Law no. 14/2023, of 28 December, introduces changes to the Value Added Tax Code ("VAT"), in order to give greater flexibility, efficiency and fairness to the tax, not only for taxpayers (in the process of assessment, declaration, payment and reimbursement of VAT credits) but also for the General Tax Authority ("AGT"), within the scope of tax control and inspection.
In addition to relevant changes that have an impact on the activity of economic operators in Angola, there are also changes to the wording, in order to make some rules clearer, without this implying a change in their content and mode of application.
Under Law 14/2023, other rules/regimes with a lesser comparative impact are occasionally amended in order to clarify their meaning or scope, particularly with regard to issuing invoices, keeping documents, periodic returns, rectifying tax, bad and doubtful debts, creating and managing the reimbursement account, collecting and allocating revenue, ex-officio tax assessment, correcting returns, additional assessments, among others.
Find out more below, where we focus on summarising and explaining the main changes, additions or repeals to legislation that impact on the activity of VAT payers in Angola.
Services or ancillary sales
Transfers of goods or services that are ancillary to other transfers of goods or services are no longer considered part of them.
VAT can therefore be levied on them if the objective and subjective rules so determine.
Services rendered
Services rendered by the company itself free of charge for the particular needs of the company's governing bodies, staff or, in general, for purposes unrelated to the company are now considered to be services rendered. There is no longer any mention of services provided to the owner of the company.
Localisation of Asset Transfers
International e-commerce distance sales of goods are considered to be localised in Angola whenever the purchaser has its registered office, domicile or permanent establishment there or the payment originates in Angola or is intermediated by a financial institution established there.
VAT exemptions
Infra the changes to VAT exemptions:
- The exemption for the transfer of miscellaneous goods, as per Annex I to the VAT Code, is revoked;
- Books with pornographic content are excluded from the exemption on the transfer of books;
- The exemption for transactions subject to SISA no longer exists, and there is now an exemption for any and all transfers of immovable property;;
- The exemption for the operation and practice of games of chance and social entertainment, as well as the respective commissions and all related operations, when subject to Special Gaming Tax, is revoked;
- Aesthetic clinics are exempt from VAT on the supply of medical services;
- The sale of medical equipment and materials continues to benefit from VAT exemption, provided that the equipment or material to be sold is listed in Annex IV to the VAT Code.
Waiver of exemption
On switching or returning to the exemption regime, the taxpayer must now regularise the VAT contained in the stock in favour of the State on the date of the switch.
Exempt imports
In addition to the exemption on the import of goods intended as gifts to mitigate the effects of natural disasters (floods, storms, droughts, cyclones, earthquakes, epidemics and others of a similar nature), there is also an exemption on goods intended as gifts for philanthropic purposes, provided that this is recognised by the AGT.
In addition, imports of goods destined for donations to the state and its organisations, as well as local authorities, are now exempt.
Exports, assimilated operations and international transport
Exemptions on exports of goods made within the scope of diplomatic and consular relations, the exemption for which results from international agreements and arrangements entered into by Angola, as well as transfers of goods destined for international organisations recognised by Angola or members of the same organisations, within the limits and under the conditions set out in international agreements and arrangements entered into by Angola, and transfers of goods made within the scope of international treaties and agreements to which Angola is a party, where the exemption results from such agreements, will now be made operational by means of a tax reimbursement.
Taxable value in domestic transactions
The taxable value is changed in the following transactions:
- Insurance transactions: total value of insurance premiums paid by the purchaser, recipient or third party to the insurer or reinsurer;uradora;
- Games of chance or social entertainment: amount given for access to or participation in the game, with the exception of the prize;
- Condominiums: commission or condominium management fee, with the exception of the portion that covers maintenance and upkeep costs of the condominium.
Commercial discounts or rebates continue to be excluded from the taxable value of transfers of goods and services, provided that they appear on the invoice issued to prove the transfer of goods or provision of services. These discounts do not include bonuses or abseil discounts.
Taxable value on re-imports
In the case of the re-importation of goods temporarily exported for the purpose of repairing, transforming or supplementing manufacturing, the taxable value is that of the operation carried out abroad.
Tax rates
The VAT rates are now as follows, consolidated in the VAT Code:
- 14% as a general rate;
- 7% for the simplified regime;
- 7% for hotel and restaurant services (depends on the fulfilment of certain cumulative requirements, e.g. registration of (a) all real estate owned by the taxpayer and used for hotel business; (b) all motor vehicles owned by the taxpayer and used for hotel business; and (c) issuing all invoices by electronic invoicing system and (d) submitting tax returns for previous years);
- 5% for imports and transfers of foodstuffs for broad consumption and agricultural consumption listed in Annex I and II of the VAT Code;
- 1% for imports and transfers of goods subject to the special tax regime of the Province of Cabinda.
When there is a down payment and the asset is not specified, the general rate applies.
Captive Tax
The law in question introduces significant changes to the regulation of captive VAT:
- Public entities, with the exception of public companies, can apply captive VAT to the import transactions they carry out;
- The obligation to charge VAT does not apply to transactions between the BNA, commercial banks, insurance and reinsurance companies and telecoms operators with a unified global title.
Right to deduct
1. Scope
The list of activities giving rise to the right to deduct has been amended, with exports and transactions exempt under both the general VAT regime and the special customs regime now giving rise to the right to deduct, while transfers of miscellaneous goods that are exempt, as per Annex I to the VAT Code, no longer give rise to the right to deduct.
2. Conditions
The deadline for exercising the right to deduct VAT has been changed so that VAT can be deducted as long as the return is submitted within 12 (twelve) months of the issue of the invoice or receipt for payment of tax on importation. In other words, in practice, 2 + 10 months for the substitution return from the issue of the invoice.
The documents conferring the right to a deduction are amended.
As such, the tax mentioned in the following documents is entitled to deduction, provided that it is in the taxpayer's name, capacity and tax identification number:
a. Invoices issued by taxpayers under the general VAT regime and under the terms of the Legal Framework for Invoices;
b. Receipt for payment of import duty;
c. Receipts issued to taxpayers on a cash basis.
3. Oil operators
Oil companies will no longer be able to deduct VAT paid on transport and car hire services from production costs.
VAT reimbursement
Three new rules have been added to the reimbursement system, according to which:
- The deadlines for the AGT to make a reimbursement may be extended for a period not exceeding 6 months, whenever there are indications that the claims have arisen from the commission of tax offences;s;
- Taxpayers in the Simplified Regime can request reimbursement of the credit in their favour more than 12 months after the period in which the excess occurred;
- The AGT may, whenever it deems it necessary, analyse the documents that gave rise to the tax credit that gave rise to the reimbursement request or supervise the taxpayer.
Partial VAT Deduction
Taxpayers who start a business or substantially change it can deduct on the basis of a provisional percentage estimated by them, and only have to enter that percentage in the first periodic declaration.
Responsibility for paying VAT
Where the VAT is not captive, the responsibility for paying the tax reverts to the issuer of the invoice, until the last working day of the month following receipt.
Captive VAT payment
Public organisations that do not record their expenditure in the State's Integrated Financial Management System will now have to submit their captive VAT via a periodic declaration.
Declaration of Change of Activity
The exclusion of the obligation to submit a declaration of change of activity when there are changes in the percentage of deduction for mixed activities is repealed, and this obligation will only be excluded in the case of changes in turnover.
Joint and several liability for payment of VAT
The regime of joint and several liability is totally altered.
As follows
- Intermediaries will now be jointly and severally liable with the supplier for the payment of VAT, including digital platforms, provided that they are subject to VAT and when there is proof that the intermediary knew, or should have known, that tax fraud or evasion was being committed in relation to the transaction in question;
- The taxpayer acquiring the goods or services becomes jointly and severally liable with the supplier for payment of the tax when the mandatory invoice has not been issued, includes inaccurate information as to the nature or quantity of the goods or services supplied, the price or the amount of tax due;
- The taxable purchaser or consignee who proves that he has paid all or part of the tax due to his duly identified supplier is released from the liability described above;
- The right to deduct is excluded when the taxpayer knew or should have known that, through the transaction invoked as the basis for the right in question, they were participating in VAT fraud or evasion. It is presumed that the taxpayer is aware or should have been aware when the price he owes for the goods or services in question is lower than their normal value (this presumption can be rebutted if the taxpayer proves that the price applied is not the result of VAT fraud or evasion.
Exclusion regime
Taxpayers with a turnover of less than Kz 25,000,000.00 are now excluded.
If these figures are exceeded, the AGT may change the tax regime to the general VAT regime of its own motion, but must notify the taxpayer, which takes effect from the month following the notification.
General Regime
Subjects who:
- In the previous financial year, they had a turnover or import operations equal to or greater than Kz 350,000,000.00;
- If they are from the manufacturing industry, they have had a turnover or import operations equal to or greater than Kz 25,000,000.00;
- Opt for voluntary inclusion in this tax regime.
Cash Accounting Scheme
Taxpayers under the general regime who have had a turnover or import transactions equal to or less than 2,000,000,000.00 and who do not carry out exempt transactions may opt to settle and pay VAT on cash accounting scheme.
Simplified regime
The Simplified VAT Regime is consolidated in the VAT CODE, covering taxpayers who, in the previous financial year, had a turnover or import operations equal to or greater than Kz 25,000,000.00 and less than Kz 350,000,000.00.
These taxpayers must submit the simplified declaration and its annexes every month, containing information on the transactions carried out in the previous month and the invoices issued must be marked "VAT-Simplified Regime".
VAT is calculated by applying the rate to the turnover actually received from all transactions, including exempt transactions and advances or prepayments (except property leases, which are subject to Stamp Duty).
Under the simplified regime, the state can withhold VAT on transactions carried out with taxpayers covered by this regime, as long as payments are made via the state's Integrated Financial Management System.
Obligation to pay Stamp Duty
VAT taxpayers who fall under the general regime and carry out exempt transactions without the right to deduction are obliged to pay Stamp Duty on the discharge receipt, at the rate of 1% (item 23.3 of the table annexed to the Stamp Duty Code). Stamp Duty paid under these terms is a cost accepted for income tax purposes.
VAT not deductible as a cost
From the entry into force of the updated republication of the VAT Code, there will be an express rule prohibiting the tax deductibility of VAT deductible from the income tax base.
In addition, the inclusion of deductible VAT in the research, development, production and abandonment costs of oil investment companies mean that VAT is not accepted as a tax-deductible cost for income tax purposes.
Report banking operations
Banking financial institutions must now ensure that a quarterly file containing a summary of transactions processed at POS terminals is reported to the AGT.
Tax paid on international e-commerce
VAT paid before the implementation of the simplified registration system by non-resident taxpayers in connection with international e-commerce whose sales or services are located in Angola may be returned without penalty.
Deferred payment of VAT
At the request of the taxpayer and with the approval of the AGT, the payment of VAT due on the importation and transfer of industrial equipment by the manufacturer may now be deferred for up to 12 months, without legal increases.
