Angola Individual Tax Guide

Angola

Luanda

EY

Presidente Business Center

Largo 17 de Setembro, No. 3

3rd Piso — Sala 341

Luanda

Angola Executive contacts

Rui Henriques

+244 927-561-851

Email: rui.henriques@pt.ey.com

Milton Chantre Melo +244 936-725-788 Email: milton.melo@pt.ey.com

Anabela Silva +351 936-079-620 Email: anabela.silva@pt.ey.com

Law No. 18/14 of 22 October 14 contains the new Personal Income Tax Code, which entered into force on 1 January 2015. The Personal Income Tax Code has been subject to amendments through Law No. 9/19 of 24 April 2019, Law No. 28/19 of 25 September 2019 and Law No. 28/20 of 22 July 2020.

Because of the COVID-19 pandemic, temporary measures regarding visas have been put in place. As a result, readers should seek professional advice before traveling to Angola.

A. Income tax

Who is liable. Individuals receiving work-related income and/or business and professional income in Angola are subject to per sonal income tax if the compensation is paid by an Angolan entity or if the respective cost of such income is allocated to an entity with a head office, residence or permanent establishment in Angola. Angola applies a pure source-based system for indi vidual taxation.

Groups of taxation. The new tax code introduced the following three groups of taxation:

• Group A: Income derived from employment and paid by employers under the General Labor Law or civil servants regime, as well as remuneration earned by members of statu tory boards

• Group B: Income derived from self-employment (related to the activities included in the list attached to the Personal Income Tax Code, which was expanded by Law No. 9/19 and Law No. 28/20)

• Group C: Income derived from industrial and commercial activities

Income subject to tax

Group A – Employment income. Taxable income includes all income considered to be salaries, commissions, fees, gratifica tions (broadly, these are bonuses not included in base salary that reward employees for good performance), allowances, premiums,

allowances or ancillary forms of remuneration, such as payments in kind. These types of income are subject to tax, regardless of whether they are attributed to a contractual obligation and regard less of their frequency or computation method.

In addition, the following types of income are also subject to tax:

• Shortage allowances, daily entertainment allowances and travel allowances

• Remuneration paid to shareholders as compensation for work performed for the company

• Remuneration of a company’s statutory board members

• Undocumented asset increases and expenses

• Remuneration payments by political parties and other organiza tions with a socio-political purpose

The following types of income are not included in taxable income for personal income tax purposes:

• Social payments made by the National Social Security Institute

• Shortfall allowances (per diem, representation, travel and displacement allowances attributed to civil servants) not exceed ing the limits established for public officials

• Family allowances

• Social security contributions

• Subsidies paid to national citizens with disabilities

• Daily allowances, for meals, up to AOA30,000

• Daily allowances for transportation, up to AOA30,000

• Reimbursement of expenses incurred by employees of entities subject to Industrial Tax (corporate income tax), if documented as per the Industrial Tax Code and ancillary diplomas (Legal Regime for Invoices and Equivalent Documents) and the Angola General Tax Code

Group B – Self-employed income. Self-employed individuals are taxed on 100% of their income if they do not have organized accounting records. For individuals with organized accounting records, a deduction from taxable income can be made up to 30% of the costs incurred. Income that is paid by corporate entities or individuals with organized accounting records (subject to withholding tax) can be deducted from the total taxable base.

Group C – Industrial and commercial activities’ income. Taxpayers with organized accounting records can assess the tax able base considering the rules applicable to the Industrial Tax (corporate income tax). If Group C taxpayers do not have accounting records, no deductions from the taxable income can be made.

Rates. Income tax rates applicable to taxable employment income derived by residents and nonresidents are set forth in the follow ing table.

Taxable

Rate on

Taxable income

Tax on lower Rate on Exceeding Not exceeding amount excess AOA AOA AOA

300,000 500,000 49,250

500,000 1,000,000 87,250

1,000,000 1,500,000 187,250 21 1,500,000 2,000,000 292,250 22 2,000,000 2,500,000 402,250 23 2,500,000 5,000,000 517,250 24 5,000,000 10,000,000 1,117,250 24.5 10,000,000 2,342,250 25

For income subject to withholding tax assessed to Group B and Group C taxpayers, the withholding tax rate is 6.5%.

Income not subject to withholding tax assessed to Group B and Group C taxpayers is liable to tax at a rate of 25%.

Income earned by nonresident service providers covered by Group B or Group C is subject to withholding tax at a 15% rate.

B. Other taxes

Inheritance and gift tax. Inheritance and gift tax is payable by heirs and donees. This tax is levied on gratuitous transfers of movable assets and rights located or transferred in Angola. Tax rates range from 0.5% to 2%, depending on the value of the estate or the gift and on the relationship of the heir or donee to the deceased person or donor.

Property tax on rent income. Property tax is payable annually by the beneficiary of rental income from rented property or by the owner, usufructuary or beneficiary of surface rights of unrented property. The tax is imposed at the following rates:

• 25% of 60% (which results in a final rate of 15%) of the rental income from Angolan rented property

• 0.5% of the patrimonial value of unrented properties (proper ties valued above AOA6 million)

• AOA5,000 for properties with patrimonial value more than AOA5 million to AOA6 million

Value-added tax. Value-added tax (VAT) follows the assessment/ deduction mechanism used in European Union (EU) countries, with a standard rate of 14%, except for certain VAT reduced rate (5%) and zero-rated items (specific basic goods).

Property transfer tax. Property transfer tax is levied at rate of 2% with respect to transfers of immovable property, including longterm leases (20 years or more). Stamp duty at a rate of 0.3% also applies to these transactions.

C. Social security

Salaries and additional remuneration specified under the law are subject to social security contributions. No ceiling applies to the amount of remunerations subject to social security con tributions. The rates of the contributions are 8% for employers and 3% for employees.

Employees working transitorily in Angola are not required to make social security contributions if they can prove that they are covered by the social security system in another country.

Self-employed persons are subject to social security contribu tions based on a predefined monthly notional salary. The rate of the contributions is 8%, but it may be increased to 11% if addi tional benefits are covered.

D. Tax filing and payment procedures

The fiscal year in Angola is the calendar year.

Self-employed individuals must file tax returns in February (Group B) and March (Group C) following the tax year-end.

Income taxes on employees are withheld by the employer under a Pay-As-You-Earn system, and employees are not required to file returns. The employer must file, by the end of February of the year following the tax year, a tax return, indicating the name and per sonal details of the employees, their remuneration and corre sponding taxes withheld.

Tax on income from capital is generally withheld by the payee entity, unless the entity is not resident or established in Angola. Otherwise, the income recipient is responsible for paying the tax.

Landlords must also file Property Tax Form M/1 in January. Payments (whenever the rents are not subject to withholding tax) must be made in two installments, which are payable in January and July. Alternatively, a request may be presented to the tax administration to make the payments in four installments, which are payable in January, April, July and October.

E. Tax treaty

Angola has entered into double tax treaties with Portugal and the United Arab Emirates. There are mechanisms in place for the treaty to be applied, namely the legal forms that must be com pleted by the tax administration in Angola, as well as the forms required to nominate a fiscal representative in Angola.

F. Visas

Law No. 13/19, of 23 May 2019, contains the new legal regime for foreign nationals in Angola. This new law revoked the prior Law No. 2/07 of 31 August 2007. In June 2020, the regulation for Law No. 13/19 was approved by Presidential Decree No. 163/20, of 8 June 2020, which revoked the prior Presidential Decree No. 108/11, of 25 May 2020.

In line with the new legal regime for foreign nationals in Angola, various types of visas may be granted to foreign nationals who intend to come to Angola. The type of visa depends on the reason and period of stay. The most common visas of which foreign nationals should be aware are described below.

The former Ordinary Visas, which were originally granted to foreign nationals for business or family reasons, were replaced by Tourism Visas, which were already in place for other reasons. Under the new regime, the Tourism Visas are granted by Consular Missions at the applicant’s country of origin or residence, for business prospection or family reasons and for engaging in scien tific and technologic activities, as well to those foreign nationals who intend to stay in Angola for recreational, sporting or cultural activities. Tourism Visas allow its holder to stay in the country for

30 days, extendable twice for the same time period. Tourism Visas do not allow their holders to perform remunerated activities in the country, for which a Work Visa is required, or apply for residence.

Short-Term Visas are granted for urgent reasons, allowing its holder to stay in the country for 10 days, extendable once in Angola. Some countries have their own specificities regarding Short-Term Visas. Short-Term Visas do not allow their holders to perform remunerated activities in the country, for which a Work Visa is required, or apply for residence.

Investor Visas, which replaced the Privileged Visas, are granted to foreign investors, representatives or proxies of investing com panies to implement and execute investment projects in Angola, under the Private Investment Law. Investor Visas are issued for multiple entries for two years and are extendable for the same time period while the investment project is being implemented. Under the new regime, these visas are granted by the authorities in Angola.

Temporary Stay Visas, which are granted for 365 days, extend able for the same time period, until the end of the term of the reason that justified the visa, may be granted in the following circumstances:

• To accomplish missions within religious institutions or within nongovernmental organizations

• For scientific research, mobility or university extension

• To family members of study, medical treatment and work visa holders

• To family members of holders of valid residence permits

• To spouses of Angolan citizens

G. Work Visas

The appropriate visa allowing a foreign national to undertake remunerated activities in Angola is the Work Visa. The Work Visa is granted for 365 days, extendable for equal time periods until the end of the term of the employment agreement that justified the visa. In general, the Work Visa must be applied for at the Angolan Consulate or Embassy in the applicant’s country of origin or residence. Before applying for a Work Visa, a favorable opinion from the entity overseeing the sector of activity in Angola is required.

The Work Visa does not allow its holder to establish residence in Angola.

H. Residence visas (and/or permits)

Residence permits are granted to foreign nationals that intend to establish residence in Angola, provided that they meet the requirements imposed by the Angolan law. The application for a residence permit may include spouses, underage children and any dependents of the applicant who have disabilities.

The following residence permits may be granted:

• A Temporary Residence Card, granted to foreign nationals with authorization to establish residence in Angola. It allows the holder to establish residence for two years and is extendable for equal time periods.

• A Permanent Residence Card, granted to foreign nationals resi dent in the country for more than 10 consecutive years. It is valid for five years and is extendable for equal time periods, without limitation.