In September 2018, Angola’s Legal Framework for Mandatory Social Security Protection and Social Security Contributions was passed by Presidential Decree No.227/18 - repealing the previous Decree No. 38/08. The framework targets Angola’s social security system, specifically, altering the contribution basis for employers and employees.
Although it won’t come into force until 26 December 2018, now is the time for employers to prepare their payroll departments for the relevant compliance changes…
Who is affected?
The new framework affects all employers and equivalent entities obliged to contribute to social security, along with all employees. Also affected are any special regimes which fall under the scope of the Mandatory Social Protection.
What has changed?
Contribution rates: Social security contributions have not changed from their previous rates. They remain set at 8% for employers, and 3% for employees - of employees’ total taxable remuneration.
Contribution basis: The significant change introduced in the new framework involves a broadening of the basis for social security contributions. Under the new law, social security contributions will be levied on all cash benefits and allowances provided by employers to their employees as part of their gross remuneration. As a rule, this means that employees’ base salaries, and supplements, are subject to social security contribution as part of the new system.
Only the following will be exempt from the social security levy:
- Vacation allowances
- Family allowance and other social benefits
- Amounts paid by employers and employees to social protection arrangements as mandated by specific legislation
Who has to pay social security contributions - and when are they due?
It is the employer’s responsibility to pay both their own contributions and those of their employees to the tax authority. Employers should make a direct deduction from their employees’ salaries via their payroll withholding mechanism in order to facilitate this.
The deadline for paying social security contributions is the 10th of every month. Certain special schemes allow for a different contribution schedule with alternative specified deadlines.
Are there penalties for non-compliance?
The Presidential Decree includes criteria for non-compliance - with penalties including a 1% rate of interest on the initial amount due, for every month after the payment deadline.
What should I do now?
The new social security regime doesn’t come into force until the 26 December, so employers should take steps (if they haven’t already) to ensure their payroll team understands its obligations. Likewise, international businesses in Angola should adjust their global payroll solution, or ensure that their payroll provider has taken appropriate steps to do so.
For more information on Angola’s tax and social security landscape, check out activpayroll’s dedicated Angola Global Insight guide.
