights in Mozambican territory or involving real estate mining assets situated in Mozambican territory, regardless of where the transaction takes place, are considered as capital gains subject to a 32% capital gains tax. The tax must be paid within 30 days from the date of the transaction. 5. Mining Investment and Finance 5.1 Attracting Investment for Mining In addition to the huge potential of the mineral deposits found in Mozambique and the vast vari - ety of minerals that exist in the country, investors are usually motivated to invest in the Mozam- bican mining sector by the simplified process of awarding mineral rights, security of tender, privileged geo-strategic location, protection of ownership and IP rights, the relaxed foreign exchange regulations, and the investor-friendly industry-specific tax regime. 5.2 Foreign Investment Restrictions and Approvals in the Exploration and Mining Sectors Investment in the mining industry is governed by the Mining Law and Mining Law Regulations, where there is no distinction between foreign and national investment, apart from access to and exercise of mineral rights on a small and artisanal scale, which is reserved for national individuals/entities. Without prejudice to the above, it is worth not - ing that projects subject to the Law on Public- Private Partnerships, Large-Scale Enterprises and Business Concessions are subject to foreign ownership restrictions – namely, it is mandatory
that 5–20% of a mining project’s capital must be reserved for national participants. 5.3 International Treaties Related to Exploration and Mining Mozambique has entered into double taxation treaties and bilateral investment treaties estab- lishing certain benefits that also apply to the mining industry. Double taxation treaties have been entered into with Vietnam, India, Portugal, Mauritius, Macao SAR (China), Italy, South Afri - ca, the UAE and Botswana. Bilateral investment treaties have been estab- lished with Algeria, Angola, Belgium, Brazil, China, Cuba, Denmark, Egypt, Finland, France, Germany, India, Indonesia, Italy, Japan, Lux - embourg, Mauritius, the Netherlands, Portugal, South Africa, Spain, Sweden, Switzerland, Tur - key, the UAE, the United Kingdom, the United States, Vietnam and Zimbabwe. A more targeted bilateral co-operation treaty for the mining sector was entered into between Mozambique and Angola in 2007, and later with Portugal in March 2014. 5.4 Sources of Finance for Exploration, Development and Mining In Mozambique, financing for mining activities is mainly secured through private equity, sharehold - ers’ loans or direct loans from foreign banks. The implementation of streaming and royalty agree - ments is still significantly impaired by the existing foreign exchange and marketing regulations. 5.5 Role of Domestic and International Securities Markets in the Financing of Exploration, Development and Mining The Mozambican financial market remains underdeveloped and unable to cope with the investment amounts associated with large-scale
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