With the entry into force of Decree no. 34/2013, of 2 August 2013, which approved the Regulation of Licensing of Commercial Activity (Regulamento do Licenciamento da Actividade Comercial), the Mozambican Government aimed to simplify the investment within the country. In fact, the previous legal framework was characterized by its complexity in terms of legal requirements and lack of speed, which this regulation aimed to overcome, making room for and encouraging the investment flow in Mozambique.
Introduction
The licensing of a commercial activity is a particularly sensitive matter as it represents a significant role in the attraction of investment, foreign or national alike, reason for which the competent authorities have been undertaking their best efforts in removing or reducing the potential obstacles in this procedure.
In accordance with this state of mind, it was recently approved the Regulation of Licensing of Commercial Activity, (hereinafter referred to “Regulation”), enacted by the Decree no. 34/2013, of 2 August 2013, which revoked Decree no. 49/2004, of 17 November[1].
For the purposes of this Regulation, the expression “commercial activity” refers to wholesale and retail trading, provision of services, foreign commercial representation, pursuant to the subclasses of Classification of Economic Activities (“CAE”), attached to the Regulation, and to the registration of foreign trade operators in areas designated for occupation for commercial purposes (cf. paragraph a) of the Regulation, Annex I).
Scope of the Regulation: there are other legislation that also governs the licensing of the commercial activity, according to the specificities of each economic activity, for example, Decree no. 94/2013, of 31 December and Decree no. 5/2012, of 7 March.
Notwithstanding this, the Regulation constitutes the general legal framework, applicable in the absence of specific legislation (by virtue of the general principle that states that specific regulation derogates general regulation).
Therefore, this regulation sets forth the legal framework, including terms and procedures, for the licensing of commercial activity, not regulated by specific legislation, for the following activities:
- Wholesale and Retail Trading and Provision of Services – according to the subclasses of the Classification of Economic Activities listed in Attachment II;
- Foreign Commercial Representation – according to the subclasses of the Classification of Economic Activities listed in Attachment II;
- Registration of Foreign Trade Operators and issuing of foreign trade operators certificate;
- Licensing of Agricultural Trading Agent’s Activity.
Within the paragraphs mentioned above, the only licensing procedure within the responsibility of the Minister of Industry and Commerce (Ministro da Indústria e Comércio) is the licensing of foreign commercial representations (article 4.1 of the Regulation), being the rest under the competence of the Executive Director of the One-Stop-Shop service (Director Executivo do Balcão de Atendimento Único) (article 4.2 of the Regulation).
In addition to these two entities, at a lower scale and with reduced powers, we find the District Director (Administrador Distrital), which has powers only to license the retail trading and provision of services performed by micro and small companies, provided that within that territory there is no One-Stop-Shop service available, (hereinafter referred to as “BAU”) (cf. article 4.3 of the Regulation).
This legislation was introduced in the Mozambican legal system in order to simplify the licensing process by reducing its requirements and establishing quicker deadlines for the conclusion and notification of the decision to the applicant, providing as a consequence that, in the event there is no formal decision within a certain period of time, the application would be tacitly approved. By way of example, we note that for purposes of applying for the licensing of wholesale or retail trading activities or for the provision of services, it is only necessary to fill in the form available at the BAÚ and attach non-authenticated copies[2] of the identification documents of the applicant (identification card, voter registration card, passport, Foreign Resident Card - “DIRE” or otherwise), full extract of the commercial certificate, Sole Tax Identification Number (“NUIT”) and power-of-attorney granting powers to the applicant (in case he has does not appear in the registration certificate as a director or representative).
After a brief comparative analysis between the previous and the current Regulation, we draw your attention to the following:
- Formalities: Under the previous regulation, the licensing procedure was subject to different outlines whether a rural or urban area was involved, which does not occur nowadays; furthermore, under the current Regulation, it is not necessary to submit certified copies of the documents to file the licensing application, as referred to above;
- Licensing jurisdiction: Under the previous regulation, the competence for dealing with these requests fell under Minister for Industry and Commerce (Ministro da Indústria e Comércio), the National Director of Commerce (Director Nacional do Comércio), the Provincial Director of Industry and Commerce (Director Provincial da Indústria e Comércio), the District Director of Industry and Commerce (Director Distrital da Indústria e Comércio), the Permanent Secretary (Secretário-Permanente) or the Chief Administrative Post (Chefe do Posto Administrativo); presently, the responsibility for the licensing of foreign commercial representations belongs to the Minister who oversees the corresponding commercial activity and, in the remaining situations, the One-Stop-Shop service, or, where this does not exist, the District Director (with the aforementioned reservations);
- Procedure, Decisions and Deadlines: Previously, failure to obtain a decision on the application within the legally provided deadlines, had as consequence that a certificate valid for a maximum period of 2 months (when no inspection was necessary) was issued by the licensing authority, or an interim tacit approval was deferred (when such inspection was necessary); according to the present regime, failure to comply with the deadlines provided by the law – 10 or 8 working days whether a site inspection is required or not – will lead (irrespective of the situations), to the tacit approval of the application and the issuance of the corresponding permit, license or card. In this sense, the applicant will not be prejudiced by the failure of the Public Administration.
- Fees: Under the previous regulation, all fees had to be approved by a joint ministerial Decree issued by the Ministers of Finance and of Industry and Commerce, which meant that the investor was subjected to further inquiries; nowadays, all fees are calculated with reference to the prevailing minimum wage in the public sector[3]. The applicable amount varies according to the applicant’s request. For example, for an endorsement application or issuing of a foreign trade operator card the applicable fee is 25% of the minimum wage in the public sector, whilst for the licensing for wholesale trading the applicable fee is the equivalent to the minimum wage in the public sector (article 20 of the Regulation).
- Validity: Under the previous regulation, the license and certificate for the performance of the trading activity were valid for an indefinite period of time; whilst the foreign commercial representation license was valid for a minimum period of 1 year and maximum period of 3 years, extendable by request; on the other hand, the import trade operator registry was valid for a year, whilst the export trade operator registry was closely tied with the validity of the company’s establishment or business permit.
Currently, the license and / or certificate for the performance of the wholesale or retail trade activity and provision of services is valid for an indefinite period of time; the license for a foreign commercial representation is valid from 1 up to 5 years, depending on the application request, the registry and / or certificate for an import trade operator is valid for 1 year, while the registry and / or certificate for an export trade operator is valid for 5 years, in case of commercial activities, or the same validity period of the company’s establishment or business permit.
- Renewal: Under the previous regulation, the application for renewal of license, permit or card had to be done at least one month before the date of expiry of the same document; presently, renewal of the foreign commercial representation license can be required up until 10 working days before its date of expiry, and renewal of the foreign trade operator card can be required up until 7 working days before its expiry.
Conclusion
Even though one should note an attempt to simplify the applicable legal requirements, the implementation of this Regulation still leaves some open questions, particularly in relation to the applicable fees, hence the need to, whenever possible, seek for legal advising.
[1] The Decree no. 34/2013, of 2 August 2013, revoked all previous legislation on the matter, except for the Regulation for Simplified Licensing for Economical Activities (Regulamento do Licenciamento Simplificado para o Exercício das Actividades Económicas), approved by decree no. 5/2012, of 7 March, and entered into force 90 days after its publication, i.e., October 31srt 2013.
[2] Upon filing of the form, the original documents must be presented for comparison and validation.
[3] Please note that upon enforcement of this regulation, the prevailing minimum wage in the public sector was 2.599,00 MT, having recently increased to 3.002,00 MT.