ANGOLA Type of Business The principal forms of business enterprises in Angola are: y A branch has no legal entity and

thus, obligations entered into by the branch are binding on the foreign company (if the company fails to comply with the registration requirements, the directors and the company will be jointly liable). All mandatory regulations (e.g. labour and tax laws) apply to the activities of a branch. A branch does not offer the protection of limited liability, and the assets of the operating company are therefore subject to any legal claims arising through the Angolan operations. This could cause serious problems in cases of insolvency or payment of fiscal debts. The foreign investment regulation requirements also apply to the registration of a branch in Angola. From a legal point of view, a subsidiary has its own legal entity and remains independent of its shareholders. For the incorporation of an Angolan company, compliance with the Commercial Law and registration requirements is imposed by Angolan foreign investment regulations. A subsidiary company can be set up in different ways. Angolan Commercial Law provides for different kinds of legal structures, of which the most important are Limited Liability Partnerships (Sociedade por Quotas - LDA) and share companies (Sociedade Anonima - SARL). Both are limited liability company structures and both have to be formed by notarial deed and subsequently registered in the Commercial Registry. The minimum capital legally required was established some years ago in Kwanza 50.000. With the strong devaluation of the Kwanza this number is not used for foreign investors for whom an approximate amount of USD 3.000 is used as minimum. One of the solutions to consider is to split specific projects and/or contractor services agreements between the incorporated company and the foreign company operating through the branch. Another company could be formed for the rendering of services, in which foreign personnel would be concentrated. This would imply that the investing company operates both with a structure established in Angola and with an offshore occasional participation of the mother company, for specific projects or contractual co-operation.

y y y y

Representative Offices Under Angolan Decree 7/90, dated March 24, the Representative Offices can not undertake on its own any commercial activities in Angola. Its activity is limited to the mere representing on behalf and for account of the foreign (represented) entity, without legal capacity to act autonomously or hold any participation on the capital of companies. This implies that all activities carried on in Angola by the foreign represented entity will be considered as carried on by this entity, with all the legal consequences from that. Under that Decree, the Representative Office may be definitively closed, in case of violation of the applicable Angola regulations, as well as if the represented entity not accomplish any contractual obligation entered in Angola. So, if you intend to start up running a business in Angola on the basis of a local structure, it is in fact really necessary to establish a different legal structure. This structure to operate in Angola, can either be to incorporate a company or merely to formally register as a branch. These two different structure allow you to enter into trade activities and imply respecting different formalities and being subject to different authorities. Basically, you will not be under the

National Bank of Angola supervision but rather subject to the control of the Foreign Investment Institute. A branch has no legal entity and thus, obligations entered into by the branch are binding on the foreign company (if the company fails to comply with the registration requirements, the directors and the company will be jointly liable). All mandatory regulations (e g labour and taxes law) apply to the activities of a branch. Please note that a branch does not offer the protection of limited liability, and the assets of the operating company are therefore subject to any legal claims arising through the Angolan operations. This could cause serious problems in cases of insolvency or payment of fiscal debts, for instance. Also remember that the foreign investment regulation requirements also apply to the case of registering a branch in Angola. From a legal point of view, a subsidiary has its own legal entity and remains independent of its shareholders. For the incorporation of a company, Angolan Foreign Investment Regulation provide several forms. A subsidiary company can be set up in different ways. Angolan Commercial Law provides different kinds of legal structures, of which the most important and suitable forms are limited liability partnerships (Sociedade por Quotas Lda) and share companies (Sociedades Anonimas SARL). Both are limited liability companies and both have to be formed by Notarial Deed and subsequently registered in the Commercial Registry. For starting a trading business, it is advisable to set up a company in Angola, both for political and legal reasons. However, as regards the tax implications of this choice, please note that theoretically the 10%, withholding tax only applies to the distribution of dividends and not to the remittance of profits from a branch to its head office. In face of this, since registered branches and companies are taxed in the same way, from a pure tax view, to register as a branch would provide a more effective tax saving. But this should be checked with the concerned authorities once we have notice cases of taxation on remittances of profits from branches to its offices despite the different provisions in the appropriated Code. Taxation Taxation Corporate Income Tax Special regime A new tax law approved in 1997 introduced a special tax regime for contracting and similar services, stating that the taxation by Industrial Tax for contracting services, sub-contracting and rendering of services shall be made by the special regime defined in the law. The new tax establishes a withholding tax on payments made to persons and companies, carrying out, occasionally or permanently, contracting services, sub-contracting services or rendering of services not included in the Employment Income Tax Code, no matter they have or not a head office, a permanent office or a permanent establishment in Angola.

The concept of contracting services is considered to be included in the activities which partially or wholly compete to complete civil works or services, which are or may be considered as costs, whether booked or not in Angola, by the acquirer, contractor or recipient of the services. For purposes of the law, the technical assistance contracts, management and others of similar nature are considered as services contracts. The taxable income will be 10% or 15% of the value of the contract, depending on the type of services. In respect of constructing, improvement, reconstructing, repair or maintenance of fixed assets, the taxable income will be 10% of the value of the contract, no matter in what form it is made. The rate applicable to such taxable income will be 40% which is the ordinary Industrial Tax rate, as stated in the Article 71 (1) of the Industrial Tax Code. The tax shall be withheld by the contracting party for each payment made, and paid over to the Tax Office within the following fifteen days, accompanied by a completed official document (DA. The tax shall be paid in a currency which is determined in the respective contract, converted into Kwanza Reajustados, for the purposes of applying Article 76 of the General Tax Code. The assessment and payment of the tax due shall be of the responsibility of the contracting party who will be liable for the whole amount of the tax in case of non payment, without prejudice to the right of recourse against the debtor of the tax, but only in respect of the principal debt. General Regime Companies carrying out industrial and commercial activities in Angola are subject to Industrial Tax (Income Tax) on all profits derived from Angola. Under the appropriated code, all the income obtained abroad by an Angolan company operating overseas will be fully taxable. Foreign entities with a permanent establishment in Angola are subject to an income tax only on profits derived from the permanent establishment. The definition of permanent establishment, introduced in the Codigo Geral Tributario, following the accepted notion of the OECD Draft Double Taxation Relief Convention, also considers as permanent establishment the mere rendering of services, if made by the presence in Angola of hired personnel, for more than 90 days within an year. Industrial tax is divided into three groups, of which, Group A is the more important. Group A includes the share companies, the public companies, companies which capital is higher than Kze 400,000,000.00, the financial and insurance institutions, Angolan companies operating abroad and foreign entities having a permanent establishment in Angola and other taxpayers that had an average turnover over Kzr 800,000,000.00. The ordinary tax rate is 40% and plus a surcharge of 10% tax will additionally apply to income exceeding Kzr 400,000,000.00 (thus on exceeding amounts, a final tax rate of 50% will be applicable). While this surcharge remains in force, to diminish this burden, a company can split the awarded projects between different group companies or, for the case of operating in a mere rendering of services, choose to be taxed on contract by contract basis. In the last case, it will be not exactly a matter of choice due to the fact that the law establishes that the taxation by Industrial Tax for contracting services, sub-contracting services and rendering of services shall be made by a special regime on contract by contract basis.

In the other hand, when a taxpayer forms a head office, residence or permanent establishment in Angola, subject to the Industrial Tax rules, by carrying on the activities indicated above, the payments made in contract by contract basis shall be treated as payments on account for the tax year for that year. The Minister of Finance can decide, on a case by case basis, to provide tax exemptions or tax reductions for companies investing in fundamental areas of the Angolan economy. Under the tax reform of 1992, further to granting tax incentives to companies investing in fundamental areas for Angolan development, an exemption from three to five years can be obtained for new industries, as defined by law. Companies are generally subject to tax on the gross amount of dividends received. Dividends received from Angolan companies subject to Industrial Tax are exempt from tax if at the time of the distribution the recipient owns at least 25% of the capital of the paying company and has held the shares for at least two years or since the incorporation of this company. The Capital Income Tax (Imposto sobre a Aplicacao de Capitais) imposed on taxable dividends was raised to 10% under the new legislation of 1992. An exemption, on the same conditions as the exemption from income tax, can be obtained from the Minister of Finance for news industries and investment projects in fundamental areas. The tax year is the calendar year. Under the tax reform, Group A companies have to file form M/1 up to 31st of May and advance payments of tax shall be made in January, February and March of the following year. Final payments will be made at the time of delivering form M/1 and set off against the advance payments made. Companies may carry forward tax losses for three years. No carry back is allowed. The allocation of costs as regards permanent establishments of foreign companies in Angola can only be made as regards costs directly incurred by the Angolan establishment. There are no tax regulations governing groups of companies. But the tax reforms of 1992 introduced provisions allowing the Tax Authorities to adjust the taxable income of any taxpayer, due to the existence of a special relationship. Furthermore, adjustment of the assessable income is also allowed for the case of a foreign operating entity declaring a taxable profit which will be different from the taxable profit which would be obtained by an Angolan entity under the same conditions. Personal Income Tax Employment All individuals receiving employment income for duties performed in Angola are subject to income tax. Personal Income Tax will be payable by all Angolan residents and non-residents on all the income obtained from an activity in Angola. A definition of residence was established in the appropriated Code, covering the stay for more than 183 days each year or the holding of a personal abode, evidencing the intention of that being a permanent residence by the 31st of December. Taxable income includes all employment income, such as wages, salaries, leave payments, fees, gratuities, bonuses and premiums or allowances paid or granted by reason of employment, in cash or in kind. You should consider that the personal tax law imposes a monthly definitive withholding tax on salaries and other employment income paid by the companies. Non residents are subject to

taxation on their income obtained in Angola. Taxation is made through a monthly definitive withholding by the employer according to the following rates: Up to Kzr 30,000,000.00 blank Exempt From Kzr 30,000,001.00 up to Kzr. 90,000,000.00 4% of the excess of Kzr. 30,000,000.00 From Kzr 90,000,001.00 up to Kzr. 150,000,000.00 fixed parcel of Kzr 2,400,000,00+6% of the excess of Kzr. 90,000,000.00 From Kzr 150,000,001.00 up to Kzr 300,000,000.00 fixed parcel of Kzr. 21,000,000.00+15% of the excess of Kzr 300,000,000.00 Double Tax Relief Angola has not concluded tax treaties with any other jurisdiction. No relief is granted for foreign taxes paid by an Angola taxpayer. Exchange Control All the exchange operations are subject to Banco Nacional de Angola supervision. However, the exchange residents (including representation offices, branches of foreign companies, incorporated companies, etc) are allowed to open and to movement hard currency banking accounts in the banks that operate in Angola. The Banco Nacional de Angola will define the conditions and the terms under which the exchange residents can open the hard currency bank accounts mentioned above. The exchange non residents foreign companies can open and movement Kwanza Reajustados (Angolan currency) and hard currency banking accounts in the financial institutions established in Angola. Companies covered by the foreign investment law may open bank accounts in local or foreign currency in banks domiciled in Angola in accordance with current banking and foreign exchange legislation, unless they are covered by some special regime. Ordinarily and generally, the contracts signed by a branch or a subsidiary must be made in Kwanzas Reajustados. However, this obligation does not forbid the parties from entering in a splitting contract in which the head office/mother company is paid directly in other currency according to the services rendered and the branch or subsidiary is paid in Kze. Visa Requirements y All foreign workers performing duties in Angola shall obtain visas after justification is made for their stay. If the workers are hired by an Angolan company or allocated to a permanent establishment of a foreign company, they should also obtain work permits.

1. Guiding Principles
y All foreign nationals wishing to enter in Angola must possess a valid passport.

y y

Entry visas are required for non Angolan nationals from countries with which Angola has no reciprocal agreement regulating the rights of entry. The Angolan authorities issue transit visas, short term visas, ordinary visas, work visas and residence visas. Angola has no quote systems for immigration into the country.

2. Temporary permits
y Transit visas are short term travel visas granted by the concerned angolan consular authorities for a period of 5 days, prorogable for an equal period of time and valid for a single entry. Short term visas are valid for a single entry and granted for a period of 15 days. These visas are conceded by the Angolan National Department of Immigration and Borders, through his border police stations, with the goal to permit the entry in national territory of the foreign citizens that had not could (??) get the visa in the concerned Angolan Consular Authority. The ordinary visa is granted to foreign people by the concerned angolan consular authorities for a period of 30 days. This kind of visa is issued for familiar, cultural, scientific, business and tourist reasons and might be used within 60 days after the date of emission.

3. Work Permits
y The work visas are conceded by the Angolan consular authorities to permit the entry in Angola of foreign citizens with the objective of realise, temporarily, a professional activity in the interest of the State or the third parties. This type of visa is valid for multiples entries and enable his titular to stay in the country for a period of a year, prorogable for equal periods of time, up to the term of the individual contract of work. The work visa needed to perform a professional activity on the account of the State can only be conceded with the authorisation of the Angolan National Department of Immigration and Borders after hearing the Minister of Labour. The work visa necessary to carry on a professional activity on the account of third parties must be conceded after permission of the Angolan National Department of Immigration and Borders under positive opinion of Minister that supervise and regulate the concerned activity. The issue of the work visa is linked with the payment by the titular of a pledge in an amount equivalent to the cost of the flight ticket to go back to the origin country, which should be deposited in the National Bank in the name of the Angolan National Department of Immigration and Borders. The repatriation pledge will be refunded by the authorities when the titular of the visa decide to leave the country.

4. Residence Permits
y Non Angolan nationals wishing to take up a residence in Angola must apply for residence permits. Applicants must initially apply for residence visas at the Angolan Consulates in their home countries. Once granted, the visa entitles entry into Angola for a maximum period of stay of 120 days, prorogable for equal periods of time, during which time application may be made and conceded for a residence permit. There are three kinds of residence permit: temporary, permanent type A and permanent type B. Temporary residence permits are valid for one year, with subsequent annual renewals for equal periods of time. Type A permanent permit is conceded to foreign people living in Angola during 5 consecutive years and is valid for 2 years with subsequent renewals for the same period tome. Type B permanent permits are granted to foreign people that have been living during 15 consecutive years in the country and are indefinite residence permits.

y y y

5. Steps for obtaining Permit

y In addition to an application, the following documents, all of which must be translated into Portuguese, must provide to the authorities to obtain the permit: o Passport copies o Photograph o A medical certificate o Details of a criminal record o Proof of financial means o A signed labour contract In granting work permits, consideration is given to the type of work proposed, the availability of workers capable of performing the work, the level of the salary to be paid and the availability of accommodation. The work visa only entitles his titular to perform the job that justified the concession of the visa. Foreign citizens are not permitted to engage in employment until work permits are issued.

y y

6. Self Employment
With the exception of sensitive industries and activities like defense, banking activity related with monetary issuing, administration of ports and airports, some areas of telecommunications and air transports, setting up business in Angola, either as a single proprietor or as a company, is now not very restricted. Angolan commercial law does not prohibit foreign residents from being directors of Angolan companies.

7. Family Members
The working spouse of a work permit holder does not automatically receive the same type of visa as the expatriate. An independent work permit application must be filed.

8. Tax Considerations
y Income Tax Foreign nationals working in Angola are treated as Angola citizens for income tax purposes. Declared or not a tax resident, a foreign national is taxed on income achieved in Angola. Tax Treaties Up to now Angola has not concluded any double tax treaties with third countries. Social Security Salaries and additional remuneration, as defined by law, are subject to social security contributions at the rate of 5% for employers and 2% for employees.

y y

Foreign workers are also subject to social security taxes. However, once they prove that they are already covered by another country social security regime, they are exempt from that payment.

9. Steps for obtaining drivers permits

y y y Foreign nationals may drive legally on their home country drivers' licenses in Angola for 45 days. Angola does not have driver's license reciprocity with any country. To obtain a local Angolan driver's licence, foreign citizens must submit a copy of their home country drivers' licenses, two photographs and an identification car. An applicant must also take a medical examination.

10. Administrative Addresses

Ministry of Home Affairs National Department of Immigration and Borders Rua 17 de Setembro Luanda-Angola Tel: 392887/339091 Fax: 392828 Ministry of Public Administration, Employment and Social Security Rua Primeiro Congresso do MPLA Luanda-Angola Tel: 339656