Angola payroll and tax overview.

Bordering the Democratic Republic of Congo to the north and Namibia to the south, Angola lies on continental Africa's southwest coast, on the shores of the south Atlantic Ocean. Angolan territory is diverse, including sub-Saharan deserts, tropical rainforests, and grassland, while its climate varies from cool and dry, to hot and humid during monsoon season. Oil is the cornerstone of Angola's economy but important industries include mining, agriculture, fishing, and tourism. In 2019, Angola’s GDP was around $208 billion and with recent government reforms taking effect across the country, the Angolan economy is starting to diversify. A 2019 review by the IMF confirmed that Angola’s economic program was on track, prompting the approval of a $247 million disbursement to aid ongoing consolidation and diversification of the economy. Angola is a member of the UN, OPEC, the African Union, and the Southern African Development Community. In 2019, Angola was ranked 177 on the World Bank’s Ease of Doing Business Survey.

Why Invest in Angola?

With the government taking steps to diversify the economy, opportunities in Angola are becoming more attractive to foreign businesses - and have made the country the fourth-largest investment destination in Africa...

• Oil market: Although prices have fallen, oil remains important to the Angolan economy and an attractive target for foreign investors. As the second-largest producer in the sub-Saharan region, the Angolan government has taken steps to protect the oil industry during periods of downturn and continues to explore ways to enhance the financial potential.
• Economic advantages: Economic diversification efforts are boosting non-oil industries. Specific financial incentives (such as tax breaks) have been introduced for a wide range of sectors including agriculture, construction, textiles, fishing, energy, education and tourism.
• Tech potential: Tech industries in particular offer attractive opportunities for foreign investment: around 50% of Angola's population is under 20 years old, with an appetite for consumer technology. Sustainable tech is also gathering momentum: the engineering, farming and renewable energy sectors attract interest from many African nations.
• Government support: Government-backed financial bodies, like the Fundo Activo de Capital de Risco Angolano (FACRA) are helping international businesses partner with Angolan counterparts to kick-start a range of projects. Government entities are able to offer the benefit of their expertise and experience in the marketplace to boost chances of success.
• Industrial incentives: In addition to tax exemptions for the purchase of land and the construction of industry premises, customs tax exempt status is also granted on the import of industrial equipment, goods and raw materials.

Foreign Direct Investment in Angola

Angola is very familiar with foreign investment and the oil and gas sector has invested in Africa’s second largest oil producer for a number of years. However, companies considering investing in Angola should not think that opportunities begin and end with oil and gas related enterprises.

Many investors are unaware of Angola’s rich agricultural history. Prior to the civil war, Angola was a key exporter of numerous agricultural products, including coffee, maize, tobacco and rice and in the early seventies, Angola became the world’s fourth largest coffee exporter.

Angolan real estate requires the least explanation, and as a result of the oil and gas industry, real estate prices have continually increased over the years. Though the high towers and condominiums will bring big returns, the greatest opportunity exists in lower-cost housing. About a third of the country’s population lives in the capital and as this number grows, the low-cost housing demand in Luanda will only increase.

Registering a Company and Establishing an Entity in Angola

A company is required to have a legal entity established in order to carry out business in Angola with no legal restrictions, including processing a payroll. A foreign company has two options:

1. Register a branch
2. Incorporate a local company

Foreign workers are required to hold a visa in order to be able to work in Angola, with visas only being granted to foreign workers of companies incorporated or having branches registered in Angola.

Setting up of a Legal Structure in Angola

This should be the case if the company activities continue for a considerable period of time and the company decides to keep its personnel in the country for more than one year (normally a permanent establishment is triggered if the person stays in the country for more than 90 days in a 12-month period). In this case, the company will have to register either a branch or a subsidiary in Angola, for the purpose of developing activities.

Private Investment Regulations in Angola

In terms of foreign investment, there are no differences between a branch and a local company as both qualify as Private Investment Operations under the Private Investment Law, which was recently changed. Law nº 10/2021, of April 22nd introduced some changes to the previous Private Investment regime approved by Law nº 10/2018, of 26th June (“PIL”).

This new Law (Law nº 10/2021) establishes the return of the contractual regime to the private investment. In this context, the current private investment regimes are the following:

1) Previous Declaration Regime;

2) Special Regime;

3) Contractual Regime.

The Contractual Regime is applicable to the projects of any activity sectors and operates through a negotiation process of the conditions to implement the project, of the incentives and facilities to grant within the private investment contract.

The benefits of the current three investment regimes are the ones that result from the Tax Benefits Code in force. On the other hand, the benefits that were associated to the previous and special declaration regime, and that were listed on Law nº 10/18, of June 26th, were revoked.

The investors are now exempted from obtaining provisory licenses and other authorizations of the government authorities, being enough to present the Private Investment Registry Certificate. In the cases in which it is mandatory to obtain legal opinions, approvals, authorizations, or in cases in which it is mandatory the practice of others acts or formalities, it is established the rule of the tacit grant.

Concerning the dividends transfer abroad, the same is no longer dependent on the complete execution of the Private Investment Project, being sufficient that the investor ensures the payment of the taxes due and has available the mandatory reserves needed for that purpose.

Also, the recourse to internal credit by external investors is no longer limited by the implementation of the investment project.

The benefits and facilities granted by the Private Investment Law consider, apart of the priority sectors of activity and development zones, the amount of the investment as well as the jobs created.

Finally, this new Law enables that projects within activities out of the scope of the Investment Law, may be regularized by a mere registry near the competent entity, but in this case, the project will not benefit from any tax incentives.

Documents Required to Register a Branch or to Incorporate a Subsidiary in Angola

The following documents must be provided to register a branch or to incorporate a subsidiary in Angola:

1. Certificate of Incorporation
2. Copy of Articles of Association/ By Laws
3. Board minutes stating the decision to set up a legal structure in Angola
4. Power of Attorney authorizing a Representative to act on behalf of a company for incorporation/registration purposes
5. Declaration of the Angolan embassy in the company’s country of incorporation stating that the company is duly incorporated in accordance with the laws of the country

All documents required for the registration process must be:

• Translated into Portuguese;
• Legalized by a Notary Public; and
• Certificated by the Angolan embassy in the company’s country of incorporation.

The main steps for registration of a legal structure are as follows:

1. Obtain Central Company Name Registry’s approval to use investor’s corporate name in Angola;
2. File Application Form with ANIP (National Private Investment Agency) (not required if registered outside the Private Investment Law);
3. Obtain BNA license to import Investment Funds;
4. Publication in the official gazette of translated Articles of Association for Foreign Company;
5. Tax Registration;
6. Provisional Commercial Registration;
7. Open a Bank Account;
8. Definitive Commercial Registration;
9. Statistical Registration;
10. Obtaining commercial (“industrial”) Operations Permit (“alvará”), if required;
11. Social Security Registration, if applicable;
12. Import / Export license, if applicable.

For the setting up of the local structure, the steps are: registration of the name, drafting of the articles, organize the public deed followed by the statistical, tax and commercial registration and the publication in the official gazette. The timeframe is roughly four working days.

Business Banking in Angola

It is mandatory to make payments to both employees and the authorities from an in-country bank account.

Banks are open to the public from 08:00 – 12:30 and 14:00 - 15:00 Monday to Friday. Some banks are open on Saturdays from 08:00 – 12:30.

Working Days and Working Hours in Angola

The working week in Angola is Monday to Friday. The maximum number of hours per week as per the Angolan labor law is 44 hours. Commercial offices are open Monday to Friday from 08:00 - 17:00. Some offices are open on Saturday mornings.

Basic Facts about Angola

General Information

Angola is a southern, sub-Saharan African state located on the continental west coast. Angola shares borders with the Democratic Republic of Congo to the north, Zambia to the east, and Namibia to the south. Although civilisation has existed in the territory which became Angola since prehistory, the country’s recent history was shaped by Portuguese colonisation, which began in the 16th century. Angola achieved independence in 1975, but experienced a period of political turmoil until 2002, when it emerged as a stable presidential republic. With vast natural resources, Angola has grown as a destination for international business and is amongst the fastest growing economies in the world. Covering approximately 1,246,700 square kilometres of desert, tropical forest and grassland, and with a population of over 25 million, it is the 23rd largest country in the world.

Full Name: The Republic of Angola

Population: 32.87 million (World Bank, 2020)

Capital: Luanda

Major Languages: Portuguese (Official), Umbundu, Kimbundu, Kikongo

Monetary Unit: 1 Kwanza = 100 Lwei

Main Exports: Oil, Diamonds, Minerals, Coffee, Fish, Timber

GNI Per Capita: US $ 6,380 (World Bank, 2019)

Internet Domain: .ao

International Dialling Code: +244

Angola income tax rates for individuals (resident and non-resident) are levied on a sliding scale at rates which vary from 10% to 25%.

Residence: Residence is not defined in Angola Tax Law; all individuals are taxed irrespective of their residence.

Taxable Income: Individuals are subject to a separate tax on income from business, employment, investments and property. Employment income is broadly defined and includes Benefits-in-Kind.

Capital Gains: Capital Gains obtained by an individual are only taxable when realised as part of a business activity.

Deductions and Allowances:

• Vacation and Christmas allowances are subject to PIT.
• Severance payments, as well as the total amounts paid due cashier allowances and house rent allowances are subject to PIT;
• Accidental services, provided by non-resident individual suppliers, are subject to a tax rate of 15%.

Tax Rates: Employment income is taxed at progressive rates up to a maximum of 25%. The withholding tax on investment income is a final tax for individuals. Taxable capital gains are included in business income and taxed at the standard corporate income tax rate of 25% for unincorporated businesses. Professional fees (e.g. self-employment) are subject to withholding tax at an effective PIT (personal income tax) rate of 6.5%.

Tax returns must be submitted to authorities no later than the end of the month following the one it respects to.

Social Security is mandatory for all employees working in Angola who are Angolan nationals or foreign residents.

Expatriates are not required to make their social security contributions in Angola, provided they are covered by a similar social security system in their home country.

Social security contributions are payable monthly by employers and employees to the National Social Security Institute (“Instituto Nacional de Segurança Social – INSS”).

All allowances are subject to social security contributions, except the following ones:

(i) Vacation Allowance;

(ii) Social benefits paid by the employers within the scope of Mandatory Social Protection (eg. Family allowance);

(iii) The amounts corresponding to the subscription or participation made by employees and employers of complementary social protection arrangements as foreseen in specific legislation.

The social security contribution payable by the employee amounts to 3% of the Basic Salary plus any other components subject to SS deductions.

The employer must withhold the contribution due from their employees and pay the amount which has been withheld to the Authorities. The rate for employers is 8% of employees’ Basic Salary plus any other components subject to SS deductions.

In total, the employer must submit to the Angolan Social Security Authorities a total of 11% as contributions.

The employer is required to withhold the employee’s contribution and pay both contributions by the 10th of the month following the one social security respects.

Reporting Tax in Angola

PIT (personal income tax) is paid through the withholding tax mechanism operated by the employer on a monthly basis and submitted before the end of the following month.

The employer should also comply with the Mod2 (Annual PIT Tax Return) which must be submitted to the tax authorities by the end of February of the following year (last working day). This can be submitted in-country by the payroll provider on behalf of the customer. These forms require the customer’s signature and stamp.

New Employees in Angola

In Angola, the payroll and registrations of a new employee are the responsibility of the employer. If an expat employee needs to be included in the local payroll, a local labour contract must be registered with the labour entity known as MAPTSS (Ministério da Administração Pública, Trabalho e Segurança Social), and this registration has a fee associated of 5% of the salary declared on the local labour contract.

In principle, an expat employee will be exempted of Social Security assuming he is covered by a similar system in their home country.

Angolan nationals should be included on the payroll and registered with Social Security (SS) entities.

Unless the employee proves their contribution to another social security scheme, all employees must register with the National Social Security Institute and contribute.

Expatriate employees are required to contribute only if the employee has a Residency Permit.

All new employees must be registered within the 30 days of commencing the employment.

The following information and documents are required to be provided by every new employee:

• ID card (Angolan nationals only)
• Passport (expatriate employees only)
• Work Visa (expatriate employees only)
• SS card (only applicable to expat employees in certain circumstances)
• Angolan Taxpayer Card

Leavers in Angola

Payment for leavers is to be made with the employee’s last payslip and the leaver must be de-registered from social security.

Payroll in Angola

Beyond ensuring employees are paid accurately and on time, the primary duties of payroll departments in Angola are to ensure companies comply with the country's tax rules and regulations. Specifically, this involves paying employees' Individual Income Tax (IIT), employee and employer social security, consumption (sales) tax, business tax and withholding tax (WHT). Under article 22º of the PIT Code, payroll reports must be kept for a minimum of five years, the records can be kept electronically as long as the records can be printed out on request. It is not legally acceptable in Angola to provide employees with online payslips.

In practice, payroll in Angola may be delivered internally, or outsourced to a third party locally, or remotely (via a foreign company). Foreign companies setting up in the country will need to incorporate and join the Angolan company registry if they wish to administer payroll internally. Foreign companies may engage a global payroll provider to help ensure compliance with Angola’s tax laws as they deliver pay to their employee population working within the country’s legislative territory.