Law 07/2024 of 06 June was recently published, approving the legal framework for Micro, Small and Medium-sized Enterprises (herein after & MSME). According to its preamble, the new law aims to ensure greater promotion and protection of this important business segment, as well as to promote its certification, in order to generate employment and competitiveness in the national economy.
Scope of Application
The new legal regime applies to duly incorporated companies, with the exclusion of MSMEs that carry out activities involving the manufacture and commercialisation of weapons, ammunition, explosives and pyrotechnic articles, toxic substances harmful to human health and the operation gambling. Also excluded are MSMEs that are a subsidiary, branch, agency or representation in the national territory of a legal entity with its head office abroad, or that hold a shareholding in a large company, or if the State or another public legal entity hold any shareholding on it.
Classification of MSMEs
MSMEs are classified according to the criteria of the number of employees and turnover, as follows:
(i) micro enterprise – up to ten employees and an annual turnover not exceeding MZN 3,000,000.00;
(ii) small enterprise – between 11 and 30 employees with an annual turnover of more than MZN 3,000,000.00 and up to MZN 30,000,000.00; and
(iii) medium-sized enterprise – between 31 and 100 employees and with an annual turnover of more than MZN 30,000,000.00 and less than MZN 160,000,000.00
Certification of MSMEs
The certification process is one of the main novelties of the new law, aiming to classify MSMEs and also to to assess whether their articles of association comply with legal requirements. In order to operationalise the MSME certification process, an electronic system has been created that is integrated into the registration and licensing system within the scope of interoperability, using digital platforms, and the tax, social security and suppliers of goods and services to the State register. A company is categorised in accordance with the above classification once it has been set up by means of a certificate issued by an entity dedicated to promoting and fostering MSMEs, entitling them to the various benefits and incentives that we will now present.
Benefits of MSMEs
(i) Procurement of goods and services by the State and other public authorities The new regime has consolidated the principle of giving preference to MSMEs when contracting public works, supplying goods and providing services to the State. To this end, the State and other public bodies must set aside a minimum margin of 20 per cent for MSMEs. Large companies are also required to reserve a minimum of 20 percent of the value of contracts for MSMEs to be awarded with the supervision of the successful tenderer in public works contracts, the supply of goods and services.
(ii) Easy access to information on financial services and products MSMEs enjoy easier access to information on financial services and products, including subsidies,as well as support in re-engineering and renegotiating credits. Likewise, financial institutions, such as public funds and NGOs, are obliged to provide quarterly detailed information on available financial products, access conditions and the status of credits related to certified MSMEs, as requested by the organisation promoting this business segment.
Support Fund for the Promotion and Development of MSMEs
Development of MSMEs As a way of boosting the economic growth of this business group, the Support Fund for the Promotion and Development of MSMEs was introduced. Essentially, the Fund aims to add value to state initiatives aimed at the establishment, growth and development of MSMEs. To this end, companies responsible for public-private partnerships, large- scale projects and business concessions must set aside 1% of their social and corporate responsibility budget to support the competitiveness of MSMEs.
Tax Benefits
The new regime establishes a series of tax benefits for MSMEs, such as: a reducing in half the fees applicable to obtaining the "Made in Mozambique& stamp; for registering intellectual property rights; for certifying qualities and for taking part in fairs organised by the State. At the same time, there is a 25% reduction in the fees for establishing MSMEs in science and technology parks, rapid development zones, logistics centers, supply markets, storage infrastructures, special economic zones, industrial free zones and industrial parks managed by the State.
Other Benefits
At the same time, apart from the tax benefits already mentioned, the new law grants MSMEs other benefits, namely:
(i) a reduction in court fees and emoluments;
(ii) the creation of facilities for organising trade fairs;
(iii) access to reduced energy tariffs;
(iv) a 25% reduction in the cost of services offered by technology transfer centers, business accelerators, business centers and business incubators for the first three years of activity, among others.
Obligations of MSMEs
MSMEs & obligations include:
(i) regularising their tax and social security obligations
(ii) agreeing with the state on their tax debt amortisation plans or those whose existence is the subject of administrative or litigation challenges.
Penalties
Violation of the new legal regime entails the application of sanctions based on the nature and seriousness of the offence committed, such as:
(i) a fine
(ii) suspension
(iii) revocation
In addition to the application of one of the above sanctions, in the event of a repeat offence, offences are punishable by the loss of the benefits provided for in the new law.
Entry into Force
This Law will enter into force within 90 days of its publication and it is up to the Council of Ministers to regulate it.
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Read the original publication at JLA Advogados
