London, United Kingdom, 19 Dec – The Angolan government is due to introduce new tax codes in January, which are the central focus of reform of the country’s tax system, with the aim of increasing state revenues and boosting economic growth and increasing the efficiency of business activities.
Launched in 2010, the Executive Programme for Tax Reform (PERT) will involve introduction of three new laws: The General Tax Code, the Tax Process Code and the Fiscal Execution Code, according to the Economist Intelligence Unit in its latest report on Angola.
The aim of PERT, the British analysts said, is to “achieve much-needed modernisation of the legal framework and taxation system,” most of which has not been updated for decades.
“The government believes that the planned reform will have a positive impact on economic growth, through increased efficiency,” the EIU report said.
With a five-year duration, PERT also outlines the introduction of a Value Added Tax (VAT) and another tax on income, whilst the tax on corporate income is expected to remain at 35 percent, according to the EIU.
Whilst taxation of the oil and diamond sectors has always been a priority for Angola, non-oil activities have been paid less attention, particularly because they generated fewer revenues.
“A far-reaching tax reform can thus help to put public finances on bigger and more stable ground,” the EIU said.
But the process presents several challenges, the British analysts said. Firstly the fact that the informal economy still has a greater weight than the formal one, which means that it is not covered by any kind of taxation.
The housing market is also only, “sporadically regulated,” and consumer goods are often bought and sold on the black market.
Bringing these activities into the formal economy, the EIU said, “will partly depend on the creation of more jobs by the formal sector of the economy,” which so far has not be entirely capable of absorbing them.
Alongside this in November Angola approved its Budget for 2012, which is balanced and outlines expenditure of US$46.7 billion with a focus on the Health and Education sectors.
Economic growth in the next year is expected to be around 12.8 percent, which is a strong acceleration against the 3.4 percent posted in 2011, led by the oil sector, which is expected to grow by 12.5 percent benefitting from the positive oil and gas production trend, which is the country’s biggest source of revenues. (macauhub)