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Angola

13 May 2022

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Angola's New Consolidated Tax Benefits Code

Angola has published Law no. 8/22 of 14 April 2022, the Law Approving the Tax Benefits Code (TBC). The TBC enters into force on 14 May 2022, providing general rules on the application of and eligibility for tax benefits in Angola. The TBC also provides for the consolidation of various tax benefits and some new benefits, as well as the repeal of any contradictory benefits under the following laws and decrees:

  • Law of Former Soldiers and War Disabled (Law no. 13/02);
  • Law for the Promotion of Angolan Private Companies (Law no. 14/03);
  • Law of Environmental Associations (Law no. 3/06);
  • Law of Micro, Small and Medium-Sized Companies (Law no. 30/11);
  • Private Associations Law (Law no. 6/12);
  • Patronage Law (Law no. 8/12);
  • Law for the Financing of Political Parties (Law no. 10/12);
  • Law for Disabled People (Law no. 21/12);
  • Private Investment Law (Law no. 10/18);
  • The Tax  Regime for Undertakings for Collective Investment as per Presidential Legislative Decree no. 1/14; and
  • Article 13(1)(a) of the Investment Income Tax Code as per Presidential Legislative Decree no. 2/14.

Any tax benefits granted under the above before the entry into force of the TBC shall remain in force until the end of the period for which they were granted. Further, it is provided that the TBC does not apply to tax benefits granted under the special taxation regimes for oil and mining activities, which continue to be regulated by their respective laws.

The main tax benefits provided under the TBC are summarized below. For the purpose of certain benefits, 4 investments zones are established:

  • Zone A: the province of Luanda and the capital municipalities of the provinces of Benguela, Huíla, and the municipality of Lobito;
  • Zone B: the provinces of Bié, Bengo, Cuanza-Norte, Cuanza-Sul, Huambo, and Namibe, and the remaining municipalities in the provinces of Benguela and Huíla;
  • Zone C: the provinces of Cuando Cubango, Cunene, Lunda-Norte, Lunda-Sul, Malanje, Moxico, Uíge, and Zaire; and
  • Zone D: the province of Cabinda.

Listed Shares on The Angolan Market

A 50% reduction in the Investment Income Tax is provided on profits attributed to shareholders of commercial or civil companies under a commercial form, and the repatriation of profits attributable to permanent establishments of non-residents in Angola from shares that are traded on an Angolan regulated market. This applies for a period of 5 years from the date the shares were admitted for trading on a regulated market.

Further, an Investment Income Tax exemption is provided for any profits or dividends distributed by a company whose capital is traded on a regulated market to another legal person (beneficiary) liable to Corporate Income Tax (even if exempted), provided the company and the other legal person have their registered office or center of effective management in Angola. The exemption is subject to the condition that the beneficiary holds at least 25% of the capital of the distributing company for at least one year prior to the distribution.

Tax Deduction for Job Creation

Taxpayers are allowed a deduction per job created as follows, calculated on a monthly basis:

  • 3 times the lowest civil service salary per job created in Zones A and B;
  • 6 times the lowest civil service salary per job created in Zones C and D; and
  • 7 times the lowest civil service salary per job created for disabled people, whose degree of disability or incapacity is equal to or greater than 50%.

The deduction is taken in the calculation of the taxable income for the year to which they refer, or for the year in which the employee completes one year of service. If less than one year, the deduction is taken proportionally based on the period of employment, as long as it is at least 6 months. Further, the deduction is doubled when the employee is a woman.

Professional Internships and Training

Taxpayers are allowed a deduction equal to 50% of the lowest civil service salary hiring young people for professional internships or for scientific research and investigation for a period of at least 6 months, and up to 1 year. The deduction is increased to 60% where the people hired are women or persons with disabilities. Taxpayers are also allowed to increase deductible training costs for employees by 25%, subject to a cap of AOA 1 million.

Environmental Tax Benefits

Several environmental tax benefits are provided, including:

  • 50% reduction in import customs duty and motor vehicle tax for electric vehicles until 2032;
  • 75% reduction in property tax for the acquisition of buildings used to produce energy from renewable sources and a 50% reduction for the ownership of such buildings; and
  • 35% reduction in the final rate of assessment for Corporate Income Tax and a 60% reduction in the rate of Investment Income Tax for taxpayers engaged in the production and sale of energy produced from renewable sources, limited to the income from such production and sales for a period of 4 years from the date of effective production.

Tax Benefits for Pension Funds

Pension funds that are established and operated in accordance with Angolan law are granted the following benefits:

  • Reduced Corporate Income Tax rate of 14%;
  • 50% reduction in Property Tax on the transfer, ownership, and rent of property for a period of 2 years from the date of acquisition of the property; and
  • Exemption from Investment Income Tax on the income received by the pension fund.

Benefits are also provided for participants in pension funds, including:

  • 50% reduction in Investment Income Tax on income, including reimbursements paid by pension funds and other complementary social security regimes; and
  • Exemption from Investment Income Tax on reimbursements from the contributions of the beneficiaries.

Tax Benefits for Undertakings for Collective Investment

Undertakings for Collective Investment are granted the following benefits:

  • Reduced Corporate Income Tax rate of 10% for securities investment funds;
  • Reduced Corporate Income Tax rate of 15% for real estate investment funds;
  • 50% reduction in Property Tax on the transfer of real estate and ownership of non-rented real estate for a period of one year as from the date of acquisition of the real estate; and
  • Exemption from Stamp Duty due on capital increases.

Income received or made available to participants in Undertakings for Collective Investment from redemptions and profit distributions, as well as capital gains from the disposal of units, is exempt from Investment Income Tax.

Tax Benefits for Private Investment

Tax benefits are provided for private investments made under the terms and regulations of the Private Investment Law. The tax benefits depend on the investment scheme applied:

  • Private investment under the prior declaration scheme:
    • reduction of the Corporate Income Tax rate by 20% for a period of 2 years;
    • reduction of the Investment Income Tax rate on the distribution of profits and dividends by 25% for a period of 2 years;
    • reduction of the Property Tax rate by 50% for the acquisition of real estate intended for the office and the establishment of the investment; and
    • reduction of the Stamp Duty rate by 50% for a period of 2 years;
  • Private investment under the special scheme:
    • reduction of the Corporate Income Tax rate by:
      • 20% for Zone A for a period of 2 years;
      • 60% for Zone B for a period of 4 years;
      • 80% for Zone C for a period of 8 years; and
      • for Zone D, half of the resulting rate for Zone C for a period of 8 years;
    • increase in the amortization and reintegration rates by 50% for Corporate Income Tax purposes for a period of:
      • 4 years for Zone B; and
      • 8 years for Zones C and D;
    • reduction of the Investment Income Tax rate on the distribution of profits and dividends by:
      • 25% for Zone A for a period of 2 years;
      • 60% for Zone B for a period of 4 years;
      • 80% for Zone C for a period of 8 years; and
      • for Zone D, half of the resulting rate for Zone C for a period of 8 years;
    • reduction of the Property Tax rate for the acquisition of real estate intended for the office and the establishment of the investment by:
      • 50% for Zone A;
      • 75% for Zone B;
      • 85% for Zone C; and
      • for Zone D, half of the resulting rate for Zone C;
    • reduction of the Property Tax rate for the ownership of real estate intended for the office and the establishment of the investment by:
      • 50% for Zone B for a period of 4 years;
      • 75% for Zone C for a period of 8 years; and
      • for Zone D, half of the resulting rate for Zone C for a period of 8 years;
  • Private investments made under contractual arrangements:
    • reduction of the rates of Corporate Income Tax, Property Tax, Investment Income Tax, and Stamp Duty, for a period of up to 15 years;
    • tax credit of up to 50% of the investment value, for a period of 10 years;
    • increase of the amortization and reintegration rates by up to 80% for Zones B, C, and D, for a period of 10 years;
    • consideration as a cost of 80% of the amount of investment expenditure to create the infrastructure necessary to implement a project, which must be provided by the State.

It is also provided that the above benefits may be adapted in the case of public-private partnerships where the State has a majority shareholding.

Tax Benefits for Free Trade Zones

Companies carrying out investment operations in Angola's Free Trade Zones can benefit from the following:

  • reduced Corporate Income Tax rate of 15%, in general;
  • reduced Corporate Income Tax rate of 8% for commercial, industrial, or service activities exclusively for exports;
  • reduced Corporate Income Tax rate of 8% on income derived exclusively from agriculture, aquaculture, beekeeping, poultry, livestock, fishing, and forestry, with the exception of timber exploitation;
  • exemption from Investment Income Tax on profits generated by operations in Free Trade Zones and distributed to shareholders;
  • reduced Investment Income Tax rate of 5% on royalty payments, interest, and any other remuneration for services, technical assistance, technology transfer, loans and financing, equipment rental, and full service from third countries to users of Free Trade Zones;
  • exemption from Property Tax on the acquisition of real estate in Free Trade Zones intended to promote investment operations, and on the ownership of real estate in Free Trade Zones intended for the offices or the establishment of the investment;
  • exemption from customs duties on the import, export, and re-export of goods, capital goods, accessories, and other tangible assets.

Tax Benefits for the Capitalization of Companies

In determining the taxable income of companies with a registered office or effective center of management in Angola, an amount corresponding to the agreed remuneration of the share capital may be deducted. The deduction amount is calculated by applying a rate of 5% to the amount of contributions made up to AOA 8 million, by cash payments, or through the conversion of capital contributions or loans from shareholders, as part of the share capital increase. This is subject to certain conditions, including that:

  • The taxable income is not determined by indirect methods;
  • The beneficiary company does not reduce its capital with reimbursement to its shareholders in the year the contributions are made and the following 5 years; and
  • The benefit has not been applied to the beneficiary company in the prior 5 years or to a company that directly or indirectly owns a stake in the beneficiary company.

Tax Benefits for Corporate Restructuring

Companies that are reorganized as a result of restructuring operations or cooperation agreements may be granted an exemption from or a reduction in the Property Tax rate on the transfer of real estate that is necessary for the restructuring operations or cooperation agreements. This is not available in respect of real estate intended for residential purposes.

Tax Benefits for Micro, Small, and Medium Enterprises

Micro enterprises are allowed to pay tax at a rate of 2% on gross sales, on a monthly basis, with payment due by the 15th day of the following month. Small and Medium Enterprises are provided a Corporate Income Tax rate reduction, depending on the zone:

  • 10% reduction for Zone A
  • 20% reduction for Zone B
  • 35% reduction for Zone C
  • 50% reduction for Zone D

The 2% tax rate on gross sales and the tax reductions apply for a period of two years and may be renewed.

Click the following link for a copy of Law no. 8/22 as published by a third party.

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