This new Private Investment Law (PIL), which entered into force on June 26, establishes the principles and general bases of private investment in Angola, establishes the benefits and facilities that the Angolan State grants to private investors and the criteria for access to them, and establishes the rights, duties and the guarantees of private investors.
This Law repeals all legislation contrary to what is set forth in it, namely Law no. 14/15 of 11.08 (the previous PIL).
The PIL does not apply to investments made by companies in the public domain in which the State holds all or a majority of the share capital and to sectors of activity whose investment regime is regulated by a special law.
Previous Investment Projects:
- This LIP and its regulations do not apply to investment projects approved prior to their entry into force, which continue until the end of their implementation to be governed by the provisions of the legislation and the specific terms or contracts, on the basis of which the authorization has been granted;
- However, it is possible to expressly request the submission of projects already approved to the regime established in this law;
- The benefits and other facilities already granted under the previous laws remain in force for the periods established, not being allowed any extension thereof;
- Investment projects pending at the date of entry into force of this PIL are registered under the schemes provided for therein.
Investment Value: PIL applies to private investments of any value, whether made by internal or external investors.
Investment Types: Internal, external or mixed.
These are investment projects carried out with the use of capital titled by foreign exchange residents, which may, in addition to monetary means, also adopt the form of technology and knowledge or equipment and other assets, through financing even if contracted abroad.
An internal investor is any person, whether natural or legal, who is an exchange resident, who carries out the internal investment.
Types of domestic investment operations:
- Use of means of payment available in national territory;
- Acquisition of technology and knowledge;
- Acquisition of machinery and equipment;
- Conversion of credits arising from any type of contract;
- Acquisition of shareholdings in existing Angolan commercial companies;
- Application of financial resources resulting from loans, including those obtained abroad;
- Incorporation of new commercial companies;
- Celebration and alteration of consortium agreements, association in partnership, joint ventures, association of third parties with shares or capital quotas and any other form of association agreement permitted, even if not provided for in the commercial legislation in force;
- Total or partial takeover of commercial and industrial establishments, by acquisition of assets or by means of contracts of assignment of exploitation;
- Acquisition or assignment of exploitation of commercial or industrial establishments;
- Exploration of real estate complexes, whether tourist or not, whatever their legal nature;
- Conclusion of leases of land for agricultural purposes and assignment of land rights;
- Assignment of patented technologies and registered trademarks whose remuneration is limited to the distribution of profits resulting from the activities in which such technologies or trademarks have been applied;
- Provision of additional capital contributions, advances from members and, in general, loans linked to profit sharing;
- Acquisition of real estate located in national territory, when this acquisition is integrated in private investment projects.
In projects exclusively destined for exportation, the raising of foreign resources abroad by domestic investors, provided that the reimbursement of debt service is guaranteed by export revenues, is considered an internal investment operation.
Domestic investment transactions are not considered to be those that consist of the rental or chartering of cars, boats, aircraft and other means that may be hired or chartered, leased or otherwise temporarily used in national territory.
Forms of internal investment (individually or cumulatively):
- Allocation of own funds;
- Application of existing funds in bank accounts constituted in the country, holded by foreign exchange residents, even if they result from financing obtained abroad;
- Allocation of machinery, equipment, accessories and other tangible fixed assets;
- Incorporation of credits and other assets of the private investor that can be used as investments;
- Incorporation of technologies and knowledge that can be assessed in cash;
- Application, in national territory, of funds in the scope of reinvestment.
These are investment projects through the use of capital held by non-resident foreign exchange, which may, in addition to monetary means, also adopt the form of technology and knowledge or equipment and other assets. It is an external investor, any person, natural or legal, non-resident foreign exchange that carries out external investment.
Types of external investment operations:
- Introduction of freely convertible currency into national territory;
- Introduction of technology and knowledge, provided that they represent an added value to the investment and are susceptible of pecuniary evaluation;
- Introduction of machinery, equipment and other tangible fixed assets;
- Conversion of credits arising from the execution of contracts for the supply of machinery, equipment and goods, provided that they are evidently subject to payments abroad;
- Acquisition of holdings in existing Angolan companies;
- Incorporation of new companies;
- Conclusion and modification of consortium agreements, association in partnership and other forms of business cooperation allowed in international trade, even if not provided for in the commercial legislation in force;
- Acquisition of commercial or industrial establishments;
- Holding of leases or exploitation of land for agricultural, livestock and forestry purposes;
- Exploration of real estate complexes, whether tourist or not, regardless of their legal nature;
- Provision of supplementary capital contributions, advances to members and, in general, loans linked to profit sharing;
- Acquisition of real estate located in national territory, when this acquisition is integrated in private investment projects;
- Incorporation of subsidiaries, branches or other forms of social representation of foreign companies.
For projects exclusively destined to exports, foreign investment operations are considered to be foreign funds raised by foreign investors, provided that the reimbursement of debt service is guaranteed by export revenues.
The following shall not be considered as foreign investment operations: those involving rental or chartering of cars, boats, aircraft and other means that may be hired or chartered, leased or otherwise temporarily used in national territory. However, these operations may be considered as foreign investment operations, provided that, because of their great economic importance or strategic importance, the Holder of the Executive Power expresses and, on a case-by-case basis, intends to grant them such status.
Forms of external investment (isolated or cumulative):
- Transfer of own funds from abroad;
- Application of available funds in national and foreign currency in bank accounts constituted in Angola by foreign exchange residents, subject to repatriation, in accordance with applicable exchange legislation;
- Application, in national territory, of funds in the scope of reinvestment;
- Transfer of machinery, equipment, accessories and other tangible fixed assets;
- Incorporation of technologies and knowledge.
The latter two forms must always be supplemented by transfers of funds from abroad, namely, to cover the expenses of setting up, installation and current expenses.
Supplies for foreign investment operations:
Supplies from shareholders or partners made for external investment purposes may not exceed 30% of the value of the investment made by the company and are only refundable after 3 years from the date of registration in the company's accounts.
External investors, after completing the Private Investment Project duly proven by the competent authorities and after payment of the taxes due and the constitution of the obligatory reserves, are entitled to transfer abroad:
- the amounts corresponding to the dividends;
- the amounts corresponding to the proceeds of the liquidation of their undertakings;
- the amounts corresponding to compensation due;
- the amounts corresponding to royalties or other income from remuneration of indirect investments associated with
- the transfer of technology.
Appeal to credit:
Private investors can use internal and external credit. However, external investors and majority-owned companies are only eligible for domestic credit after having fully implemented their investment projects.
All the investment that integrates internal investment operations and external investment operations.
Any private investment, internal or external, consisting of the use of capital, technology and know-how, capital goods and others in economic projects or in the use of funds for the creation of new companies, national or foreign groupings of companies, as well as the total or partial acquisition of Angolan companies already existing, with a view to the creation or continuation of a certain economic activity and direct participation in its management, according to its corporate purpose.
All internal or external investment carried out by companies governed by private law which, not constituting direct investment, comprise, individually or cumulatively, capital movements and other financial instruments such as the acquisition of shares, public debt securities, loans, additional capital, patented technology, technical processes, secrets and industrial models, franchises, registered trademarks and other forms of access to their use under either exclusive or restricted licensing by geographical areas or fields of industrial and commercial activity, among others.
Indirect investment limits:
Whenever the investor, internal or external, intends to carry out operations qualified as indirect investment these should not exceed the value corresponding to 50% of the total value of the investment.
- Prior Declaration;
- Special Regime.
Private investors can freely opt for any of the investment schemes, knowing that the benefits attributed to each scheme are different, as explained below.
- Simple presentation of the investment proposal to the competent body of the Public Administration for the purposes of registration and attribution of benefits provided for in the Law.
- The companies must be previously incorporated and the presentation of the Private Investment Registration Certificate (CRIP) at the time of incorporation is not required.
- Applicable to the investments made in the priority sectors of activity and in the development zones provided for in the Law.
- They are subject to registration in the competent body of the Public Administration for the purpose of assigning the benefits and facilities provided for in this Law.
Private Investor Benefits and Facilities:
The benefits conferred under this Law apply exclusively to the activities included in the execution of the registered private investment.
The attribution of benefits and facilities is automatic, provided that the investment complies with the criteria set forth in the Law.
Benefits of tax nature:
- deductions from the taxable amount;
- accelerated depreciation and reintegration;
- tax credit;
- exemption and reduction of taxes, contributions and import duties;
- deferred payment of taxes and other exceptional measures benefiting the investor.
Taxes on which benefits may be granted:
- Corporate Income Tax (“Imposto Industrial”);
- Property transfer tax (“Sisa”);
- Real Estate Income Tax (“IPU”);
- Investment Income Tax (“IAC”);
- Stamp Duty;
- other taxes of the same or different nature.
Benefits of a financial nature:
- access to credit through Support programs for the economy provided by the Executive, such as microcredit, interest subsidy, public guarantee and risk capital to obtain financing.
- Priority sectors of activity;
- Development areas.
Priority sectors of activity:
- Education, Technical and Vocational Training, Higher Education, Scientific Research and Innovation;
- Agriculture, Food and Agro-Industry;
- Specialized Health Units and Services;
- Reforestation, Industrial Transformation of Forest Resources and Forestry;
- Textiles, Clothing and Footwear;
- Hospitality, Tourism and Leisure;
- Construction, Public Works, Telecommunications and Information Technology, Airport and Railway Infrastructures;
- Production and Distribution of Electric Energy;
- Basic Sanitation, Collection and Treatment of Solid Waste.
Development areas (benefits are increasingly attributed):
- Zone A: Province of Luanda and the municipalities that are the headquarters of the Provinces of Benguela, Huíla and the Municipality of Lobito;
- Zone B: Provinces of Bié, Bengo, Cuanza-Norte, Cuanza-Sul, Huambo, Namibe and other municipalities of the Provinces of Benguela and Huíla;
- Zone C: Provinces of Cuando Cubango, Cunene, Lunda-Norte, Lunda-Sul, Malanje, Moxico, Uíge and Zaire;
- Zone D: Cabinda Province.
Causes of extinction of benefits:
- Expiry of the period for which they were granted, and the period can not exceed ten (10) years;
- Use of a tax savings not delivered to the State in an amount equal to the investment made;
- Verification of the assumptions of the respective resolutive condition;
- Cancellation of investment registration.
Benefits of the Prior Declaration Regime:
- Sisa's tax: reduction of the fee by half, for the acquisition of the real estate for the office and the establishment of the investment;
- Corporate Income Tax: reduction of the final settlement rate and the provisional settlement rate by 20% for a period of 2 years;
- Investment Income Tax: reduction of the rate that affects the distribution of profits and dividends by 25% for a period of 2 years;
- Stamp Duty: reduction of the fee to half for a period of 2 years.
Benefits of the Special Regime:
- Property Transfer Tax- Sisa:
- Zone A: reduction of the rate by half, by the acquisition of the real estate for the office and the establishment of the investment;
- Zone B: reduction of the rate in 75% for the acquisition of real estate for the office and the establishment of the investment;
- Zone C: reduction of the rate in 85%, for the acquisition of real estate for the office and the establishment of the investment;
- Zone D: The tax rate is half the rate that is assigned to Zone C.
- Real Estate Income Tax- IPU:
- Zone B: reduction of the rate in 50% for the ownership of real estate for the office and the establishment of the investment, for a period of 4 years;
- Zone C: reduction of the rate in 75% in the ownership of real estate for the office and the establishment of the investment, for a period of 8 years;
- Zone D: real estate income tax rate corresponds to half of the rate that is allocated to Zone C, for a period of 8 years.
- Corporate Income Tax:
- Zone A: reduction of the final settlement rate and the provisional settlement rate in 20% for a period of two (2) years;
- Zone B: - Reduction of the final settlement rate and the provisional settlement rate in 60% for a period of four (4) years;
- Increase of amortization and reintegration rates in 50%, for a period of four (4) years;
- Zone C: - Reduction of the final settlement rate and the provisional settlement rate in 80%, for a period of eight (8) years;
- Increase of amortization and reintegration rates by 50% over a period of 8 years;
- Zone D: - The Corporate Income tax rate corresponds to half of the rate that is allocated to Zone C, for a period of eight (8) years;
- Increase of amortization and reintegration rates in 50% over a period of eight (8) years.
- Investment Income Tax:
- Zone A: Reduction of the rate on the distribution of profits and dividends in 25% for a period of two (2) years;
- Zone B: Reduction of the rate that affects the distribution of profits and dividends in 60%, for a period of four (4) years;
- Zone C: Reduction of the rate that affects the distribution of profits and dividends in 80% for a period of eight (8) years;
- Zone D: The rate of Investment Income Tax, which is levied on the distribution of profits and dividends, corresponds to half of the rate that is allocated to Zone C, for a period of eight (8) years.
Special Purpose Vehicle of private investment (“sociedade veículo do investimento privado”-company through which the Private Investment Project is implemented):
- they must present the tax declaration related to the respective investment, separated from the other economic activities they carry out;
- if it is in the Special Regime, is exempt from paying the fees and charges due for any requested service, including customs, by a non-corporate public entity, for a period not exceeding five (5) years.
Specific Duties of the Private Investor:
- Observe the deadlines established for the importation of capital and for the implementation of the investment project, in accordance with the commitments assumed;
- Pay taxes, fees and all other legally owed contributions;
- Establish funds and reserves and make provisions, in accordance with the legislation in force;
- Apply the chart of accounts and accounting rules established by law;
- Respect the norms related to the protection of the environment, in accordance with the legislation in force;
- Comply with the rules on hygiene, safety and security at work against occupational diseases, accidents at work and other contingencies provided for in labor legislation;
- Hire and keep up-to-date Insurance against Accidents and Occupational Diseases of workers;
- Hire and keep up-to-date Liability Insurance for third party damages or the environment.
- Those that imply the increase of share capital, the extension of the corporate purpose, the transfer of quotas or the transfer of shares, are exempt from Prior Authorization, without prejudice to the obligation to communicate them in terms to regulate
- If these changes involve the importation of capital are subject to registration in the competent body.
- The alteration or extension of the purpose of the Project is subject to registration with the competent body.
The training plan and gradual replacement of the foreign workforce by the national should be part of the Investment Project documentation at the time of registration.
Types of Transgressions:
- use of resources coming from abroad for purposes other than those for which they were declared and recorded;
- billing practice that allows the illicit exit of capital or distorts the obligations to which the company or association is subject, in particular those of tax nature;
- the lack of implementation of training measures or the non-replacement of foreign workers by nationals under the conditions and deadlines provided for in the Investment Project;
- failure to carry out the investment unreasonably within the time limits;
- lack of information to the body with powers to supervise;
- falsification of goods and provision of false statements;
- over-invoicing of imported machinery and equipment prices;
- exercise of commercial activity outside the declared scope.
Penalties provided for in this Law:
- fine of 1% on the value of the investment, the value being increased to triple in case of recurrence;
- loss of benefits and other facilities granted under the Act;
- cancellation of the private investment registry.
In conclusion, the PIL determines:
- that there is no minimum investment value;
- the criteria for granting incentives;
- the priority sectors of activity;
- development zones;
- that the corporate changes are exempt from Prior Authorization;
- the immediate right to repatriation of dividends;
- that there is no minimum percentage of mandatory participation of national entities in the share capital.