Angola: Ups and Downs in the Investment Framework
The Angolan legal framework on foreign investment suffered significant changes along the road of the country’s development. In its invitation for investors to drop anchor into the country, authorities have frequently shifted between openness and rigidity. Since 2018 however, investment requirements have been easing and investing in Angola has become less of a burden and, not least, less bureaucratic.
The currnet Private Investment Law, approved by Law no. 10/18 of 26 June 2018, simplified the investment procedures and foreign investors are now entitled to incorporate or invest in existing companies before or without ever filling an application to the national agency for investment (designated as AIPEX – Agência de Investimento Privado e Promoção das Exportações). The registration with AIPEX is only mandatory when the investor aims to be granted with tax and customs benefits, and with the right to repatriate dividends.
Private investment regulations do not apply to industries whose investment framework is governed by a specific statute, such as the oil and gas industry.
Under the current legal regime there is no legal obligation for Angolan partnerships (meaning share capital and management participation) in investment projects, contrary to what has been demanded in so-called strategic sectors. While practical motivations may suggest engaging with a local player, outside of particular industries, there is no such rule of finding a local partner to successfully incorporate in Angola.
National and foreign private investors may be granted with tax and customs incentives depending on the business sectors in which the investment is framed and on the region where it is implemented.
As for activities, the Private Investment Law highlights as priorities: i) Education, Technical-Professional Training, College Education, Scientific Investigation and Innovation; ii) Agriculture, Food and Agro-Industry; iii) Specialized Health Units and Services; iv) Reforesting, Industrial Transformation of Forest Resources and Forestry; v) Textile, Clothing and Footwear; vi) Hotel business, Tourism and Leisure; vii) Construction, Public Works, Telecommunications and Information Technologies, Airport and Railway Infrastructures; viii) Power Production and Distribution; and ix) Basic Sanitation, Waste Collection and Waste Processing.
Additionally, the law benefits investments to be implemented in regions other than Luanda by granting tax and customs benefits to the less developed areas of the country. In that sense, the investment framework includes a division of the territory as follows:
- Zone A (with less reductions on the applicable tax rates) – Province of Luanda, the main-municipalities of the provinces of Benguela, Huíla and the municipality of Lobito;
- Zone B – Provinces of Bié, Bengo, Cuanza-Norte, Cuanza-Sul, Huambo, Namibe and remaining municipalities in provinces of Benguela and Huíla;
- Zone C – Provinces of Cuando Cubango, Cunene, Lunda-Norte, Lunda-Sul, Malanje, Moxico, Uige, and Zaire;
- Zone D (with more reductions on the applicable tax rates) – Province of Cabinda.
However, while the Government’s purpose of turning Angola into a more attractive country both for internal and external investment had been on a good pace since 2018, the Covid-19 pandemic further boosted simplification of procedures and requirements to make a company fully operational.
In this regard was notably adopted Presidential Decree 167/20 in June 2020, which regulates the creation of a Single Window for Investment (designated in Portuguese as Janela Única do Investimento – JUI). According to this decree, this is a facilitation mechanism that allows investors to access the various services aimed at implementing private investment projects, carried out under the Private Investment Law, through which the AIPEX organises and obtains the necessary authorisations and services to implement investment projects in accordance with the conditions and deadlines set out in the respective execution schedules, on behalf of the investor.
The creation of this new bureau aims at first the reduction of bureaucracy of the investment process and the standardization of procedures adopted by the public administration bodies involved in the investment process, since the investor has now a sole institution to deal with when doing a full registration of the investment (AIPEX).
Other relevant measures were taken in view of de-bureaucratising the investment process, namely:
- Suppression of the former mandatory registration with National Statistics Institute (INE) at the time of a company’s incorporation – currently tax authorities are expected to automatically communicate the incorporation of new companies to INE;
- Suppression of the obligation to obtain a commercial license upon a company’s incorporation (except for companies with activities related with sale of food, live animal species, birds and fisheries, medicines, sale of cars, fuels, lubricants and chemicals).
The country is also undergoing a tax reform in view of promoting investment, from one end, and granting the State with revenues other than from the oil industry, on the other. As a positive note for companies and investors, Law no. 26/20 recently came into force and amends the corporate tax rules, including the rate which is now of 25% instead of 30%. There were also relevant changes with regards to personal income tax, with the increase of the tax base and changes to the progressive rate scale provided in Law no. 28/20.
All in all, it is worth following the changes in the Angolan legal framework in a context where most nations will make relevant efforts to promote internal and external investment as a mechanism to develop the economy and support recovery post Covid-19.
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