Adding value Angolan Tax reform: Be prepared 5 March 2012

www.pwc.com/ao

Adding value

Angolan Tax reform:

Be prepared

5 March 2012

www.pwc.com/ao

Adding value

Angolan Tax reform:

Be prepared

Angolan Tax Reform

Be prepared PwC 2

Index

Background 3

Investment Income Tax 5

Stamp Tax 8

Consumption Tax 13

Angolan Tax Reform

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Background

Under the ongoing Angolan Tax Reform it was recently published in the Official Gazette the following legislation:

 Amended Investment Income tax (Presidential Decree Law nr 5/11)  New Stamp Tax Code (Presidential Decree Law nr 6/11)

 Amendments to the Consumption Tax regulation (Presidential Decree Law 7/11)

Although only now published, the Official Gazette dates back from December 30, 2011 and the changes now introduced are in force since January 1, 2012. Due to this time gap, we will start contacts with the Authorities in order to clarify their understanding of when the changes should be effectively in force.

In the following pages we have outline the major changes provided in the new tax legislation.

We support the

customer in

achieving an

active policy risk

prevention and

harnessing

opportunities.

Investment Income

Tax

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Investment Income Tax

Decree Presidential Law nr 5/11 of 30 December 2011 was recently published. This new law introduces some changes in

the

Investment Income Tax Code.

This law is applicable from the enforcement date

(

1 January 2012

)

to all the payments of income, subject to Investment Income Tax

. H

owever, it is only applicable to treasury bonds and interest on Central Bank bonds if

these

were acquired

on or after

1 January 2012.

What has changed?

The changes introduced in the Investment Income Tax Code (IAC) aims to wide

n

the tax base assessing other income that was not subject to tax in

the

prior legislation. This new regime also abolishes some exemptions granted previously and as included territory rules for the application of investment income tax. The penalties applicable to the investment income tax have also been updated.

Taxable income and applicable rates

In

section A, there is no change

in

the income that is being taxed for Investment Income tax purposes.

In

section B, the following income is now subject to Investment Income Tax: Interest from bank current or term

account IAC at 10%

Interest from Treasury notes or

Treasury bonds IAC at 10% (or 5% for interest with_{maturity equal or higher than}

_five

years)

Interest of debts securities issues by the National Bank

IAC at 10% (or 5% for interest with maturity is equal or higher than

three

years) Income derived from the sale of shares

or other instruments subject to IAC, if not subject to Corporate Income Tax or Employment Income Tax

IAC at 10% on the positive difference between acquisition price and proceeds received

Premiums on gambling, prize raffles, lotteries or any other gambling bets, whatever its nature or origin

IAC at 15%

Indemnities paid to companies for the

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Place of taxation

The income

in

section B is subject to Investment Income Tax if:

- the income is paid by an individual or corporate entity with

its

domicile, head office or place of effective management in Angola

- the income is made available through a permanent establishment in Angola

- the income is received by an individual or corporate entity with

its

domicile, head office or place of management in Angola

- the income is attributed to a permanent establishment in Angola

Exemptions

The exemption applicable to Section A remains the same. In Section B, the following exemptions are now applicable:

- Dividends distributed by an entity that has its head office or place of effective management in Angola, if the beneficiary entity is an Angolan entity, subject to Corporate Income Tax, which holds a share participation higher than 25%, for a period

of more

than one year before the dividend distribution

- Interest from financial products approved by the Ministry of Finance are intended to encourage savings, capped to capital invested of AKZ 500,000 for each person

- Interest from housing saving accounts intended to encourage savings for main permanent dwelling

s

These are the only exemptions mentioned in the Investment Income Tax Code for Section B.

Compliance

By the end of January, t

he taxpayers subject to Investment Income Tax, either related

to

Section A

or

B, should file a return that should include all the income received, paid or made available in the preceding year.

Penalties

The lack of payment due by the deadline is now subject to

the

penalty of double the tax amount due for all the time incurred up to the payment date

.

(

T

his amount will never be lower than 10 UCF

(Unidade de Correcção Fiscal that at this date

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Stamp Tax

Decree Presidential Law 6/2011 of 30 December 2011 was recently published. This new law introduces significant changes in the Stamp Tax Code.

The Decree entered into force on 1 January 2012.

What has changed?

Under the new

Stamp Tax

Code, several tax acts that

were

previously subject to Stamp Tax have now been excluded,

as they are

no longer applicable to the Angolan economic reality. The law is now clearer on the rules related

to

the assessment, settlement, exemptions and compliance obligations.

Territory application

Stamp Tax

is applicable on all acts and operations provided in the Stamp Tax Table that have been incurred in Angolan territory.

The following acts and operations a

re also subject in Angolan territory:  documents, acts or contracts issued or entered outside Angola, if presented in

Angola for any legal purpose

 credit operation

s

realised and guarantees granted by credit institutions or other entities located in and outside Angola to Angolan resident entities  interest, commissions and other considerations for financial services charged

by credit institutions or financial entities located in and outside Angola provided to Angolan resident entities

 insurance policies taken outside Angola whose risk exposure is located in Angola

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Taxable Operations

Type of operations Stamp Tax rates On Receipts

Stamp Tax

on receipts (

in cash

or in kind) is still applicable.

The rate of Stamp Tax for receipts remains

at

1%.

Financial operations

Stamp Tax

is applicable to financial operations, such as credit utilisation (and not only open credit accounts) and bond guarantees, interest and commission charged by financial institution, as well as foreign withdraw

al

s, foreigner public debt bonds, foreign notes and coins.

As a general rule,

Stamp Tax

is due for the entity that provides the credit and charge for the interest and commissions being then charged to the borrower or the interest / commissions debtor.

Credit facilities are subject to Stamp Tax on the utilisation of such funds and depending on the period – the rates of Stamp Tax will vary from 0.3% to 0.5%.

For r

egular credit, bank overdrafts or credit

where

the period is not determined, Stamp Tax applies at a rate of 0.001% Housing credits are subject to Stamp Tax at a rate 0.001%. Financial leasing on real estate and financial and operational leasing of tangible assets (maintenance and technical assistance included) are now subject to Stamp Tax at a rate of 0.3% and 0.4%, respectively.

Real Estate Operations

Stamp Tax is due on a paid acquisition of real estate by the acquirer.

Stamp Tax is also due on letting and sub

-letting, as well as on financial leasing of real estate,

except

when the leasing is for

a

permanent dwelling, which is exempt from Stamp Tax

.

It is now clear in the law that tenants and sub

-

tenants are liable to Stamp Tax on letting and sub

-

letting

Stamp Tax applies on the acquisition of real state at a rate of 0.003%.

Stamp Tax applies on

the

registration of letting and sub

-letting contracts at a rate of 0.004%

Corporate Operations

Stamp Tax is due on the initial or increase of share capital, whether made in cash or in kind.

On share capital and increase of share capital Stamp Tax applies at a rate of 0.1%

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Insurance

Insurance provided by

n

ational companies

is

subject to Stamp Tax, being the tax settled by the insurance company cost of insured person.

The commissions generated in the insurance mediation business will also

be

subject to Stamp Tax.

P

remiums and commission related

to

life insurance products, insurance against accidents at work, health insurance and agricultural processing and livestock insurance

are exempt from

Stamp Tax.

The Stamp Tax applies of the amount of premium paid and rates may vary from 0.1% to 0.3% depending on

the

policy’s nature. Commissions for mediation are subject to Stamp Tax at a rate of o.4%.

Other operations

In addition

to the operation

s

referred

to

above, the new

t

able also refers the Stamp Tax applicable to written agreements, financial and operation leasing in tangible assets, custom operations, cheques, lending, civil deposits, gambling, licenses, traders

’

books, deeds, report, credit bonds, transfer of business among other acts.

Other Stamp Tax applicable: Transfer of industrial or

agricultural business – Stamp Tax

applies

at a rate of 0.2%. Stamp Tax of 1% on

the

import value.

Exemptions

The new

Stamp Tax

Code provides for several exemptions namely:

 credit granted for

a period of up to a maximum of five days

, micro-credit, credit related

to

young accounts and old age accounts, and others of

a

similar nature that does not exceed the amount of AKZ 17,600

each month

;

 credit derived from credit card utilisation, when the reimbursement is made free of interest, according to the terms of the contract

 credits related with exportation, when duly documented with the respective Custom Clearance

 amounts due on

the

mortgage

for

the acquisition of

a

permanent dwelling  on interest and commissions charged on financial operations such as young

accounts, old age accounts and credits related

to export under

the terms mentioned above

 interest from Treasury Bonds and Angolan Central bank notes

 commissions charged for subscriptions, deposit and withdraw

al

from units of investment funds , as well as the charges from the pension funds

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 credit operations (including interest) for periods not exceeding one year, provided these are obtained exclusively to cover treasury needs, when realised between shareholders and entities in which a direct capital shareholding not lower than 10%

is held

and which has remained in their ownership for a year (consecutively), or since the incorporation of the respective entity

 loans bearing the characteristics of shareholder loans, including the respective interest, made by shareholders to the company in respect of which an initial period not shorter than one year is stated and no reimbursement is occurred before the end of that period

 treasury management operations, carried out between companies within the same group

 Insurance premiums and commissions related

to life insurance

, work accidents, health, agriculture and livestock insurance products

Payment and compliance

The payment should be done through a DLI (Documento de Liquidação de Impostos) including a list,

according to the

applicable section of the Stamp Tax Table, of all Stamp Tax paid. Stamp Tax is paid by

the

end of the following month. Any excess of

Stamp Tax

paid could be compensated in the following month, only if related

to

the same section of the

Stamp Tax

table.

A

Stamp Tax

annual return should be submitted

by

the end of March of the following year, disclosing all the acts, contracts and operations that have been liable to Stamp Tax.

The accounting records should also be organised in a way that is possible to identify the Stamp Tax paid, according to the section in the Stamp Tax table that the payment

relates

to.

Taxation is one of the crucial aspects of a

modern and efficient

management. Access to specialized and

innovative advisory services is an

essential factor in the prevention of

contingencies, in alternative tuning and

strengthening competitive capacity not

affected by tax inefficiencies

Angolan Tax Reform

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Consumption tax

The

Presidential

Decree

Law 7/11 of 30 December 2011 was recently published. This new law introduces some changes

to the

Consumption Tax Code approved by Decree

L

aw 41/99 of 10 December

,

and

introduces an

exemption

principle

for local production.

The Decree entered into force on the 1 January 2012.

What has changed?

One of the major changes relates

to

the introduction of new services liable to this tax and the

associated

procedures for assessment and payment.

A

nother

relevant change is also introduced with regard to local production

. The

law

states that any exemption granted

to

the importation of goods will also be applicable to the local production of the same goods.

Finally the diploma clarifies that

responsibility for

Consumption Tax payment and any declarative obligations lies with the producer, supplier of goods or service provider

,

rather than the final consumer. However

,

the

C

onsumption

T

ax, in practice, increases the final price attributed to the goods produced or services rendered.

Taxable services

The following services are now subject to Consumption Tax:

Type of Service Applicable

IC rate Lease of areas designated for collection and parking of motor

vehicles

5

Leasing of machinery and other equipment

s

, as well as work

carried out in

tangible assets

10

Leasing of areas used for conferences, colloquiums , seminars,

exhibitions, showrooms, advertising or other events 10 Consultancy services, namely legal, tax, financial, accounting, IT, engineering, archictecture, economics, real estate, audit service

s

and legal services

5

Photographic services, film processing and imaging,

IT

services and construction of web sites

5

Port, airport and custom agent services 5

Private security services 5

Tourism and travel services promoted by travel agencies or equivalent tour operators

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Canteen, cafeteria, dormitory, real estate and condominium

management services 5

Access to cultural, artistic and sport

ing

events 5 Road, sea, train and air transportation of cargo and containers,

including the management of

warehouse

s

related

to this

transport, and passenger transportation, if provided in Angolan territory

5

For all the services mentioned above the tax compliance obligations

are now the

responsibility of

the service providers. However

,

if the service providers are non-resident entities in Angola, the obligation will revert to the non-resident entities acquiring the services, if

they

are liable to

pay

Corporate Income Tax.

The Consumption Tax rates have also changed for some services already subject to

the tax

, as follows:

Type of Service Applicable

IC rate

Hotel

management

and similar services 10

Telecommunications 5

Water supply 5

Electricity supply 5

Assessment and Payment

The assessment of Consumption Tax should be made by the producer, supplier of goods or service provider when the invoice or equivalent document is issued by

either the

tax resident entity or the acquirer, as described above.

The assessed amount of

Consumption Tax can be added

to

the invoice or

equivalent document

and

collected from the acquirer

who is

purchasing the goods and services subject to tax.

Angolan Tax Reform Be prepared PwC 17

PwC contacts

Pedro Calixto Partner Tax T: +244 222 311 166 M: +244 923 418 127 pedro.calixto@ao.pwc.com Jaime Esteves Partner Tax T: +244 222 311 166 jaime.esteves@ao.pwc.com Eduardo Paiva Director Tax T: +244 222 311 166 M: +244 923 223735 eduardo.paiva@ao.pwc.com

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