Angola is currently the second fastest growing economy in Africa. Its economy has grown more than 30% in recent years and about 25% in 2008. This rate is mostly due to its oil sector - controlled by the Sonangol group, which is 100% owned by the Angolan government and which makes up about 85% of GDP. Consolidation of the country?s political stability has also fueled the significant growth and recent transformations.
The credit line from China along with others from Brazil, Portugal, Germany and Spain and the EU, is allowing Angola to rebuild public infrastructures and to complete large scale projects. Simultaneously, Angola is implementing an attractive and aggressive foreign investment policy currently focused on establishing an attractive business and investment climate by granting various incentives and benefits. The National Private Investment Agency (ANIP) is a governmental agency
set up to facilitate contact between investors and the Angolan government, reduce bureaucracy, approve private investment in Angola and to implement investment incentive measures. ANIP is responsible for issuing what is referred to as the Private Investment Certificate of Registration (CRIP) which regulates investors and the terms under which investments may be undertaken and simultaneously confers rights and
obligations to private investors under the Private Investment Law (“PIL”). Access to investment incentives and benefits depend, amongst other requirements, on a minimum investment threshold of USD 50,000 for capital domiciled in Angola. The granting of the incentives to private investment is based on two schemes: the prior declaration scheme (investment value equal or above USD 50,000, for national investors, or
1) USD 100,000 for foreign investor, up to a maximum of USD 5,000,000and the contractual scheme (investment equal or above USD 5,000,000, irrespective of its value where the investment is made through conceding temporary operation rights or through compulsory public business sector participation).
The PIL seeks to protect investments and ensure the transfer of dividends abroad. An authorized investor may transfer out of Angola in an approved foreign currency at determined exchange rates: dividends and similar profits; expropriation-related compensation received; proceeds from foreign capital disinvestment; including capital gains, and other revenue obtained from indirect investments associated with technology transfer, as well as any amounts owed to them as stipulated in private investment agreements, after deduction of any taxes due. Simultaneously, the Tax Incentives Law has lightened the tax burden on investment projects in relevant geographical areas and in priority business sectors. Currently the corporate income tax rate is 35% except for petroleum companies which are subject to taxation at the rate of 66.75% (for joint venture partners) or 50% (for production sharing agreement partners), and mining companies at a rate of 35%. Additionally, dividends and royalties are subject to a tax rate of 10% and interest is subject to tax at the rate of 15% for loans and 10% for corporate loans. The Tax Incentives Law currently foresees an income tax (imposto industrial) exemption for 8, 12 or 15 years, tax exemption
on dividends for 5, 10 or 15 years and also exemptions for 3, 4 or 6
1 2008 Figures
years, depending on the area where the investments are made, from the payment of duties and any other customs tariffs on capital goods for the start-up and development of an investment operation, including heavy vehicles and technologies import and export duty.
Under the PIL domestic and foreign investors are guaranteed equal treatment, and private investors have the right to due legal process and the right of access to Angolan courts of law, which have jurisdiction to determine litigation arising from the investment. Additionally, parties to private investment projects governed by a contract may agree that disputes on the interpretation or application of investments under the contract be resolved through arbitration, taking place in Angola under Angolan domestic law. International arbitration may be used in certain circumstances.
PIL also seeks to guarantee that assets owned by private investors cannot be nationalized, and in case of expropriations due to force majeure and legally justified, the government guarantees the prompt payment of fair compensation.
It is currently considered imperative that other sectors besides the oil and mining sectors, improve their importance in the country?s economic structure. The aim is to provide new jobs, and increase and diversify the internal market and exportation capacity. There is a young and increasingly skilled entrepreneurial Angolan sector wishing to partner with foreign investors which are willing to introduce new technology and know-how. The creation of the Angolan stock exchange and the government investment in skilled Angolan?s studying and working abroad are clear signs of the intention to modernise and internationalise. The sectors currently considered a priority are agri-livestock production; manufacturing Industries where, inter alia, the final product incorporates at least 25% of local raw materials, or whose equipment
and production process bring about technological advancement and the upgrade of the respective industry; fishing; civil construction; health and education; transport infrastructures; telecommunications as well as energy and water.
Despite all the good news, investment constraints still exist such as economic areas not open to foreign investment (reserved to the Angolan state), limitations to capital returns abroad (which can only be performed through the local banking system on presentation of an investment and tax clearance document from the Ministry of Finance) and the importation of capital (subject to a National Bank of Angola licence) or importation of machinery, equipment and other material for investment (subject to a Ministry of Trade licence), the possibility that capital repatriation can be suspended whenever the Government considers this will cause serious imbalances in the national balance of payments. Additionally, the repatriation of proceeds from the liquidation or disposal of the investment, including capital gains, may only be made after a 6-year period from when the initial foreign capital import ended.
From a tax perspective a major limitation, although foreseen in the Private Investment Law, is that Angola has not yet concluded any avoidance of double taxation international treaties.
The total reconstruction of the country?s infrastructures severely damaged over the last 30 years, wide spread landmines, the
resettlement of millions of displaced people, bureaucracy, the modernisation of the industrial and trading sector, are some of the challenges which Angola must deal with during the next decade and which at the same time constitute opportunities for investment.