Angola – Taxation of international executives

Taxation of international executives

Taxation of international executives

  

Overview and Introduction

Personal income tax is levied on any income resulting from personal services rendered in Angola, by employed or self-employed individuals, who are directly or indirectly paid by an Angolan-based entity, irrespective of the citizenship, and residence status of the individual.

The official currency of Angola is the Angolan Kwanza (AOA).

For information on practical matters that employers and employees should consider with respect to an international assignment, please refer to the companion booklet titled Planning Your International Transfer, if available.

For the purposes of this publication, the host country/territory refers to the country/territory to which the employee is assigned. The home country/territory refers to the country/territory where the assignee lives when they are not on assignment.

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Income Tax

Tax Returns and Compliance

When are tax returns due? That is, what is the tax return due date?

Employees are not required to submit tax returns.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Angola?

Residents and Non-Residents

It is always the entity that pays the income (salary, wage, or fee) that must deal with the tax administration.

The paying entity must withhold the tax and subsequently remit it to the tax administration.

Personal income tax must be paid by the end of the month following the month in which the personal income was paid.

Tax Rates

What are the current income tax rates for residents and non-residents in Angola?

Residents and Non-Residents

Income tax table for 2021

Taxable income bracket

Tax rate on income in bracket

From AOA

To AOA

Percent

0

70.000,00

Exempt

70.001,00

100.000,00

10%

100.001,00

150.000,00

13%

150.001,00

200.000,00

16%

200.001,00

300.000,00

18%

300.001,00

500.000,00

19%

500.001,00

1.000.000,00

20%

1.000.001,00

1.500.000,00

21%

1.500.001,00

2.000.000,00

22%

2.000.001,00

2.500.000,00

23%

2.500.001,00

5.000.000,00

24%

5.000.001,00

10.000.000,00

24,5%

Over

10.000.001,00

25%

Tax Rates Applicable to Employees

Group A: includes the remuneration earned by employees (paid by an employer entity under an employment contract entered into in accordance with the labor law), public servants, as well as, the remuneration earned by members of the board.

Taxable income is determined by deducting from the gross earnings the mandatory contributions to Social Security and the remuneration components not subject or exempt from PIT – progressive personal income tax rates apply, with a maximum rate of 25%.

Tax Rates Applicable to Independent (Self-Employed) Professionals

Group B: includes the remuneration received by entrepreneurs/ freelance workers that falls under the activities’ list included as attachment to the PIT Code.

The taxable income resulting from income paid by individuals, companies or equivalent, who possess bookkeeping or are under the simplified accounts regime shall correspond to the actual value of the service. Otherwise, when the paying entity does not possess bookkeeping, the taxable income shall be based on the commercial records of the purchases and sales or rendered services made by the individual (in the absence of such records, the taxable income shall be established on the data known by the General Administration).

  • For taxpayer with bookkeeping, for the purpose of assessing the taxable base, are applied the general rules of the Industrial Tax Code. On the other hand, taxpayers under the simplified accounts method are entitled to deduct up to 30% of the costs they have incurred in.
  • A 6,5% flat rate applies to income subject to tax withholding, whereas the income not subject to withholding tax is subject to personal income tax at 25% rate.

Residence Rules

For the purposes of taxation, how is an individual defined as a resident of Angola?

An individual is considered resident of Angola if he/she stays therein for more than 183 days – either continuously or not -, during each year, or if he/she has, at December 31st of each year, an accommodation available in conditions where it can be assumed that it is his/her intention to keep it and use it as a place as his habitual abode.

Residency status is, however, irrelevant for taxation at the individual level.

In Angola the only criterion for the applicability of personal income tax is the source of the income. (Therefore, only income earned in Angola attracts personal income tax).

It should be noted that, in the event that an employee of a foreign entity renders services in Angola for a period of time exceeding 90 days, this may create a permanent establishment of the foreign entity in Angola. As a result, said foreign entity will be subject to all Angolan taxation.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/territory for more than 10 days after their assignment is over and they repatriate.

There is no de minimus number of days rule in Angola.

What if the assignee enters the country/territory before their assignment begins?

This does not make a difference as there is no de minimus number of days rule.

Termination of Residence

Are there any tax compliance requirements when leaving Angola?

Not applicable in Angola.

What if the assignee comes back for a trip after residency has terminated?

Not applicable in Angola.

Communication between Immigration and Taxation Authorities

Do the immigration authorities in Angola provide information to the local taxation authorities regarding when a person enters or leaves Angola?

Currently this is not happening. This could change any time if the authorities gain the capacity to do so.

Filing Requirements

Will an assignee have a filing requirement in the host country/territory after they leave the country/territory and repatriate?

Not applicable in Angola.

Economic Employer Approach

Do the taxation authorities in Angola adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Angola considering the adoption of this interpretation of economic employer in the future?

Yes.

De minimus Number of Days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

Not applicable in Angola.

Types of Taxable Compensation

What categories are subject to income tax in general situations?

As general rule, all types of compensation and benefits received by an individual for services rendered constitute taxable income subject to personal income tax including, but not limited, to the following:

  • salaries and wages benefits-in-kind
  • cost-of-living allowances
  • housing allowances.

Intra-group statutory directors

Will a non-resident of Angola who, as part of their employment within a group company, is also appointed as a statutory director (i.e., member of the Board of Directors in a group company situated in Angola) trigger a personal tax liability in Angola, even though no separate director's fee/remuneration is paid for their duties as a board member?

In case any part of their remuneration is paid/borne by an Angolan entity, taxation should arise in Angola.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Angola?

Yes.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Angola (i.e., as a general management fee where the duties rendered as a board member is included)?

Yes, in that case taxation in Angola should arise.

c) In the case that a tax liability is triggered, how will the taxable income be determined?"

The taxable income should correspond to the total income paid/recharge to the Angolan entity.

Tax-Exempt Income

Are there any areas of income that are exempt from taxation in Angola? If so, please provide a general definition of these areas.

The following items are expressively excluded from tax:

  • Social benefits paid by Social Security of a mandatory social protection nature
  • Family allowance paid by the employer entity up to the limit of 5 percent of the employee’s monthly base salary
  • Contributions to the social security
  • Salaries and other remuneration due, up to a limit of AOA: 100.000,00 (one hundred thousand
  • Kwanzas), to casual agricultural workers national and domestic workers workers, hired directly by individuals or individuals or families and registered with the Social Security
  • Allowance granted by law to national citizens with motor, sensorial and mental disabilities
  • Travel allowance
  • Meal allowance paid to the employees up to the total limit of AOA 30,000
  • Transport allowance paid to the employees up to the total limit of AOA 30,000
  • Reimbursement of business expenses incurred by employees of entities subject to industrial tax (or to other special tax regimes) provided that such expenses are duly documented

Expatriate Concessions

Are there any concessions made for expatriates in Angola?

There are no specific concessions for expatriates

Salary Earned from Working Abroad

Is salary earned from working abroad taxed in Angola? If so, how?

Income earned from working abroad is not subject to tax, unless it is paid or borne by the Angolan company.

Taxation of Investment Income and Capital Gains

Are investment income and capital gains taxed in Angola? If so, how?

Capital gains

Capital gains earned by an individual are not subject to taxation on personal income tax.

Dividends, Interest, and Rental Income

Dividends, interest and rental income earned by an individual are not subject to taxation on personal income tax.

Gains from Stock Option Exercises

The Angolan employment income tax code does not provide any specific criteria to calculate the related income neither when the taxable event takes place.

Nevertheless, under the applicable rules, compensation and benefits paid in cash or in kind by the employer to the employees are deemed as taxable income and it is the employer’s requirement to withhold the tax due and pay it to the tax authorities. In addition, please note that the benefits in kind should be computed by its cost for the employer entity.

That said, the income derived from stock options should be considered as taxable employment income subject to withholding provide that the related cost is recharged the Angolan entity.

Foreign Exchange Gains and Losses

Income is taxed at the conversion rate ruling at the date of payment of the salary. Principal Residence Gains and Losses

Not applicable.

Capital Losses

Not deductible.

Personal Use Items

Not considered for deduction. Taxable as a benefit if paid by employer.

Additional Capital Gains Tax (CGT) Issues and Exceptions

Are there additional capital gains tax (CGT) issues in Angola? If so, please discuss?

None.

Are there capital gains tax exceptions in Angola? If so, please discuss?

Pre-CGT Assets

Not applicable.

Deemed Disposal and Acquisition

Not applicable.

General Deductions from Income

What are the general deductions from income allowed in Angola?

Social security contributions.

Tax Reimbursement Methods

What are the tax reimbursement methods generally used by employers in Angola?

N/A

Calculation of Estimates/Prepayments/Withholding

How are estimates/prepayments/withholding of tax handled in Angola? For example, Pay-As- You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

PAYE.

This tax withholding is final.

Pay-As-You-Go (PAYG) Withholding Not applicable.

When are estimates/prepayments/withholding of tax due in Angola? For example, monthly, annually, both, and so on.

Monthly.

Relief for Foreign Taxes

Is there any Relief for Foreign Taxes in Angola? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on.

Angola signed a Double Tax Treaty with Portugal (however, the practical procedures for elimination of double taxation, namely, over employment income received were not yet defined). Otherwise, no foreign credit system exists as the PAYE system is final.

General Tax Credits

What are the general tax credits that may be claimed in Angola? Please list below.

None.

Sample tax calculation

This calculation assumes a married taxpayer resident in Angola with two children whose 3- year assignment begins 1 January 2019 and ends 31 December 2021. The taxpayer’s base salary is USD100,000 and the calculation covers 3 years.

 

2019 USD

2020 USD

2021 USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Car allowance

6,000

6,000

6,000

Moving expense reimbursement

20,000

0

20,000

Home leave

0

5,000

0

Education allowance

3,000

3,000

3,000

Interest income from non-local sources

6,000

6,000

6,000

Exchange rate used for calculation: USD1.00 = AOA308.31 (this same rate was used for the calculation for of the years 2019, 2020 and 2021).

Other Assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year, and accrue evenly throughout the year. Interest income is not remitted to Angola.
  • Car allowance
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.
  • The remuneration accrues evenly throughout the year.

Calculation of Taxable Income

Year ended

2019

2020

2021

Days in Angola during year

366

365

365

Earned income subject to income tax

 

 

 

Salary

30.831.048,03

30.831.048,03

30.831.048,03

Bonus

6.166.209,61

6.166.209,61

6.166.209,61

Cost-of-living allowance

3.083.104,80

3.083.104,80

3.083.104,80

Net housing allowance

3.699.725,76

3.699.725,76

3.699.725,76

Car allowance

1.849.862,88

1.849.862,88

1.849.862,88

Moving

expense reimbursem ent

0

0

0

Home leave

0

1.541.552,40

0

Education allowance

924.931,44

924.931,44

924.931,44

Total earned income

46.554.882,52

48.096.434,92

46.554.882,52

Other income

0

0

0

Total income

46.554.882,52

48.096.434,92

46.554.882,52

Deductions:

924.931,44

924.931,44

924.931,44

Total taxable income

45.629.951,08

47.171.503,48

45.629.951,08


Calculation of Tax Liability

 

2019 AOA

2020 AOA

2021 AOA

Taxable income as above

45.629.951,08

47.171.503,48

45.629.951,08

Angolan tax thereon

7.743.741,68

11.635.125,62

11.249.737,52

Less:

 

 

 

Domestic tax rebates (dependant spouse rebate)

0

0

0

Foreign tax credits

0

0

0

Total Angolan tax

7.743.741,68

11.635.125,62

11.249.737,52


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Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency Rules

Are there special residency considerations for short-term assignments?

None.

Payroll considerations

Are there special payroll considerations for short-term assignments?

None.

Taxable income

What income will be taxed during short-term assignments?

All income earned in Angola.

Additional considerations

Are there any additional considerations that should be considered before initiating a short- term assignment in Angola?

None in terms of tax.

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Other taxes and levies

Social Security Tax

Are there social security/social insurance taxes in Angola? If so, what are the rates for employers and employees?

Employer and Employee

 

Paid by

 

Type of Insurance

Employer Percent

Employee Percent

Total Percent

Social Security

8

3

11

Total Percent

8

3

11

The following aspects of social security are worth noting:

Social security is only mandatory for Angolan nationals and for individuals with a residency permit.

Subject to this condition, the employee and the employer must contribute 3 percent and 8 percent, of the employee’s gross salary, respectively.

The employer is required to withhold the employee’s contribution and pay both contributions by the tenth day of the month following the month in which the personal income was paid.

Gift, Wealth, Estate, and/or Inheritance Tax

Are there any gift, wealth, estate, and/or inheritance taxes in Angola?

Inheritance / gift tax:

  • up to 15% for transfers between spouses or in favor of descendants and ascendants,
  • up to 30% for other transfers. 

Real Estate Tax

Are there real estate taxes in Angola?

There is a property transfer tax (SISA) applied on the sale, exchange, and disposal of immovable tangible property.

Sales/VAT Tax

Are there sales and/or value-added taxes in Angola?

There is no value-added tax in Angola. However, there is a consumption tax.

Unemployment Tax

Are there unemployment taxes in Angola?

Not applicable.

Other Taxes

Are there additional taxes in Angola that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Capital gains

Capital gains earned by an individual are taxed under Capital Taxation Law (capital gains deriving from the sale of shares) at 10% rate.

Dividends, Interest, and Rental Income

Owners of properties are subject to property tax on the rents received at 25 percent.

Investment income (including dividends and interest) are taxed at 5%, 10% or 15% depending on the type of income received / underlying asset.

Payroll Tax

Employees are subject to a monthly payroll tax which is a final tax.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g., foreign financial accounts, securities) to the country/territory’s fiscal or banking authorities?

No.

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KPMG in Angola

Luanda
Jorge Tainha
KPMG Angola – Audit, Tax Advisory, SA Rua Assalto ao Quartel de Moncada,
15 – 2º Luanda – Angola
Tel. +244 227 280 101
e-Mail: jtainha@kpmg.com

KPMG Angola - Audit, Tax, Advisory, S.A., an Angolan company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The information contained herein is of general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Disclaimer

All information contained in this document is summarized by KPMG Angola - Audit, Tax, Advisory, S.A., an Angolan company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity, based on the relevant provisions in the Angolan Tax legislation, namely the Angolan Employment Income Tax Code of 2014, approved by the Law n.º 18/14, of October 22nd; the Angolan Social Security Base Law, approved by the Law 07/04 of October 15th; the Angolan Social Security regime, approved by the Presidential Decree n.º 227/18 of September 27th, the regulations there under, and the juridical and administrative interpretations thereof.