April 22, 2021
Angola's Indirect Tax Changes for 2021 discussed
Angolan Law no. 42/20 (the Law), approving the State Budget for 2021, was published on 31 December 2020. The Law entered into force on 1 January 2021.
This Alert summarizes the key indirect tax changes under the Law.
Simplified Value-Added Tax (VAT) regime
The Law introduced a new VAT Regime - Simplified VAT Regime - which is applicable to taxpayers whose annual turnover and/or import operations of the previous 12 months was equal to AOA350 million or less.
This new VAT regime, if applicable to a taxpayer, provides for:
VAT to be charged at a rate of 7% on the turnover amount effectively paid by the customers related to the sales of goods and services subject to VAT and not exempt.
VAT to be charged (through the reverse-charge mechanism) at a rate of 7%, on the services acquired and paid to nonresident entities.
Recovery of 7% of the VAT incurred on the acquisitions of goods and services (including import VAT).
Refund claims of the correspondent VAT credit.
With reference to VAT-exempt transactions performed, payment of Stamp Tax at a rate of 7% on the receipt of discharge of such transactions related to item 23.3 of the table attached to the Stamp Tax Code, which may be allowed against income tax.
When changing from the Simplified Regime into the General Regime, the taxpayer may deduct the VAT incurred on the acquisition of stock for sale in the previous 12 months preceding the change, upon authorization of the Angolan tax authorities, provided that such acquisitions were reported on the correspondent Suppliers’ List. Such recovery does not include the VAT incurred on the services incorporated in the cost of goods for sale.
With reference to the General Regime, the following is provided under the Law:
Taxpayers subject to this regime who carry out exclusively VAT-exempt transactions, should pay Stamp Duty at a 7% rate on the receipt of discharge of such transactions related to the item 23.3 of the table attached to the Stamp Tax Code, which may be allowed against income tax.
Taxpayers from the manufacturing industry mandatorily are subject to the General VAT Regime, regardless of the correspondent annual turnover or import operations and are entitled to deduct the total VAT amount paid to the assessment of income tax.
Scope of VAT
Taxpayers whose annual turnover or import transactions are equal to or less than AOA10 million are excluded from the scope of VAT.
VAT split-payment mechanism
A VAT-split payment mechanism is introduced by establishing a 2.5% VAT retention rate on payments to automatic payment terminals related to the supply of goods or services made by taxpayers. The taxpayers under the General Regime or Simplified Regime may deduct the total VAT withheld under the VAT-split payment mechanism through the correspondent VAT return.
Financial and banking entities are responsible for ensuring the automatic cash transfer to the Treasury Account of the tax withheld under the mentioned VAT-split payment mechanism, according to the applicable deadlines for reporting obligations.
Other VAT changes
The Law that approves the General State Budget for the year 2021 also sets forth some changes which had already been introduced by the Law which revised the State Budget for the year 2020, such as:
A reduced VAT rate of 5% which applies to the import and supply of certain goods (products of the Basic Basket listed in Annex I of the VAT Code and agricultural inputs).
The broadening of the taxable amount on import of goods, meaning that VAT should be charged on the amount which includes also duties, taxes and ancillary expenses, among others.
Operation and playing of games of chance and social entertainment, as well as the respective commissions and all related operations are subject to VAT at a 14%.
In terms of the Customs tariff, the main changes introduced are as follows (some of which resulted from what was established in the Law which revised the State Budget for the year 2020):
Exemption from the clearance procedure and payment of customs duties for goods dispatched by post through courier or express cargo operators, or contained in travelers’ personal luggage, provided they are considered to be goods for personal use, transported in small quantities and not exceeding the value of AOA880,000 per consignment or per traveler.
Application of the simplified dispatch procedure for goods that are not considered personal use goods or whose value is between AOA880,001 and AOA1,320,000 (with a flat rate of 16% of FOB value applied to imports and the rates provided for in the goods’ export regime are applied to exports).
For the remaining goods, whose value exceeds AOA1,320,001, the general clearance procedure is applicable for customs clearance purposes.
The products of the tariff headings listed in Annex II of this Law are subject to the payment of customs duties and fees set forth therein.
The export of food, medicines, medical equipment and nationalized biosafety goods are subject to the payment of customs duties at a rate of 70%.
For additional information with respect to this Alert, please contact the following:
Ernst & Young, S.A.