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12.4.1. Main Rules

The Angolan transfer pricing regulations were introduced by Presidential Decree 147/13 of 1 October 2013 (otherwise known as the Large Taxpayers Statute). The rules were supplemented by Regulations 472/14 of 28 February 2014 and 599/14 of 24 March 2014. In September 2017, a Transfer Pricing Unit was created within the Tax Administration, with the mission to monitor compliance with the transfer pricing regulations. The tax laws of Angola provide that the transactions entered into by large taxpayers with related parties / ‘special relationships’ must be made at arm’s length price.

Although Angola is not a member of the Organization for Economic Co-operation and Development (OECD), under the domestic legislation the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (‘the OECD Guidelines’) are used as an explanatory instrument.  

Definition of Related Parties

Under the rules, large taxpayers are subject to special rules governing their transactions with related parties/ ‘special relationships’. Such transactions must be conducted at arm’s length. For this purpose, a taxpayer is classified as a large taxpayer if its turnover for the reporting year exceeds AOA 7 billion. Moreover, large state-owned enterprises, as well as taxpayers engaged in specified sectors, including telecoms, oil and gas and diamonds, are classified as large taxpayers regardless of any turnover threshold.

A special relationship is deemed to exist if one entity exercises significant management and control over the other entity. This is deemed to be the case notably when:

  • An interest of 10% or more in the capital or voting rights in one entity is held directly or indirectly by the directors or managers of another entity or their next of kin;
  • The majority of the members of the board are common between two entities, or are different but are related by marriage or kinship;
  • The two entities are connected by a subordination agreement or by dominance or reciprocal participation or any other agreement with similar effect under company law;
  • One entity exercises dominant commercial or financial control over the other entity. This is deemed to be the case where the volume of operations of one entity is conducted for 80% or more with the other entity or where the indebtedness of one entity is owed for 80% or more to the other entity.

Applicable TP Methods

The regulations only provide for the use of one of the traditional OECD methods, being:

  • Comparable uncontrolled price method;
  • Resale-minus method; or
  • Cost-plus method.

The domestic laws provide that only the aforesaid three traditional methods may be used and the taxpayer should use the most appropriate method according to the transaction.

Use and Availability of Comparables

The domestic laws generally follow the OECD guidelines on comparability analysis, timing issues on comparability, as well as compliance issues. Taxpayers may use internal or external comparable as well as domestic or foreign comparables for determining the arm’s length price. The domestic laws neither require / restrict the use of an arm’s length range or statistical measure nor provide for any comparability adjustments / factors to be made while comparing the results of the controlled transactions with the results of the uncontrolled transactions.