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This information was last updated in May 2006 For further details and updates, please contact: Eduardo Queiroz Phone: +244 222 391 808 Fax: +244 222 391 972 Luis Belo Phone: +351 (21) 034 5000 Fax: +351 (21) 034 3343
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Investing in Angola
Forms of Business Organisation In establishing a business in Angola, a foreign company may choose to form an Angolan company, operate through a branch, or enter into a joint venture with a local partner. Alternatively, a company can appoint a local representative, which can be either an individual or a company, to promote its business, or it can decide to open a representative office. The operations of the representative office are limited to the promotion of the business of the foreign company; it is not recognised as a local commercial entity and therefore may not conduct business in its own name. There are two forms of companies in Angola: the private limited liability company (sociedade por quotas) and the public limited liability company (sociedade anonima). A public company must have a minimum of five shareholders. In principle, any foreign investment must be approved by the National Private Investment Institute. Certain industries, such as telecommunications and armaments, are closed to private investors. Exchange Controls The Angolan monetary unit is the Kwanza (AKZ). Exchange controls are administered by the central bank (Banco Nacional de Angola) and are reviewed on a regular basis. Any import or export of funds must be in accordance with the rules established by the central bank. In particular, certain transactions, such as the payment of dividends must be authorised by the Ministry for Finance. However, under the countrys foreign investment legislation, foreign investors can be guaranteed the free repatriation of profits and dividends arising in Angola. The importation of goods into Angola requires an import license granted by the Ministry of Commerce. Both foreign and local companies are allowed to maintain foreign currency bank accounts. The use of such funds is regulated by the central bank. Companies operating in the petroleum and mining sectors are subject to more favourable terms under the exchange control regulations. Local Participation or Management Requirements There are no nationality or residence requirements for shareholders, and companies may be 100% foreign owned. The Commercial Law applies to all Angolan companies irrespective of ownership. Investment Incentives To attract foreign investment into Angola, the country offers foreign investors various incentives and guarantees under its private investment legislation. Special incentives are also offered under tax regulations for projects located in rural areas that will aid the development of those areas. The recently enacted private investment law, gives tax relief to non-residents who invest $100 000 or more in specifically identified sectors such as agriculture, fishing, civil construction; health and education, infrastructure, and heavy transport equipment for cargo and passengers. Relief from customs duties, corporate income tax, capital gains tax and transfer duties is given. The amount of relief given is dependent on the geographical location of the investment made.
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Management Fees Management fees are generally deductible, but the tax authorities may question fees that appear excessive. Management support in the form of technical services, studies, financial assistance, or procurement is usually deductible without limitation. Taxes Any tax payments not related to income tax are deductible for income tax purposes. Provisions Provisions for inventory losses or bad debts can be included as a cost in the year in which the provision is established and are deductible from taxable income, subject to certain limitations. Tax treatment of Losses A company that incurs a net loss during a tax year may carry forward the loss against taxable income in the following three years. Losses may not be carried back.
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Treatment of Families Taxable income is computed individually for each member of a family. Personal Income Tax Rates An individuals employer withholds personal income tax from his or her salary or wages. Amounts withheld are final. The rates applying to monthly income are shown in Table 3. Residents and non-residents are subject to tax on salaries and business income at the same rates. Taxable Income Taxable income includes all of the individuals revenue from employment or self-employment in Angola, regardless of the origin of the income, location of receipt, or currency used. Employment Income Employment income includes an individuals salary or wages, plus any bonuses, allowances, or benefits, in cash or in kind, received from employment. However, if the benefits received do not exceed the level of benefits granted to public servants, the employee will not be subject to tax on them. Employment income earned by an employee of a diplomatic mission or international organization is exempt from tax if the home country of the organization or mission offers reciprocal treatment. Dividend Income Individuals are subject to a 10% withholding tax on the gross amount of dividends received from a resident company. Business Income An individuals income from a business is taxable in the same manner as a companys income (see Taxation of Resident Entities). Capital Gains In theory, capital gains are subject to tax at normal personal income tax rates. In practice however, the tax authorities may not seek to tax such gains. Deductions and Reliefs Self-employed workers can deduct the basic costs associated with self-employment, such a rent, telephone bills, motor vehicle costs and insurance.
Withholding Taxes
Basic Rates Resident companies must withhold tax from payments of dividends and royalties at the rate of 10%. A 15% rate applies to payments of interest. These rates apply to resident and non-resident recipients, whether they are individuals or companies. Rates Under Double Tax Treaties Angola has not concluded any treaties with other countries that would reduce or eliminate the Angolan tax payable in cases of double taxation.
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Other Taxes
Stamp Duties In general, most documents and agreements are subject to stamp duty at variable rates. Rates range from 0.01% to 10%. All receipts from clients are subject to stamp duty at a tax rate of 1% of the value of the receipt. Social Security Contribution A social security contribution is levied on the total amount received by an employee as remuneration. The total rate is 11%; the employer withholds 3% from the employees pay and pays the remaining 8% itself. For expatriates, payments are not compulsory, provided that they contribute to the social security program of another country. Customs Duties and Consumption Tax Almost all goods imported are subject to customs duties. Rates vary depending on the product imported. Imported goods are also subject to a consumption tax. Rates vary from 2% to 30%. Transfer duties A SISA tax is payable on the acquisition or registration of buildings. Rates vary from 2% to 10%.
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Tables
TABLE 1: TAX RATES FOR THE PETROLEUM AND MINING SECTORS
TYPE OF TAX Petroleum sector: Joint ventures: Petroleum production tax Petroleum income tax Petroleum transaction tax Production sharing agreements: Petroleum income tax RATE (%)
Mining Sector: Royalty Precious stones and minerals Semiprecious stones Iron and metallic mineral Other minerals Mining income tax Surface tax (per 2 square kilometers): First two years Third year Fourth and fifth years
CATEGORY Industrial buildings Administrative and commercial buildings Furniture Heavy machinery and tools Light machinery and tools Vehicles Intangible fixed assets
* The rate is 5% under the special regime for the petroleum sector ** The rate is 25% under the special regime for the petroleum sector
NOTE: The depreciation for the JV in the petroleum is the same used for the other industries. For the Production Sharing Agreement it is 20% to 25% depending on the contract
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BAND OF MONTHLY TAXABLE INCOME (KZ) 0 8,500 8,501 11,000 11,001 16,000 16,001 21,000 21,001 26,000 26,001 36,000 36,001 56,000 56,001 76,000 >76,001
CUMULATIVE TAX ON UPPER LIMIT OF BAND (KZ) 50 250 550 950 1,950 4,450 7,250
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