Angola – Tax Benefits Code approved

In brief

Law 8/22, of 14 April, approves the Tax Benefits Code. The Law introduces new tax benefits and aims at condensing in a single diploma all the tax benefits foreseen in multiple legal diplomas. It also includes definitions and sets out deadlines, rules and principles to be observed when granting tax benefits, as well to assess the lack of compliance with the underlying assumptions; in addition, exemptions are established for the public sector.

The Law now published enters into force 30 days upon its publication.

In detail

Law 8/22, of 14 April, approves the Tax Benefits Code. The Law introduces new tax benefits and aims at condensing in a single diploma all the tax benefits foreseen in multiple legal diplomas. It also includes definitions and sets out deadlines, rules and principles to be observed when granting/extinguishing tax benefits; in addition, exemptions are established for the public sector.

The Law now published enters into force 30 days upon its publication.

The diploma revokes all legislation contrary to its provisions and also the tax benefits foreseen in the legislation quoted therein. 

Highlight for the revocation of Article 13 no, 1 letter a of the Investment Income Tax Code that established an exemption from taxation on profits/dividends distributed by entities with head office or effective management in Angola  to corporations with head office or effective management in Angola and subject to corporation tax, provided that a participation of at least 25% was held for more than one year.

The law defines as tax benefits the measures that having an extraordinary nature result in an advantage or a tax reduction when considering the general taxation regime. 

We briefly highlight the following tax benefits foreseen in the diploma approved:

Profits or dividends from securities traded in regulated market

• Reduction by 50%, for 5 years, of the Investment Income Tax rate applicable to profits/dividends from shareholdings negotiated in regulated market;
• Exemption from Investment Income Tax on profits/dividends distributed by entities with head office or place of effective management in Angola and which capital is negotiated in a regulated market, to corporations with head office or effective management in Angola and subject to II, provided that a participation of at least 25% was held for more than one year.

Job creation, Internships and Professional Training

Job creation

Taxpayers that create jobs are allowed a II or a Personal Income Tax deduction corresponding to 3 to 7 times the lowest wage paid to civil servants per job created. Additional requirements should be met. The benefit duplicates in case of creation of jobs for women.

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, up to certain limits and according to specific rules, the hiring costs. 

In case of certified training provided in Angola, related costs allow an additional deduction of 25% capped at AOA 1 million.

Environment

• Establishment of tax benefits related with electrical vehicles for the purpose of Customs Duties and Tax on Motorized Vehicles;
• Tax benefits are granted in connection with the production and distribution of renewable energies for the purposes of Real Estate Tax, corporation tax and Investment Income Tax.

Financial System and Capital Markets

Tax benefits are granted to:

- Pension Funds

- Savings Funds;

- Collective Investment Undertakings.

And to income from:

- Pension Funds;

- Savings Funds;

- Capitalization life insurance;

- Deposits made by individuals;

- Deposits made by non resident entities.

Private Investment

The tax benefits available for the purposes of corporation tax, Investment Income Tax, Real Estate Tax 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.

Free Zones

Several benefits are granted to companies operating in the Free Zones of Angola, for the purposes of corporation tax, Investment Income Tax, Real Estate Tax 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;
• Patronage;
• Public utility associations;
• Cooperatives;
• Political parties;
• Public-Private Partnerships;
• People with disabilities;
• Former soldiers and veterans.

We highlight also that:

• Tax benefits can 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 or the tax benefits granted prior to the entry into force of the law.

^{© 2022 PwC. This communication is of an informative nature and intended for general purposes only. It does not address any particular person or entity nor does it relate to any specific situation or circumstance. PricewaterhouseCoopers Tax Services TLS, Lda. We will not accept any responsibility arising from reliance on information hereby transmitted, which is not intended to be a substitute for specific professional business advice.}