Do I Need a Local Entity to Hire in Mozambique?

In Mozambique, a "local entity" refers to a recognized business presence, such as a subsidiary or branch office, that can legally employ staff. This setup allows you to fulfill local payroll and employment obligations, ensuring compliance with Mozambican labor laws.

Without a local entity, you generally can't manage payroll, register as an employer, or issue compliant employment contracts. However, using an Employer of Record (EOR) can simplify the process, allowing you to hire without the complexities of establishing a local entity.

What is Required to Employ Someone in Mozambique?

• Local employing entity required to directly employ? Yes (You need to register with the Ministry of Labor for direct employment)
• Payroll registration required? Yes (Mandatory registration with the Tax Authority is necessary)
• Withholding/tax remittance required? Yes (Employers must withhold income tax and remit to the Tax Authority)
• Social contributions required? Yes (Contributions to the National Institute of Social Security are required)
• Local employment agreement required? Yes (Written contracts are mandatory under Mozambican law)
• Mandatory benefits to budget? Yes (Includes annual leave, sick leave, and maternity leave)
• Works council/collective agreements considerations? Often (Collective agreements may apply depending on the sector)

Best Options If You're Hiring in Mozambique

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about the nature of the work relationship.

While hiring contractors can be a viable option, Mozambique has strict labor laws that protect workers. If the contractor's role resembles that of an employee, you risk misclassification, which can lead to legal issues. Ensure that contractors operate independently and are not integrated into your business operations.

• Contractors should have their own tools and methods of work.
• They should not be under your direct supervision.
• Keep the relationship clearly defined in contracts to avoid legal pitfalls.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Mozambique, depending on the necessary registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 15,000–30,000 MZN per month ($250–$500)
• Payroll provider: Estimated 1,500–3,000 MZN per employee per month ($25–$50)
• Employer registrations and recurring compliance: Estimated 10,000–20,000 MZN per year ($170–$340)
• Corporate tax filings and annual reporting: Estimated 20,000–50,000 MZN per year ($340–$850)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Mozambique

Hiring in Mozambique can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Mozambique quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.