Angola

VAT was introduced in Angola on 1 October 2019 with a general regime for taxpayers with a turnover exceeding USD 250,000, excluding taxpayers with a lower turnover. Also a transitory regime up to 31 December 2020 for taxpayers falling on the general regime that were not prepared to meet all VAT obligations under the general regime.                     

The transitory regime applied automatically to all but specifically listed taxpayers, and such taxpayers' adherence to the VAT general regime depended on meeting specific conditions and acceptance by the Tax Authorities. Until 31 December 2020 most SMEs were included in the transitory regime.

As anticipated, Angolan VAT does not yet deliver the intended economic neutrality and the co-existence of the general and transitory regimes does not help and causes evident competitiveness issues in the private sector players.

Due to its complexity, VAT's success - economic neutrality and to serve as a catalyst for economic formalization - is heavily dependent on a capable IT and Communication infrastructure on one hand, and on taxpayers being interested and able to comply with minimum compliance requirements.

These conditions are yet to be met in Angola to a degree that might meaningfully roll out the general VAT regime to a significant number of SMEs.

In the 2021 Budget the Government introduced a few changes to the VAT to respond to taxpayers' needs without jeopardizing collections while mitigating competitiveness issues resulting from the co-existence of different VAT regimes.

From 1 January 2021, VAT on importation changed so as to apply on CIF plus import duties; the VAT rate was reduced to 5% on a few, mostly agricultural goods; and gambling and betting activities are subject to VAT.

The most interesting and impacting changes are however the following:

• setting a lower VAT exclusion threshold
• introducing a simplified VAT regime
• introducing stamp duty on VAT exempt transactions
• partial VAT upfront payment on electronic payments

The VAT exclusion threshold was reduced from an annual turnover of USD 250,000 to AOA 10 million, USD 15,000. Taxpayers circa may opt out of the exclusion to join the normal regime. Taxpayers falling into the VAT exclusion regime pay a 1% stamp duty on collections.

A VAT simplified regime replaced the transitory regime, co-existing from 1 January 2021 with the VAT normal regime. Most taxpayers with an annual turnover or importing up to AOA 350 million, circa USD 550,000, fall under the simplified regime. Taxpayers may opt out of the simplified to the normal regime. A taxpayer in the simplified regime charges VAT at a reduced 7% rate and is able to offset 7% of input VAT; the remaining 93% of input VAT is a corporate income tax cost.

A 7% stamp duty is payable by taxpayers falling under the simplified regime on any VAT exempt transactions, while taxpayers of the general regime must pay this 7% stamp duty only when all transactions are VAT exempt. This stamp duty matter is of course under significant scrutiny, and there are indications that changes are to be introduced to clarify that the 7% stamp duty will not be due on VAT exempt transactions carried out by taxpayers of the general regime that may offset input VAT.

When payments are made electronically, a 2.5% deduction is made automatically by the financial institutions involved. This VAT withheld is then reported in the VAT return, or corporate income tax return in case of taxpayers in the VAT exclusion regime.

These changes are intended to widen the VAT base and collections, while intending to mitigate the competitiveness impact between companies that fall under the normal and simplified VAT regimes. 

This is an evolving reality so we suggest that you keep informed on progress.