Tax Reform in Angola

Employment Income Tax (“Imposto sobre os Rendimentos do Trabalho” or “IRT”)

The main change to the Employment Income Tax relates to the tax rates. The aim of this change is to remove the burden imposed on lower incomes, maintain the tax burden imposed on average incomes, and progressively increase the tax burden imposed on high incomes. New tax brackets are included, and the minimum tax applicable to incomes over Kz 10,000,000 increases from 17% to 25%.

Along with the increase in tax rates, the tax base is also increased, and some exemptions are struck out.

Tax Base Increase

The tax base is increased to encompass accessory income along with any patrimonial or financial rights and benefits which are not included in the main source of income. These new additions have to be earned by employees or workers while on the job or in connection to a job and must represent an economic advantage for the relevant beneficiary.

The following elements are now fully taxed:

• Cashier’s allowance;
• Housing allowance (these were previously taxed at 50% of the value in the lease agreement);
• Severance payments (these were only taxed if they went beyond the limits established in the General Labour Law);
• Holiday pay and Christmas Subsidy.

Rates

Self employment income of Groups B and C is now subject to a withholding tax rate of 6.5% on the amount of the service provided (in line with the Corporate Income Tax rules foreseen for the payment of services)..

Similarly, random services acquired from non residents are subject to withholding tax at the rate of 15%

The table applicable to income from Group A becomes the following: 

Property Tax  (IP)

The new Property Tax (“Imposto Predial”) rules consolidates in a single Code the provisions of the former Urban Property Tax, the Inheritance and Gifts Tax and the Property Transfer Tax. The following becomes liable to Property tax:

• Owning of property (on the tax registered value);
• Income from rental of property (on the amount of the rent);
• Free or onerous transfers of real estate (formerly, “SISA”).

Tax Base

• Property Tax is levied on the real estate or on the income arising from urban and rural property and land for construction, as well as on the transfer of real estate (as a gift or for consideration)
• The transmission and lease of any property is VAT exempt
• The tax due on leased property cannot be less than the tax which would be levied on non-leased property.
• The taxable income for rural properties corresponds to a tax registered value of Kz 10 397.00 per hectare.
• The deadline for taxing sub lettings under the Property Tax regime was reduced from 20 years or over to 10 years.
• The taxation of the sale of shares in the value of over 50% of the capital of a property-owning entity[1]  now applies to situations of purchase of participation units  owned by real estate funds.
• The tax base mentioned above is no longer restricted to share acquisition for possession of property owned by the company. Now, it applies to any kind of transmission of shares or purchase of participation units of any entity which owns property.
• Similarly, any transfer of property for consideration, regardless of its form, is subject to Property Tax.

Rates

• The Property Tax levied on non-leased urban buildings is determined according to the rates and fixed amounts as per the following table: 

•  The rate of Property Tax applicable to leased properties is kept at 25% of the taxable income (60% of the value of rents), thus the effective rate is 15%. The current withholding rules remain unaltered.
• The Property Tax rate levied on the transfer of properties is of 2%.
• There is an aggravated taxation (in 50% of the amount of the Property Tax due) in case of buildings which have been vacant for over a year and land for construction that has not been effectively given use for 3 consecutive or alternate years. This deadline is computed as from the date of entry into force of the Property Tax Code, the granting of the real estate, its occupation or last acquisition. 

Value Added Tax (VAT)

The IVA regime is altered as to expand exemptions laid out in article 12(1)(e) of the VAT Code, to the conveyance and lease of property, whether for commercial, industrial, housing or any other purpose. 

The rendering of accommodation services by the hospitality or other similar sectors are not exempt and as such are taxed under the IVA Code. 

The VAT exemption does not encompass the financial lease of property, as per Tax Circular 000052/DNP/DSIVA/AGT 2020.

It is also important to note the changes made by Presidential Decree 194/20, of 24 July,  to the ‘self-billing’ regime. 

This diploma repeals article 10 of the Legal Regime of Invoices and Equivalent Documents (“Regime Jurídico das Facturas e Documentos Equivalentes” or "RJFDE"). 

As per the new regime, the ‘self-billing’ requirement is applicable to entities fiscally resident in Angola and which possess organised accounts. These companies must also acquire, in the course of business, national products in any given sector, not only the agricultural, aquaculture, beekeeping, poultry farming, livestock farming, fishing as in the old law. 

The invoices/receipts issued shall not exceed 20% of the total cost of goods sold and materials consumed and the cost of supplies and services from third parties of the issuer. 

All self-billing documents should be issued by properly certified IT programs which comply with the relevant legal requirements. 

Self-billing entities must withhold the Corporate Income Tax.

General Tax Code (“Código Geral Tributário”)

Definitions and interpretation of tax rules

• Simplification and significant clarity on definitions and interpretation of tax rules.

Tax Benefits 

• Become only either automatic or subject to administrative recognition, either objective or subjective. Tax benefits of administrative recognition should be published by the Ministry Department responsible for Public Finance. 

• Tax benefits for acquisition of goods will expire if the goods are disposed of within 5 years as opposed to the 8 years established in the previous legislation. 

Taxpayer’s garantees and duty of cooperation

• The right to legally binding information becomes widespread and is applicable to the rights and duties of taxpayers. This type of information is personal and as such, only the individual taxpayer may profit from its content. The information will imply the payment of a fee yet to be defined. 

• All public entities are obliged to provide information to the Tax Authorities regarding tax verification procedures, as such, the duty of secrecy is waived. 

Tax residency of taxpayers

• In order to be tax resident in Angola, taxpayers would need to own a house which they intend to keep or use as a family home or they would need to be in Angola for a period of 90 days in a year, whether consecutive or not.  These requirements are to be fulfilled by the 31st December of each year. 

Tax procedure, legally binding information and deadlines

• In case of an administrative claim or hierarchical appeal, the right to prior hearing only applies where the claimant or appellant had not previously exercised this right at an earlier stage, and the situation results from an action by the Tax Authorities.

• The right to a prior hearing must be exercised within 30 days, subject to notification.

• The deadlines to file an administrative claim against a tax assessment and any other administrative acts related to taxes shall be 30 days counted from the respective notification. The decision on these claims shall be made within a maximum period of 60 days.

• The hierarchical appeal against the final decision of a tax procedure is addressed to the highest body of the Tax Administration. It should be filed to the author of the claimed act within 30 days following the notification of the decision. Hierarchical appeals shall be decided within a maximum period of 60 days.

• In case of insufficient notification, the deadline for requesting the absent documents or an equivalent certificate, is now of 5 days, and is free of charge. 

Late assessment interest

• Debts paid voluntarily within 15 days allow a reduction of 30% of the late assessment interest due.

Credit compensation and tax debts

• The extinction of the tax obligation through an offset is extended to customs duties; debts or customs credits can be offset against other taxes.

Expiration

• If the delay in liquidation stems from a tax crime, the statute of limitation is extended to 10 years. 

• As long as there is no specific rule, the deadline for the taxpayer to request tax credits is of 5 years.

Fines, voluntary payment and during the course of a tax audit

• The standard fine for non-payment or delayed tax assessment decreases from 35% to 25%.

• The amount applicable to fines paid voluntarily by the offender if no tax audit is underway is reduced by 50%, provided that the offence does not constitute a tax crime, nor is the offender in a repeat offender. The voluntary payment of debts including the tax due as well as the fine and any additional charges should be made within 15 days following the notification (the reduction does not apply once this deadline elapses).

• When the offender has fulfilled his tax compliance obligations, the fines assessed during the course of a tax audit are reduced by 20%, provided that the infraction does not constitute a crime, nor is the offender a repeat offender. In this case, the fine should be paid within15 days of the notification otherwise the taxpayer will lose this benefit. 

Anti-abuse rules

• New rules have been introduced regarding transactions which aim to obtain a tax benefit through the exploitation of a legal procedure. These transactions may be disregarded for tax purposes and may be taxed in a manner which reflects its true economic value, therefore disregarding any tax benefit. These transactions will be subject to an late assessment interest at the rate of 2.5%. 

• The aforementioned anti-abuse rules should be applied when the local tax office assesses and collects taxes due. There is the possibility to individually define the procedure to apply anti-abuse rules for each specific tax, in a separate regulation. 

Provision of information to the Tax Authorities and bank accounts

• The Tax Authorities can request information from any authority, natural or legal person or entity. The request can be made to anyone in Angola or who carries out operations in Angola. Similarly, they are obliged to provide any kind of information, including that which may be within exceptional limitations or cover by the duty of secrecy. 

• Individual and collective taxpayers (and similar organisations) must provide to the Tax Authorities several elements upon their initiation of activity in Angola. These entities must report on relevant bank accounts used for payments and transfers related with their business activity along with any transactions made by such accounts. While conducting audits, the superior Tax Authorities’ body may access all these informations and bank statements, whether with or without consent, but only in specific situations such as: 

• Whenever there is suspicion of a tax crime;
• If reporting obligations are not complied with;
• In case it is necessary to verify documentation of taxpayers that are covered by the VAT cash scheme;
• Whenever there is a need to prevent avoidance stemming from a tax benefit. 

A fine of double the unpaid amount can be levied on any financial institution which refuses to present bank documents upon their request.