The income tax treaty between Angola and Rwanda was signed on 15 April 2022. The treaty is the first of its kind between the two countries.

Taxes Covered

The treaty covers Rwandan personal income tax, corporate income tax, withholding taxes, capital gain tax, and tax on rent of immovable property. It coves Angolan personal income tax, corporate income tax, tax on income of immovable property, and taxes on passive income.

Residence

The treaty includes the provision that if a person other than an individual is a resident of both Contracting States, its residence for the purpose of the treaty will be determined by mutual agreement between the competent authorities, having regard to its place of effective management, the place where it is incorporated or otherwise constituted, and any other relevant factors. If no agreement is reached, such person shall not be entitled to any relief or exemption from tax provided by the treaty except to the extent and in such manner as may be agreed upon by the competent authorities.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel if the activities continue for the same or connected project within a Contracting State for a period or periods aggregating more than 90 days within any 12-month period.

Limited Force of Attraction Provision

Article 7 (Business Profits) includes a limited force of attraction provision whereby taxing rights are granted to a Contracting State on profits attributable to the sale of goods or merchandise or other business activities carried on in that Contracting State by a resident of the other State if the same or similar goods or merchandise or business activities are also sold or carried out by a permanent establishment maintained by that resident in the first-mentioned Contracting State.

Withholding Tax Rates

• Dividends - 10%
• Interest - 10%
• Royalties - 10%
• Fees for Technical Services of a managerial, technical, or consultancy nature - 10%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
• Gains from the alienation of shares or comparable interests, such as interests in a partnership or trust if, at any time during the 365 days preceding the alienation, the shares or comparable interests derived more than 50% of their value directly or indirectly from immovable property situated in the other State; and
• Gains from the alienation of shares, other than the above, in a company that is a resident of the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation. A provision is also included for a tax sparing credit, whereby tax payable will be deemed to include the amount of tax that would have been paid if the tax had not been exempted or reduced in accordance with laws that establish schemes for the promotion of economic development in Rwanda or in Angola, as the case may be, and such schemes having been mutually agreed by the competent authorities of the Contracting States.

Entitlement to Benefits

Article 30 (Entitlement to Benefits) provides that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty.

Entry into Force and Effect

The treaty will enter into force once the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.