Corporate income tax (CIT) is levied, currently at a 25% rate, on the profits deriving from business activities carried out in Angola by resident entities or non-resident entities with a tax permanent establishment (PE), as defined by Angolan domestic legislation.
Tax residents are taxed on worldwide profits, while PEs are liable to taxation on the profits attributable to the PE, sales in Angola of goods or merchandise of the same or a similar kind to that sold by the PE, and to any other business activity that is of the same or similar kind to that conducted by the PE.
The Angolan system has two tax regimes: the general regime and the simplified regime. The simplified regime applies to taxpayers subject to CIT who are in the value-added tax (VAT) non-taxation regime (entities with business turnover below or equal to 250,000 United States dollars [USD]).
The following are excluded from the simplified regime:
- Public companies and public entities.
- Financial institutions.
- Companies under special tax regimes.
- Telecom companies.
- Subsidiaries or branches of foreign entities.
Taxpayers who have been included in the simplified taxation regime may apply to join the general regime, if they meet the requirements to be included in it, and must submit their application to the relevant tax office by the end of February of the year to which the CIT relates.
The general regime applies to taxpayers whose revenue is over USD 250,000 for two consecutive or non-consecutive years.
Special tax regimes apply to the oil and gas industry and to the mining industry.
Exemptions from CIT are provided for non-resident shipping and airline operators (as long as reciprocity exists in the foreign jurisdiction).
Investment income tax (IIT)
The IIT is due on interest, dividends, royalties, and other income of a similar nature. In Angola, the IIT Code divides such income into two sections, as follows:
Section A includes:
- Interest on credit facilities.
- Interest on loans.
- Income derived from deferred payments.
The tax is due at the moment that the income starts to be due or is presumed to be due.
A minimum annual interest rate of 6% is deemed on loan agreements and credit facilities, except if another rate is proven through a written and stamped contract.
Section B includes (amongst others):
- Repatriation of profits attributable to PEs.
- Interest, premiums on the amortisation, reimbursement, and other forms of remuneration of: (i) bonds and securities or other financial instruments issued by any company, (ii) treasury bills and treasury bonds, and (iii) Central Bank Securities.
- Interest on shareholder loans (or other shareholder financing). A deemed minimum annual interest rate equal to the rate used by the commercial banks is imposed.
- Indemnities paid to entities for the suspension of their business activity.
- Capital gains on shares and other financial investments.
The concept of royalties includes payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic, or scientific work, including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment or for information concerning industrial, commercial, or scientific experience.
The following income is exempt from IIT:
- Interest on deferred payments regarding commercial transactions.
- Payment of dividends to Angolan CIT payers that hold a participation higher than 25% for more than one year. Such exemption only applies if the share capital of the company distributing the dividends is quoted in a stock/regulated market.
- Interest from financial products approved by the Ministry of Finance that intend to encourage savings, capped to capital invested of 500,000 Angolan kwanza (AOA) for each person.
- Interest from housing saving accounts intended to encourage savings for main permanent dwelling.
The IIT rate is generally 15%, except for certain income, for which the rate is 10% or 5%.
The tax rate is 10% for the following income (amongst others):
- Dividends and repatriation of profits.
- Bond interest.
- Interest from shareholder loans.
- Capital gains.
The tax rate is 5% for the following income (amongst others):
- Interest and capital gains on bonds, securities, or other financial instruments issued by any company, Treasury Bills and Treasury Bonds, and Central Bank Securities, when these instruments are traded on a regulated market and have a maturity equal to or in excess of three years.
- Dividends and capital gains on shares when traded in a regulated market.
Assessment and payment
On Section A investment income, the IIT is, as a general rule, paid and assessed by the receiving entity, through the filing of a tax return in January of the following year the tax relates to. If the income is paid to a foreign entity, then the obligation shifts to the Angolan resident paying entity.
Generally, for Section B investment income, the IIT is, as a general rule, withheld by the payer entity.
Local income taxes
There are no provincial or local taxes on income in Angola.