Companies and workers subject to “moderate” taxation in Angola

20 June 2011

Lisbon, Portugal, 20 June – Foreign companies and workers in Angola are subject to a “moderate” level of taxation and can access mechanisms to eliminate and reduce double taxation, according to law firms PLMJ (Portugal) and GLA (Angola).

According to lawyers Rogério Fernandes Ferreira (PLMJ), Bruno Xavier de Pina (PLMJ Angola) and Sílvia Espírito Santo (Gabinete Legal de Angola) a lack of double taxation agreements with countries such as Portugal, “is not, strictly and in particular area, a disincentive to investment.”

“Angola has a level of taxation that is marked by some moderation, considering that it is a state that receives investment despite having some precarious development indices in several areas,” they said in an article entitles, “Investing in Angola, Today,” published in the latest joint information bulletin.

In Portugal’s case, the “moderation of taxation levels in Angola,” is in addition to Lisbon’s efforts “not to burden companies with branches in Angola, which means that the lack of a double taxation agreement, in taxing income and dividends, is compensated in some way.”

In terms of dividends and services paid for from Angola to Portugal double taxation can be prevented, but there are more exposed areas, such as income from permanent workers as well as interest, capital gains, pensions and income of members of governing bodies.

Dividends in Angola are taxed at a rate of 10 percent “as they leave Angola,” when they are distributed to shareholders, and “on arrival” in Portugal, as profits for shareholders resident in Portugal, which could lead to double taxation.

In order to reduce this potential disincentive to internationalisation, in 2007 the Portuguese government created a mechanism that makes dividends from Portuguese-speaking African countries and East Timor equivalent to domestic dividends distributed by companies in Portugal.

“Counting the 10 percent rate on dividends in Angola and the possibility of corporate tax exemption in Portugal, we can conclude that the tax regime on dividends ends up being similar to what would result from a double taxation agreement,” said the two law firms.

The basic laws on Private Investment and Tax and Customs Incentives for Private Investment, neither of which can be applied to the oil, diamond and financial sectors, include incentives that depend on being part of one or more priority sectors, the location of the investment and the amount of investment involved.

In the case of contracts and/or services carried out in Angola by non-resident bodies the lack of a double taxation agreement may be compensated for, as they are taxed under the terms of a specific regime, which introduces taxation at source by companies that are “resident in Angola,” regardless of where accounts and residence are registered . (macauhub)