Angola is the only member of the Southern African Development Community that has not yet implemented a tax like the value added tax to date. However, it plans to include a sui generis value-added tax (“VAT”) in the general state budget for 2019, which is scheduled to be implemented on July 1, 2019.
Currently, in Angola, there is a consumption tax on all products produced or imported in Angola, irrespective of the origin. It also applies to the consumption of water and energy, telecommunications services, services provided in the tourism industry, consultancy services (namely tax, legal, financial, accountancy, computers, engineering, architecture, economic and real estate consulting), auditing services and legal services, private security services and others.
Implementation of VAT
Inevitably, the implementation of VAT entails many challenges for the Angolan economy, among which we underline the following:
- Creation of a general, neutral and multi-stage tax
- Clear and transparent administration and implementation
- Implementation of an indirect taxation system to increase the competitiveness of the country’s economy
At the moment, the General Tax Administration (“AGT”) has made available for public consultation the law proposal of the “VAT” Code, which is expected to be approved soon. The entering into force of a tailor-made VAT will have an impact on the Angolan tax system, as follows:
- Increasing the taxable base → New rules related to the taxable event and chargeability
- New methods related to the deduction of the input VAT
- New exemptions and specific regimes (e.g. Oil Sector, Financial Sector, Real State Sector, among others)
- Introduction of a new rate and new rules to compute, assess and pay the VAT
- New tax rate (a standard VAT rate of 14% is proposed at the moment with nil rating on foodstuffs and other essentials)
- New accounting and reporting obligations
It is expected that the standard VAT regime will be gradually applied and mandatory for large taxpayers during the interim period of roughly two years (2019 and 2020), and optional for the remaining taxpayers that intend to apply the VAT regime.
In fact, remaining taxpayers will be covered by a simplified scheme, under which they will not assess VAT, being obliged to proceed with a quarterly payment on the amount of half of the VAT rate, e.g., 7% (=14% x 50%) of the sales received in such period.
Upon fulfilling certain requirements, taxpayers with a turnover exceeding USD 250,000 may apply for authorization to join the standard VAT regime.
As a consequence of the implementation of VAT in Angola, several legislative changes/ revocations are expected, such as the Legal Regime of Invoicing and Equivalent Documents requirements, the Regulation of Consumption Tax (Presidential Decree no. 3-A/14, dated October 21st), the Angolan Customs Tariff Code in the items related to Consumption Tax due on the customs operations (Presidential Decree no. 3/18, dated May 9th), Angolan GAAP (Decree no. 82/01, dated November 16th), among other legislation. All these legislative changes have already been drafted and are, at this date, under approval.
New regulations like Standard Audit File for Tax (SAF-T) and Certification of Accounting/ Billing Systems are also under approval and the implementation of VAT will be completely electronic.
Finally, a new tax – Special Consumption Tax (Imposto Especial de Consumo – IEC) – will be introduced for the following products: alcoholic beverages, tobacco, collector vehicles, petroleum products and others.