The new consolidated tax benefits code (Law no. 8/22) is effective from 14 May 2022 and consolidates various tax benefits, provides new benefits, and repeals any contradictory benefits under various laws and decrees. Angola has established four investment zones for providing certain tax benefits:
- 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.
- Micro enterprises are eligible for a special tax rate of 2% of gross turnover for the first two to five years of operation, depending on the localization. Further, micro enterprises are also eligible for stamp duty exemption;
- Small and medium enterprises are eligible for a reduction of 10% to 50% in corporate tax rate during the first two to five years of operation, depending on the localization; and
- Small, medium and micro enterprises are eligible for exemption from consumption tax on raw materials.
The new consolidated tax benefits code provides small and medium enterprises a reduction in the rate of corporate income tax depending on the zone:
- 10% reduction for Zone A;
- 20% reduction for Zone B;
- 35% reduction for Zone C; and
- 50% reduction for Zone D.
Effective 14 May 2022, as per the new consolidated tax benefits code, companies with a registered office or effective center of management in Angola are provided a deduction of an amount calculated with reference to its share capital in computing its taxable income. The amount of deduction is calculated by applying a rate of 5% to the amount of contributions made to share capital, up to a cap AOA 8 million subject to fulfillment of the following conditions:
- 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 previous 5 years or to a company that directly or indirectly owns a stake in the beneficiary company.
Under the Private Investment Law, projects having a foreign investment of USD 1 million and above or domestic investments of USD 500,000 and above may be granted tax benefits in the form of reduced rates of industry tax, investment income tax, and property tax on transfer of real estate.
The concessions/ incentives are provided on a case-to-case basis and vary based on factors such as number of local job creation, investment amount and location, activity sector, shareholding/ participation by Angolan residents, value-addition to the Angolan national market, etc.
Special tax and customs incentives are also provided for investment projects located in strategic economic development areas and sectors.
The new consolidated tax benefits code of 2022 also provides tax benefits in the form of reduced rates of industry tax (corporate income tax), investment income tax, property tax, and stamp duty under the Private Investment Law as applicable to the prior declaration regime, the special scheme for investment zones and the contractual regime. The incentives are given below.
Prior Declaration Scheme:
- Reduction in the corporate income tax rate by 20% for a period of 2 years;
- Reduction in the investment income tax rate on the distribution of profits and dividends by 25% for a period of 2 years;
- Reduction in 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.
- Reduction in the corporate income tax rate by 20% up to 80% depending on the zone. The reduction applies for a period ranging from 2 years to 8 years;
- Increase in the amortization and reintegration rates by 50% for corporate income tax purposes. The increment applies for a period ranging from 4 years to 8 years depending on the zone;
- Reduction in the investment income tax rate on the distribution of profits and dividends by 25% up to 80% depending on the zone. The reduction applies for a period ranging from 2 years to 8 years;
- Reduction in the property tax rate for the acquisition of real estate intended for the office and the establishment of the investment by 50% up to 85% depending on the zone; and
- Reduction in the property tax rate for the ownership of real estate intended for the office and the establishment of the investment by 50% up to 75% depending on the zone. The reduction applies for a period ranging from 4 years to 8 years.
Private Investment under Contractual Arrangements
- Reduction in 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 in the amortization and reintegration rates up to 80% for a period of 10 years depending on the zone; and
- 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.
Angola provides a tax deduction of up to 50% of the profits reinvested in new installations or equipment, within 3 years from the finalization of the investment. Effective 19 August 2020, the deduction is limited to 40% of reinvestments made in Luanda, Lobito, and provincial capitals and 80% in respect of investments made in the remaining zones within 5 years from the finalization of the investment.
Effective 14 May 2022, a deduction is allowed for the creation of jobs under the new consolidated tax benefits code, calculated on a monthly basis as follows:
- 3 times the lowest wage paid to civil servants per job created in Zones A and B;
- 6 times the lowest wage paid to civil servants per job in Zones C and D; and
- 7 times the lowest wage paid to civil servants per job created for disabled people, whose degree of disability or incapacity is equal to or greater than 50%.
A job is said to be created if there is a positive balance of the existing jobs at the beginning and at the end of the year.
The deduction is allowed from the taxable income calculated for the year in which the job is created, or for the year in which the employee completes one year of service. If the employee has worked for less than 1 year, proportionate deduction is allowed based on the period of employment, provided the employment is at least for a period of 6 months. Further, a double deduction is allowed for female employees.
Effective 14 May 2022, the new consolidated tax benefits code provides the following environmental tax benefits:
- A reduction of 50% in import customs duty and tax on motorized vehicles for electric vehicles until the year 2032;
- A reduction of 75% in property tax for acquisition of buildings used to produce energy from renewable sources and a reduction of 50% for the ownership of such buildings; and
- Taxpayers engaged in the production and sale of energy produced from renewable sources are provided a 35% reduction in the final rate of assessment for corporate income tax and a 60% reduction in investment income tax. The reduction is limited to the income from such production and sales for a period of 4 years from the date of effective production.
Effective 14 May 2022, the new consolidated tax benefits code provides the following benefits to undertakings for collective investment:
- 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 1 year from the date of acquisition of the real estate; and
- Exemption from stamp duty that is due on increases in capital.
Further, redemptions and profit distributions made to participants in undertakings for collective investment as well as capital gains from the disposal of units, are exempt from investment income tax.
Effective 14 May 2022, the new consolidated tax benefits code provides several benefits to companies operating in the Free Trade Zones of Angola in the form of reduced rates and exemptions from industry tax (corporate income tax), investment income tax, property tax, and customs duty.