The reforms Angola has performed over the last years have improved macroeconomic management and public sector governance. Macroeconomic stability has been enhanced through a more flexible exchange rate regime, central bank autonomy, sound monetary policy, and fiscal consolidation.
Laws to allow greater private sector participation in the economy, to increase the stability of the financial sector, and to reduce the impact of oil revenue on public finances have also been introduced.
To guarantee economic stability, the National Bank of Angola (BNA), the country’s central bank, which acts as the supervisory authority in the Angolan banking sector, has since October 2017 implemented supplementary monetary and exchange rate reforms. Monetary policy was simplified, replacing some instruments with others more in line with the prevailing environment, as was the case with the adoption of the monetary base as an operational variable to improve price stability.
Angola has been taking steps to improve its banking regulations and align them with international regulation and supervision practices. The country enacted several important elements of banking legislation and introduced regulations based on Basel II and Basel III principles. By the end of 2017, all banks operating in Angola had adopted International Financial Reporting Standards.
The dollar peg was abandoned in January 2018. The kwanza, semi pegged to the euro, floats with the other currencies traded on the local market. This implementation led to a continuous reduction in the exchange rate spread between the formal and informal market from 150% in January to 45% in July 2018, for example. The new exchange regime allowed for greater efficiency in the allocation of international reserves.
The banking system is made up of less than 30 banks, including state-owned banks, subsidiaries of foreign entities and private Angolan banks. Added to this is the Development Bank of Angola (BDA), whose main task is to subsidise loans to the private sector.
Private Investment Law
The Private Investment Law simplifies the investment process and improves the conditions of competitiveness in attracting investment to Angola. The Tax Benefits Code aims to concentrate in a single diploma all the benefits dispersed in separate legislation.
In 2021, Law No. 10/21 of 22 April amended the Private Investment Law (Law No. 10/18 of 26 June 2018), to make the private investment regime in Angola more attractive for investors and simplify the investment process. It provides the possibility of negotiating incentives, facilities and investor rights, and improves the conditions of competitiveness in attracting investment to Angola.
In this amendment to the Private Investment Law of 2018, obstacles to internal credit by external investors were removed. The factors that determine the attribution of benefits were also changed, with the value of the investment and the jobs created being included in the factors that determine the attribution of support. In addition, the maximum period for granting benefits was eliminated (in the previous version was ten years) – article 31.
Among the most relevant changes are the:
Private investors are exempt from obtaining provisional licenses and other administrative authorisations for the implementation of their private investment projects: the Private Investment Registration Certificate (CRIP – Certificado de Registo de Investimento Privado) is sufficient.
In investment projects where it is indispensable to issue opinions, approvals, authorisations or the practice of other acts or administrative formalities, the authorities are obliged to comply with the schedule for execution and implementation of the project agreed with the investor. Approvals and authorisations are considered granted if no decision is issued within the timeframes.
Investors may resort to domestic and foreign credit under the terms of the law. The use of internal credit by external investors is no longer dependent on the implementation of the respective investment projects.
Tax benefits code
In 2022 was published Law No. 8/22, of April 14, approving the Tax Benefits Code (CBF – Código dos Benefícios Fiscais). This law creates tax benefits and aims to concentrate in a single diploma all the benefits dispersed in separate legislation. It also defines concepts, deadlines, rules and principles for granting tax benefits or for non-compliance with the conditions that gave rise to them, and establishes exemptions applicable to the public sector.
The CBF provides tax benefits for private investment, while revoking legislation that contradicts it. Highlights of revoked legislation include paragraph a) of number 1 of article 13 of the Capital Investment Tax Code (IAC – Imposto sobre a Aplicação de Capitais), which preview tax exemption for profits/dividends distributed by entities with headquarters or effective management in Angola to other legal entities subject to Industrial Tax (II- Imposto Industrial), provided that the holding was at least 25% and held for more than one year.
The law defines tax benefits as: measures of an exceptional nature that imply a tax advantage or relief compared to the general tax regime.
Among the tax benefits provided for in the diploma, it should be noted:
50% reduction, for five years, of the tax rate on Capital Investment Tax applicable to profits/dividends from shareholdings traded on a regulated market.
100% reduction (exemption) on Capital Investment Tax on profits/dividends distributed by entities with capital traded on a regulated market (that have headquarters or effective management in Angola) to legal entities with headquarters or effective management in Angola subject to Industrial Tax, provided that the participation is at least 25%, and detained for over a year.
Tax benefits are defined in terms of Industrial Tax, Capital Investment Tax, Property Tax and Stamp Duty attributable within the scope of private investment in relation to the regimes of (i) prior declaration, (ii) special regime and (iii) contractual regime, also specifying the areas covered.
Creation of jobs: taxable entities who create jobs may deduct between three and seven times the lowest civil service salary, per job created, under the Industrial Tax or Labor Income Tax and upon fulfillment of additional requirements. The benefit is doubled when jobs are created for women.
Are considered jobs created when: the positive difference between the jobs existing at the beginning and at the end of the financial year.
Internships and professional training: taxable entities who hire young people for professional internships or for scientific research may increase, within defined limits and rules, the costs incurred with hiring. In the case of providing certified training in Angola, it will also be possible to increase costs by 25% within a limit of Kz 1 million.
Within this scope, tax benefits are attributed to:
- Pension funds
- Savings funds
- Undertakings for collective investment.
And income benefits from:
- Pension funds
- Savings funds
- Capitalisation life insurance
- Deposits made by natural persons
- Deposits made by non-resident entities.
Several tax benefits are granted to companies operating in the free trade zones of Angola, namely in terms of Industrial Tax, Capital Investment Tax, Property Tax and Customs Rights.
On October 2020, Angola adopted Law No. 35/20 – the Free Trade Zones Law. It establishes the possibility of creating free trade zones with incentives and benefits. The new law came into force on 12 October 2020 and revoked the Legal Framework of Special Economic Zones.
Within the scope of restructuring processes, companies in Angola may request exemption or reduction of the Property Tax on the transfer of properties, as long as they are not intended for housing.
Tax benefits are defined in terms of Customs Duties and Tax on Motor Vehicles in relation to electric vehicles.
Tax benefits are also granted in terms of Property Tax, Industrial Tax and Capital Investment Tax in relation to renewable energy production and distribution activities.
- Micro, small and medium enterprises
- Patronage
- Public utility associations
- Cooperatives
- Political parties
- Public-Private Partnerships
- Disabled people
- Former combatants and veterans of the country
Competition Law
Applicable to all economic activities, establishes the rules and principles governing competition in Angola.
Approved by Law No 5/18, of May 10, 2018, the Competition Law of Angola aims to establish the rules and principles governing competition in the country. It is applicable to all economic activities carried out, on a permanent or occasional basis, and to all public and private companies, groupings of companies, cooperatives, business associations and any other legal entity with or without legal personality.
It incorporates the Competition Regulatory Authority, which is governed by the principle of the public interest in promoting and defending competition. In addition to the rules according to which activities in Angola must be regulated, this law determines the penalties that may be applied in case of non-compliance. The Competition Regulatory Authority may apply fines and additional sanctions, namely the exclusion of the offender from participating in public procurement procedures for a period of up to three years.
General Labor Law
Approved by Law No. 7/15, of June 15, 2015 (plus the Rectification No. 15/15), it is applicable to all workers who carry out remunerated activities for others, within the scope of the organisation and under the authority and management thereof, including public companies. It is applicable to non-resident foreign workers, and companies can only hire non-resident foreign workers up to a maximum of 30% of the workforce, with the remaining 70% being made up of national workers or foreign workers resident in the country.
In addition to the base salary and other mandatory benefits, all employees are entitled, for each year of effective service, to a minimum of 50% of the base salary as holiday allowance, and to a minimum of 50% of the base salary as a Christmas subsidy.
Law of Public Contracts
The legal framework for the formation and execution of Public Contracts in Angola is provided for in Law No. 9/16, of June 16, 2016 (plus Rectification No. 23/16).
It is applicable to public works contracts, leasing or acquisition of movable property and the acquisition of services concluded by a public contracting entity, as well as contracts to be concluded by public contracting entities that are not subject to a special legal regime, contracts whose implementation is carried out through a public-private partnership, and to contracts signed by defense, security and internal order bodies, without prejudice to the exceptions provided for by law.
The economic operators who participate in the process of forming or executing the mentioned contracts must observe the principles and rules of corporate governance, in particular: the regular provision of information; have organised accounting; have internal control systems and comply with social and environmental accountability rules.
Contracting public entities wishing to sign the contracts in question must adopt, according to the estimated value of the contract, one of the following procedures: public tender; competition limited by prior qualification; invitation-only competition; or simplified hiring.
Land Law
Law No. 9/04, of November 9, 2004, establishes that the transmission, constitution and exercise of land rights over land granted by the State must respect the following principles: principle of original ownership of land by the State; principle of transmissibility of land integrated in the private domain of the State; principle of useful and effective use of land; taxability principle; principle of respect for the land rights of rural communities; principle of ownership of natural resources by the State and the principle of non-reversibility of nationalisations and confiscations.
The land is an original property of the State. Without prejudice to the exceptions determined by law, the State may transfer or encumber the ownership of land included in its private domain, with null transactions that violate the norms of public order.
The transfer of property rights and the constitution of limited land rights over lands included in the private domain of the State can only exist with the aim of guaranteeing their useful and effective use.
PPPs Law
The Angolan State has taken important steps to create a solid legal and regulatory environment with the approval of the PPPs (Public-Private Partnerships) Law, in May 2019, and subsequent regulations. The legislation establishes a broad structure that supports a favorable environment for the development of a PPPs program in the country and allows for a transparent and competitive process that contributes to the success of the transactions.
In September 2020, the Operational Plan for Structuring Public-Private Partnerships was approved. The Plan consists of an indicative list of more than 40 investment projects structured in the PPPs modality, structuring schedule, as well as phases for the preparation, negotiation and launch of PPPs establishment procedures. Among the most emblematic projects (from a diverse range of road and rail projects, in water and energy sectors, tourism development poles, up to a solid waste recovery unit focused on recycling) is the surface metro in Luanda and the new bridge over the river Kwanza.
PPPs are thus an opportunity for Angola to improve the efficiency and quality of basic services, diversify funding sources, promote economic development led by the private sector, and, therefore, improve the quality of services to the population.
Immigration Law
The legal regime for foreigners in Angola is regulated by Law No. 2/07, of August 31, 2007, and by Presidential Decree No.108/11, of May 25, 2011, with changes introduced by Presidential Decree No. 151/17, of July 4, 2017. These diplomas establish the rules and procedures for obtaining visas for Angola, including the rules applicable to consular visas (which, in general, must be granted by Diplomatic and Consular Missions).
Foreign citizens wishing to work in Angola must apply for a work visa. It is necessary to previously obtain the favorable opinion of the activity’s supervisory body, in the case of private companies or entities, or of the Ministry of Public Administration, Labor and Social Security, in the case of public institutions or companies.
Foreigners wishing to visit Angola for family reasons or business prospecting must apply for an ordinary visa. This is, as a rule, valid for 30 days and extendable twice for the same period.
Citizens of CPLP – Community of Portuguese Language Countries and G20 (group consisting of the world’s 19 largest economies plus the European Union) are exempt from paying business or tourism visas for trips until 30 days to Angola.
Commercial Activities Law
Under the Law No. 1/07, of May 14, 2007, the following are considered commercial activities:
- Wholesale trade
- Retail trade
- General trade
- Precarious trade
- Fair trade
- Street trade
- Trade of representation
- Provision of commercial services
- Import
- Export
Presidential Decree No. 193/17, of August 22, 2017, which approved the Regulation on the Licensing of Establishments and Commercial Activity and Mercantile Services, complements this diploma.
Under the terms of the two diplomas, the exercise of commercial activities of wholesale trade, retail trade, general trade and mercantile services, when subject to licensing, requires obtaining the respective Commercial License, Precarious Trade License, Trader Card, Card Street Vendor or Market Stall Vendor Card.
Importers and exporters must be registered as such in the Register of Importers and Exporters.
Rules and procedures for execution of capital operations
Apllicable to the execution of capital operations by legal entities in contracts and other legal acts between foreign exchange residents and non-residents.
In the Notice No. 14/22, of 5 July, the National Bank of Angola establishes the rules and procedures to be complied in the execution of capital operations by legal entities in contracts and other legal acts that establish or transfer rights or obligations between foreign exchange residents and non-residents, including credit operations. Among the most relevant amendments are:
- Licensing of the capital operations by the National Bank of Angola is no longer required.
- Capital operations are exclusively settled through bank transfer in favor of the foreign exchange non-resident beneficiary referred in the contract or instrument in which the operation is based.
- Commercial banks must carry out a thorough assessment of capital operations, taking into account, among others, the nature and extent of the activity and consistency with the purpose and amount of the operation, history of foreign exchange operations carried out and their consistency with the operation to be carried out.
- Profits, dividends and the divestment amounts arising from investments made abroad by foreign exchange residents must be repatriated by credit to a bank account domiciled in Angola within 60 days from the date of payment thereof.
Taxes on corporate income
Applied to the profits deriving from business activities carried out in Angola by resident entities or non-resident entities with a tax permanent establishment.
Corporate Income Tax (CIT)
Corporate Income Tax (CIT) is levied, 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).
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 VAT non-taxation regime (entities with business turnover below or equal to 250,000 US dollars).
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 250,000 US dollars 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:
Section A, which 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, which includes (amongst others):
- Dividends
- 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
- Royalties
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.
Exemptions: 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 for each person.
- Interest from housing saving accounts intended to encourage savings for main permanent dwelling.
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
- Royalties
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.
Bilateral investment and taxation treaties
Angola has bilateral investment agreements and treaties with several countries.
The country has bilateral investment agreements with Brazil, Cabo Verde, Germany, Italy, Portugal, and Russia. Other 12 signed bilateral investment treaties and their status can be found on the UNCTAD – United Nations Conference on Trade and Development website.
Angola has a Trade and Investment Framework Agreement with the United States of America and ratified the African Continental Free Trade Agreement in October 2020. Angola and the European Union concluded negotiations on a Sustainable Investment Facilitation Agreement.
Angola does not have a bilateral taxation treaty with the United States of America, instead signed the Foreign Account Tax Compliance Act (FATCA) on November 9, 2015, which entered into force on August 29, 2016, through Presidential Decree No. 162/16, of August 29. Under this agreement, Angolan financial institutions report to the IRS information on financial accounts held by U.S. taxpayers in Angola.
More on business environment reforms
Angola is continuously improving and adding measures, as well as legal reforms, so that foreign investors can have a more welcoming business environment.
Measures have been implemented by the Angolan Government, and several legal reforms are underway to reduce the bureaucracy in accessing credit, as well as measures for greater protection of depositors:
Publication of Notice No. 4/2020, of February 28, 2020, on the expansion of the Information and Credit Risk Center. Instruction No. 13/2020, of July 17, 2020, on the operation of the Information and Credit Risk Center was also published.
Approval of Presidential Decree 275/20, of October 21, 2020, which validates the regulation for the operation of the Private Credit Information System (private credit bureau).
Publication of Notice No. 01/2021, of February 12, 2021, on the Credit Risk Information Center; and Instruction No. 05/2021, of February 26, 2021, consolidating the functioning of the Information and Credit Risk Center.
- Publication of the Movable Guarantees Law, Law No. 11/21, of April 22, 2021.
Approval of Presidential Decree No. 114/21, of April 29, 2021, which creates the Instruction No. 05/2021, of February 26, 2021.
Implementation of the portal that makes the Land Registry Certificate available online.
Approval of the environmental legislation, in accordance with Presidential Decree No. 117/20, of April 22, 2020, which waives the requirement for an environmental license for the construction of simplified structures (buildings with less than four floors).
Implementation of the simplification model for issuing environmental licenses with the introduction of a risk-based approach, through Presidential Decree No. 117/20, of April 22, 2020, with an electronic protocol for issuing environmental licenses for simple construction (reducing the number of procedures, time and cost to obtain a building permit).
Inauguration of the Commerce, Intellectual and Industrial Property Room in Luanda in March 2021, under Law No. 2/15, of February 2, 2015, where bankruptcy proceedings, corporate conflicts, violation of copyright and related rights are judged (intellectual property), and industrial property.
- Reduction of the Labor Income Tax rate, from 15 to 6,5%, for group B (comprises wages received by self-employed workers who independently carry out activities included in the list of professions in the Labor Code), under the Law No. 26/20, of July 20, 2020.
- Reduction of the Corporate Income Tax rate, as well as the Industrial Tax, from 30 to 25%, under Law No. 28/20, of 22 July 2020.
- Possibility for group B and C taxpayers (this last group includes remunerations received for industrial and commercial activities, which are presumed to be all those contained in the Table of minimum profits) who do not have accounting to declare their income in a simplified way: Law No. 28/20, of 22 July 2020, of the Labor Income Tax Code.
In this domain there has been a significant advance in cost reduction:
50% reduction in costs in the certification of shipment of import goods and exemption in export goods, in accordance with Presidential Decree No. 189/19, of June 12, 2019.
15% reduction in the Port Usage Fee charged for export cargo, as determined by Presidential Decree No. 189/19, of June 12, 2019.
Reduced fees for weighing containers and using ports, through Presidential Decree No. 189/19, of June 12, 2019.
The Integrated Foreign Trade Platform (Plataforma Integrada do Comércio Externo – PICE) was concluded, which simplifies the process of importing goods into Angola through the digital harmonization of administrative procedures in all entities under its jurisdiction. This single point of contact for authorized agents streamlines the import and export process by reducing procedures and time spent.