Angola: Investment incentives include tax exemption for up to 16 years for less developed regions

28 July 2008

Lisbon, Portugal, 28 July – A new Angolan law regarding private investment, aimed at attracting investment, grants important incentives, such as tax exemption of up to 16 years for investors that opt for the less developed regions of Angola, particularly Namibe (south).

Interest in Angola on the part of overseas companies runs across various sectors, but construction, relating to priority infrastructures, would receive the most incentives, said Rita Correia, partner at Miranda Correia e Associados law firm, speaking to the Semanario Economico in Lisbon.

”There are several contributing factors that are incentives, as well as the great openness of the National Agency for Private Investment (ANIP), which is very favourable to the construction sector,” said the lawyer.

According to their current level of economic development, the country’s various regions are classed, under the current law, as being type A, B or C: for example, Luanda is classed as A and therefore companies benefit from eight years of exemption from industrial tax; in Namibe, classed as a C zone, the period increases to double that, writes the Portuguese newspaper.

The same source points out that banking and real estate sectors do not benefit from this incentive, though the latter can have exemption from conveyance tax (for real estate still to be built), from custom duties and from investment tax.

The sectors most sought-after by investors in Angola are now finance, construction and real estate promotion.

According to a recent IMF report, Angola is currently fourth among sub-Saharan African countries in receiving the most foreign investment.

In 2007, private investment in the region reached US$50 billion; Angola received 5.2 percent of the total, behind Nigeria (29.4 percent), South Africa (18.2 percent) and Equatorial Guinea (9.1 percent).

In an explanatory note on the new Private Investment Law (LIP), seen by Macauhub, the Institute for the Formation of Capital Markets (IFMC) said that the system of incentives established in the law “offers investors credible guarantees of legal security and stability for their investments” as well as establishing “clear, simple and quick and procedures and rules for the respective processes of approval.

”LIP tried to establish equal treatment for foreign and national investors. For this, any person or organisation, resident or non-resident, irrespective of nationality is considered a private investor, thus moving away from residency criteria. (…) Given the great mobility of capital in the global world, the capital goes to where it is best remunerated. Thus it falls to the Government to create ways of attracting overseas capital to be invested in the country,” said the document.

Access to the incentives and support implies a minimum investment of US$50,000 for capital domiciled in the country, belonging to nationals; for capital domiciled abroad, whatever the nationality of the investor, the minimum is US$100,000.

According to the amount of investment, incentives and support for the investment operations will be subject to different procedural systems: if the investment is less than US$ five million, it is subject to a regime of previous declaration, subject to approval by the ANIP; if more than or equal to US$ five million, it is subject to a contractual regime and is dealt with by the Angolan Council of Ministers.

The law regulates access or formation of the investment, its protection and guarantee, as well as the transfer of profits, dividends, the results of the sale of the investment including appreciation of assets, compensations and royalties, or other income resulting from the indirect investments related to the transfer of technology.

LIP also establishes that the national investor (with capital domiciled in Angola) does not benefit from the “right to transfer dividends or profits abroad,” only being able to access incentives and support, a measure to avoid the loss of capital domiciled in the country.

Investors considered foreign benefit as much from repatriation of dividends and profits, as from acess to incentives and support. (macauhub)