Tax benefits code
The main benefits foreseen under the recently approved Tax Benefits Code (TBC) encompass the following:
Profits or dividends from securities traded in regulated market
- Reduction by 50%, for 5 years, of the IIT rate applicable to profits/dividends from shareholdings negotiated in regulated market;
- Exemption from IIT on profits/dividends distributed by entities with head office or place of effective management in Angola, whose capital is negotiated in a regulated market, to corporations with head office or effective management in Angola and subject to CIT, provided that a participation of at least 25% was held for more than one year.
Job creation, internships and professional training
- Taxpayers that create jobs are allowed a CIT or a PIT deduction corresponding to 3 to 7 times the lowest wage paid to civil servants per job created. Additional requirements should be met. These benefits may duplicate in case of creation of jobs for women.
- For purposes of the above, jobs are created in case of a positive balance of the existing jobs at the beginning and at the end of the economic year.
Internships and professional training
- Taxpayers that hire young people for internships or for scientific investigation are allowed a deduction of the hiring costs for CIT purposes, up to certain limits and according to specific rules.
- In case of certified training provided in Angola, related costs allow an additional deduction of 25% capped at AOA 1 million.
- Establishment of tax benefits related with electrical vehicles for the purpose of Customs Duties and Tax on Motorised Vehicles;
- Tax benefits are granted in connection with the production and distribution of renewable energies for the purposes of PT, II and IIT.
Financial System and Capital Markets
Tax benefits are granted to:
- Pension Funds
- Savings Funds
- Collective Investment Undertakings (“CIU”)
And to income from:
- Pension Funds;
- Savings Funds;
- Capitalization life insurance;
- Deposits made by individuals; and
- Deposits made by non resident entities.
The tax benefits available for the purposes of CIT, IIT, PT and Stamp Tax granted under the Private Investment Regime are established as applicable to (i) the prior declaration regime, (ii) the special regime and (iii) the contractual regime. The areas covered are also detailed.
Several benefits are granted to companies operating in the Free Zones of Angola, for the purposes of CIT, IIT, PT and Custom Duties.
Capitalization of Companies
Companies are allowed to deduct to the taxable income an amount corresponding to a conventional remuneration of the share capital. Prior approval is required and caps apply.
Restructuring of Companies
Under restructuring operations, companies in Angola can request an exemption or reduction from IP on the transfer of real estate that is not for residential use.
Other tax benefits are foreseen for
- Micro, small and medium sized companies;
- Public utility associations;
- Political parties;
- Public-Private Partnerships;
- People with disabilities;
- Former soldiers and veterans.
We highlight also that:
- Tax benefits may be passed on as a result of mergers, demergers or other transformation operations, provided that the company resulting from the merger or demerger maintains the statutory object underlying the granting of the tax benefit.
- Revocations foreseen in this diploma shall not affect the tax benefits granted to Special Tax Regimes (“Regimes Especiais de Tributação”) or the tax benefits granted prior to the entry into force of the law.
Foreign tax credit
Foreign tax credits are generally not available to offset against domestic tax.
Foreign tax credits may be granted according to the provisions of double tax treaties (DTTs).
Private investment law
The implementation of investment projects in Angola may benefit from tax incentives regarding CIT, PT, IIT, and Stamp Tax.
The Private Investment Law establishes that the tax incentives may be granted according to the following three regimes: (i) contractual regime, (ii) special regime or (iii) prior declaration regime.
The contractual regime applies to investments with a minimum amount of USD 10M, allowing the investors to negotiate the tax incentives for the project within the following frame and limitations:
- Reduction of CIT, IIT and Stamp Tax rates for a maximum period of 15 years;
- Tax credit for an amount corresponding up to 50% of the investment amount for a maximum period of 10 years;
- Increase of the depreciation and reinstatement rates up to 80% for a maximum period of 10 years for investments located in zones B, C and D;
- Possibility of deferment of tax payments;
- Considering as cost 80% of the value of the investment used to create infrastructures required to the execution of the investment which, by its nature, should have been created by the Government.
The special regime applies to private investments with an amount below the foreseen for the contractual regime and entailing the performance of the activities specifically listed in the Regulation of the Private Investment Law, which are all in the priority sectors (education, agriculture, health, tourism, telecommunications, energy, amongst others). In this regime, the tax benefits are granted automatically and vary according to the zone where the investment is made (Zone A, B, C, and D).
The prior declaration regime applies to investments not covered by any of the regimes previously referred, being the following tax benefits also granted automatically:
- Reduction of Property Tax rate in 50% for the acquisition of properties to be used as the office and establishment of the investment;
- Reduction of CIT rate in 20% for a period of two years;
- Reduction of the IIT rate applicable to dividends in 25% over a two-year period
- Reduction of the Stamp Tax in 50% for a period of two years.
In addition to the above listed benefits, entities may also benefit from other facilities, such as applications for permits, work visas, energy, water supplies, and others.
Reinvestment of reserves
Profits retained and then reinvested in new installations or equipment during the following three financial years may be deductible from taxable income during the following five years after the investment is finalised, at up to 80% of the value reinvested depending on the location of the investment performed.