Corporate tax in Angola

At a glance

   
Corporate Income Tax Rate (%) 30 (a)(b)
Capital Gains Tax Rate (%) 30 (c)
Branch Tax Rate (%) 30 (a)(b)
Withholding Tax (%)
Dividends
10 (d)
Interest 10/15 (e)
Royalties 10
Payments for Services 6.5 (f)
Branch Remittance Tax 10
Net Operating Losses (Years)  
Carryback 0
Carryforward 3 (g)
    a) Income from certain activities, such as agriculture, forestry and cattle raising, is subject to tax at a rate of 15%. Mining activities are subject to tax at a rate of 25%. Oil and gas companies are subject to Oil Income Tax rather than Industrial Tax (corporate income tax). See Section B.
    b) Tax exemptions or tax reductions are available under the Private Investment Law as well as specific legislation for micro, small- and medium-sized com­panies. For details, see Section B.
    c) Gains derived from the sale of securities that are not subject to corporate income tax or personal income tax are subject to tax at a rate of 10%. If such gains are derived from treasury bills, treasury bonds and titles issued by the Angolan Central Bank (Banco Nacional de Angola, or BNA) with a maturity of at least three years or from shares of listed companies, a 50% tax relief may apply.
    d) Certain dividends are exempt from tax (see Section B). A 5% rate applies to dividends paid by listed companies during a five-year period beginning on 19 November 2014.
    e) In general, interest is subject to a 15% rate. However, certain interest, such as interest on shareholders loans, corporate bonds, bank deposits, treasury bills, treasury bonds and titles issued by the BNA is subject to a 10% rate. Interest on treasury bills and treasury bonds and titles issued by the BNA is subject to a reduced rate of 5% if the maturity is at least three years.
    f) Some exceptions exist.
    g) Mining companies may carry forward losses for seven years, up to a limit of 50% of the turnover.

Taxes on corporate income and gains

Corporate income tax. Companies carrying out industrial and com­mercial activities in Angola are subject to Industrial Tax (corpo­rate income tax).

An Angolan company, which is a company that has its head office or effective place of management and control in Angola, is sub­ject to Industrial Tax on its worldwide profits.

Foreign entities with a permanent establishment in Angola are subject to Industrial Tax only on profits imputed to the permanent establishment. The tax law provides a force of attraction principle for permanent establishments.

All companies, regardless of whether they have a permanent es­tablishment in Angola, are subject to withholding tax on payments received for services rendered (for details, see Rates of corporate tax).

Rates of corporate tax. The standard Industrial Tax rate is 30%.

Income from certain activities, such as agriculture, forestry and cattle raising, is subject to a reduced tax rate of 15%.

In addition, the new Private Investment Law, which was approved as Law No. 14/15 of 11 August and has already entered into force, establishes that a private investment project may be granted tax benefits by Angola through the reduction of Industrial Tax, Invest­ment Income Tax and Urban Property Transfer Tax rates. The tax benefits depend on the following factors:

  • Jobs created for Angolan nationals
  • Investment amount (a minimum of USD1 million is required)
  • Investment location
  • Production to be exported
  • Shareholding by Angolan investors
  • National added value

For this purpose, Angola is now divided into the following two economic zones:

  • Zone A: Province of Luanda, head municipalities of Benguela and Huíla, and municipality of Lobito (in the province of Benguela)
  • Zone B: Provinces of Bengo, Bié, Cabinda, Cuando Cubango, Cuanza-Norte, Cuanza-Sul, Cunene, Huambo, Lunda-Norte, Lunda-Sul, Malanje, Moxico, Namibe, Uíje and Zaire, and the remaining municipalities of Benguela and Huíla

The granting of the above benefits is subject to a case-by-case analysis. However, the period of such benefits is defined through specific criteria.

Micro, small- and medium-sized companies covered by special legislation can benefit from the following reductions of the Industrial Tax rate:

  • Micro companies: payment of a special tax at a rate of 2% on gross sales for the first two to five years of activity, depending on the localization
  • Small- and medium-sized companies: tax rate reduction be­tween 10% and 50% for the first two to five years of activity, depending on the localization

Micro, small- and medium-sized industrial companies benefit from an exemption from consumption tax on raw materials. Micro companies also benefit from a stamp duty exemption.

All companies, regardless of whether they have a permanent estab­lishment in Angola, are subject to withholding tax on payments received for services rendered. The withholding tax applies regard­less of whether the services are rendered in or outside Angola. The rate of the withholding tax is 6.5%.

The following services are excluded from withholding tax:

  • Teaching and similar services
  • Health services
  • Services for which the amount paid does not exceed AOA20,000
  • Passenger transportation services
  • Lease of machinery and equipment subject to Investment In­come Tax

A similar exclusion applies to financial and insurance intermedia­tion services, hotel and similar services, and telecommunication services, if the service provider has a taxable presence in Angola. For local service providers, withholding tax does not apply to documented recharges between related parties. The withholding tax base excludes payments for raw materials, parts and other materials, if the service provider has a taxable presence in Angola.

The payer must withhold the tax from each payment and remit the withholding tax to the Angolan government. The tax withheld is considered to be a payment on account if the recipient has a resi­dence, head office or permanent establishment in Angola. Excess withholding tax can be carried forward for five years. Otherwise, the tax is final.

Income from oil and gas extraction is subject to Oil Income Tax at a total rate of 50% (under production-sharing agreements) or 65.75% (under other types of joint ventures). Angolan compa­nies benefit from a reduced Oil Income Tax rate equivalent to that of Industrial Tax. In addition, companies engaged in explora­tion for and production of oil, gas and similar products must pay Oil Production Tax at a total rate of 20%. Oil Transaction Tax and a Surface Surcharge may also be levied at rates of 70% and USD300 per square kilometer, respectively. Oil Production Tax and Oil Transaction Tax are not payable under production-sharing agreements.

Contracts, such as production-sharing agreements, between oil and gas companies and the Angolan government generally over­ride the Oil Production Tax and Oil Transaction Tax and may set forth different taxes and applicable rates.

Additional taxes and charges apply within the oil and gas and mining industries. Also, specific tax rules apply to the liquefied natural gas (LNG) project, including withholding tax exemptions on certain interest, dividends, royalties and services income.

Capital gains. Capital gains on profits derived from the sale of fixed assets are subject to Industrial Tax at the regular tax rate of 30%. Capital gains on shares or other instruments generating in­vestment income that is not taxable for Industrial Tax or personal income tax purposes are subject to Investment Income Tax at a rate of 10%.

However, a 50% relief is available for capital gains derived from listed shares or from corporate bonds, other securities, treasury bonds, treasury bills and BNA securities, if they are negotiated in a regulated market and if their maturity is of at least three years.

Administration. The tax year is the calendar year.

All companies engaging in activities in Angola must register with the tax department to obtain a taxpayer number.

Companies, including foreign companies with a permanent es­tablishment in Angola, must file an annual corporate income tax return, together with their financial statements and other docu­mentation, by 31 May in the year following the tax year.

Companies must make an advance payment of Industrial Tax in July or August of the tax year, depending of the type of taxpayer. The tax base is the turnover from the sale of goods computed during the first six months of the tax year. A 2% rate is applied to this amount of turnover to compute the amount of the advance payment.

Penalties are imposed for a failure to file tax returns and other required documents. If, on the final assessment, the tax authorities determine that a further payment is required and that the taxpayer is at fault, interest is imposed on the amount of the additional pay­ment. Fines, which are generally based on the amount of tax due, are also imposed. If the tax due is not paid, additional interest is imposed from the date of the tax authorities’ notice that an addi­tional payment is due.

Dividends. Companies are not subject to Industrial Tax on the gross amount of dividends received.

A 10% Investment Income Tax, which is withheld at source, is imposed on dividends.

The Investment Income Tax Code contains a participation ex­emption measure. Under this measure, the 10% withholding tax exemption applies to dividends received by Angolan parent com­panies from Angolan subsidiaries, subject to minimum 25% and one-year holding requirements.

Foreign tax relief. In general, no relief is granted for foreign taxes paid by Angolan taxpayers.

Determination of trading income

General. Taxable income is the income reported in companies’ financial statements, subject to certain adjustments. Expenses considered indispensable in the production of income and the maintenance of a production unit are deductible. The following expenses, among others, are not deductible for Industrial Tax purposes:

  • Representation expenses, such as travel expenses, deemed to be unreasonable by the tax authorities
  • Interest on shareholders loans
  • Investment Income Tax and Urban Property Tax
  • Costs associated with rented property
  • Costs related to previous years
  • Donations not covered by the Law of Patronage
  • Non-documented expenses and improperly documented expenses
  • Confidential expenses (an expense is considered a confidential expense if no valid documentation legally supports the expense and if its nature, function or origin are not materially justifiable)
  • Fines and penalties

Rental income subject to Urban Property Tax and income subject to Investment Income Tax is excluded from the computation of the Industrial Tax base.

Inventories. Inventories may be valued by any currently accept­able method provided that the method is consistently applied and is based on documented purchase prices.

Provisions. Provisions for the following items are allowable:

  • Bad debts up to 4% (for the annual allowance regarding the booking of a new provision or the increasing of a previous bal­ance) or 10% (accumulated balance) of clients’ receivables, if, among other requirements, such credits have been legally claim­ed and are due for more than six months and if steps to collect the claim have been undertaken
  • Provisions imposed by the public regulatory authorities of finan­cial, insurance and gambling businesses
  • Litigation processes regarding facts underlying the litigation claims that would represent costs of that year
  • Depreciation in the value of inventory, provided that it does not exceed 0.5% to 3% in the current year (depending on the nature of the activity), up to a limit that can vary between 2.5% and 12% of the value of the inventory

Tax depreciation. Depreciation rates are provided in the law. The following are some of the applicable rates.

Asset Rate (%)
Vehicles 16.67 to 25
Office buildings 4
Industrial buildings 4 or 6
Machinery, equipment and devices 12.5 to 33.33
Furniture 8.33 to 50

These rates may vary depending on the industry sector.

Relief for losses. Companies may carry forward tax losses for three years. This period is increased to seven years for mining compa­nies (up to a limit of 50% of the turnover). No carryback is allowed.

Groups of companies. The Large Taxpayers Statute entered into force in October 2013. It establishes that Angolan Large Taxpayers that are integrated in a group of companies may be taxed on the sum of the taxable results obtained by the entities included in the group. For such purpose, a special request through a specific of­ficial form (Modelo 5), still pending approval, must be submitted to the tax authorities by the end of February following the tax year for which the application of this special regime is requested. The Chief of the Large Taxpayer’s Tax Office must expressly ap­prove this request and, accordingly, the application of the group taxation regime.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate
Training levy, on oil and gas exploration
and production companies and their
subcontractors
Production companies and companies
engaged in refining and processing of petroleum
USD0.15 per barrel
Companies owning a prospecting license USD100,000 a year
Exploration companies USD300,000 a year
Subcontractors under a contract with
a term exceeding one year (levied on
annual gross income) and entities
engaged in the storage, transport,
distribution and trading of petroleum
(levied on revenue derived from such activities)
0.50%
Stamp duty
On the amount of receipts 1.00%
On the acquisition of real estate 0.30%
On leasing and subleasing of real estate 0.1% / 0.4%
On company’s capital 0.10%
On guarantees 0.1% to 0.3%
On financing 0.1% to 0.5%
On financial leasing of real estate 0.30%
On leasing of movable property 0.40%
On imports 1.00%
On certain exports 0.50%
Consumption tax; rate varies according to type of good and service 2% to 80%
Custom duties on imports 2% to 50%
Customs emoluments 2.00%
Urban Property Tax; imposed on 60% of the gross rent 25.00%
Urban Property Transfer Tax 2.00%
Social security contributions, on salaries and additional remuneration; the contributions are not payable by expatriates
working in Angola if they make contributions
to the social security scheme or a similar
scheme in their home countries; paid by
Employer 8.00%
Employee 3.00%
Special Contribution on Invisible Exchange
Transactions; applicable to payments for
services provided by nonresident entities under
technical assistance or management contracts
10.00%

Miscellaneous matters

Foreign-exchange controls. The Ministry of Economy, together with the BNA, supervises all foreign-exchange operations. Com­mercial banks usually act as intermediaries of companies to obtain clearance from the BNA.

The BNA issued Bank Order No. 13/13, of 31 July 2013, which was published in the Official Gazette of 6 August 2013. This order sets out the new foreign-exchange procedures to be adopted with respect to current invisible operations. Notwithstanding the for­eign exchange integrated reporting system (SINOC), to simplify the monitoring procedures regarding the current invisible opera­tions, the order establishes the following new thresholds for trans­actions that do not require prior approval by the BNA:

  • Transactions amounting up to AOA300 million (approximately USD2,200,000) or the equivalent in another currency carried out by oil and gas service providers
  • Other transactions up to AOA100 million (USD700,000) or the equivalent in another currency

Operations with a value exceeding the above mentioned thresh­olds must be cleared in advance by the BNA. No thresholds are provided regarding the transfer of salaries.

In general, repatriation of profits is allowed for approved foreign-investment projects if certain requirements are met. In certain cases, a time schedule for repatriation of profits may be imposed.

However, the oil and gas sector is subject to a specific foreign-exchange control regime, which aims primarily to establish uni­form treatment in this sector by replacing the multiple exchange regimes that have been applied to oil and gas upstream compa­nies operating in Angola, thereby providing fair treatment to all investors.

These foreign-exchange control rules cover the trade of goods, current invisible operations (according to the Angolan National Bank Instructive, these operations are services, royalties, interest, travel costs and salaries) and capital movements arising from the prospecting, exploration, evaluation, development and production of crude oil and natural gas.

For purposes of the rules, exchange operations encompass the following:

  • Purchase and sale of foreign currency
  • Opening of foreign currency bank accounts in Angola by resi­dent or nonresident entities and the transactions carried out through these bank accounts
  • Opening of national currency bank accounts in Angola by non­resident entities and the transactions carried out through these bank accounts
  • Settlement of all transactions of goods, current invisible opera­tions and capital movements

The National Company of Petroleum of Angola (Sociedade Nacio-nal de Petróleos de Angola, or SONANGOL, the national conces­sionaire) and domestic or foreign corporate investors must carry out the settlement of foreign-exchange transactions through bank institutions that are domiciled in Angola and are authorized to conduct foreign exchange business. They must open bank accounts in foreign currency and deposit sufficient funds for tax payments and other mandatory tax payments and for settlement of goods and services provided by residents or nonresident entities.

The BNA has established a phased implementation of the proce­dures and mechanisms to be adopted by the agents carrying out foreign-exchange transactions. Under this phased implementa­tion, the following regime applies:

  • Effective from 1 July 2013, all payments made by oil and gas upstream companies related to the acquisition of goods and ser­vices from local suppliers must be carried out through Angolan bank accounts in local currency.
  • Effective from 1 October 2013, all payments made to nonresi­dent entities must be carried out through Angolan bank accounts.

Thin-capitalization rules. No thin-capitalization rules are in effect in Angola.

Anti-avoidance legislation. The arm’s-length principle applies in Angola. Consequently, the tax authorities may adjust the taxable income derived from transactions between related parties.

Related-party transactions. The Large Taxpayers Statute contains specific rules governing “special relations” between taxpayers, which entered into force in October 2013. Under this regime, a special relationship is deemed to occur if one entity exercises, directly or indirectly, a significant influence on the management decisions of another entity. The law also establishes that a Large Taxpayer that has annual turnover exceeding AOA7 billion (ap­proximately USD52 million) at date of closing the accounts must prepare and submit a transfer-pricing file to the Angolan tax au­thorities. This transfer-pricing file, which must prepared on an annual basis, must detail the relationships and prices established by the Large Taxpayers with the companies and entities with which they have “special relations.” The transfer-pricing file must be submitted by the end of the sixth month following the year-end to which the file relates. With respect to the economic analysis of the transactions, the new regime provides for the application of the following methods only:

  • Comparable uncontrolled price method
  • Resale-minus method
  • Cost-plus method

Invoice requirements. Effective from 1 December 2013, new re­quirements are imposed with respect to the keeping and archiving invoices or equivalent documents by individuals or legal entities with their domicile, registered office, effective management or permanent establishment in Angola.

Tax-neutrality regime for mergers and demergers. A tax-neutrality regime for mergers and demergers has been introduced for Industrial Tax purposes at the level of the merged or spun-off companies, but not at the level of the respective shareholders. How ever, this regime applies only to companies that are classified as Large Taxpayers in the Large Taxpayers Statute (see Groups of companies in Section C).

Stand-alone tax. In addition to being nondeductible, certain ex­penses will be subject to a stand-alone tax, effective from 2017. This tax is expected to apply to improperly documented expenses (2%), non-documented expenses (4%), confidential expenses (30%, or 50% in certain situations) and donations not made in accordance with the Law of Patronage (15%).

Tax treaties

Angola does not have any tax treaties in force. Tax treaty nego­tiations between Angola and Portugal have been suspended. The treaty will follow the United Nations model convention. In addi­tion, it is expected that Angola will implement a tax treaty net­work with countries with which it has preferential socio economic relations, which are Southern Africa Development Community (SADC) countries and member countries of the Community of Portuguese Language Countries (CPLP).

Angola has entered into an agreement with Portugal on the recip­rocal promotion and protection of investments. However, this agreement does not provide any specific tax benefits.