Por Ricardo Nery, Senior Lawyer, MC&A

Last August, the Angola Parliament approved a new private investment law (Angolan Private Investment Law (APIL)), which aims to simplify the investment proceedings in Angola and provide investors with certain tax benefits, in an effort to improve the economic outlook of the country.

The tax benefits foreshadowed in this new regime only apply to foreign investments in a minimum amount of USD (US dollars) 1m and to national investments in an equivalent minimum amount in Kz (Kwanzas) to USD 500,000. Notwithstanding these limitations, simpler proceedings now apply to any foreign investments, even those in amounts below the thresholds mentioned, and to national investments in amounts greater than Kz 50m. This means that for foreign investors the minimum cap of USD 1m has been revoked by the new regime.

APIL still requires that every investment project is subject to negotiation between the investor and the “competent governmental authority, generally the relevant Ministry concerned with the area of investment. This negotiation will determine the specific details of the investment project, and will likely also involve an agency that deals with private investment in Angola”. Now that Angolan National Private Investment Agency (ANIP) is no longer the only agency in charge of private investment, this opens the door to direct negotiations with several different Angolan agencies, depending on which agencies are delegated such powers by the President of the Republic.

APIL has some specific provisions worth highlighting. For instance, foreign investors in some economic sectors (like energy and water, tourism, public transportation, IT, among others) are required to enter into a partnership with Angolan companies or citizens, and these Angolan partner investors must hold at least 35% of the share capital in the partnership vehicle. Other sectors, such as oil industries, mining industries, financial institutions and other sectors set aside by specific regulation, are excluded from these requirements, however.

APIL also introduced a cap on shareholder loans, equal to 30% of the amount of the whole investment. Such loans can only be repaid 3 years after the date the loan was made available by the shareholder/s. Furthermore, indirect investment (defined by this law as loans, supplementary capital contributions, patented technology, trade secrets, trade models, franchising, trademarks and technical processes) cannot exceed 50% of the amount of the total investment.

However, the new law does make it possible to distribute dividends, capital gains, compensations and royalties without needing to wait the mandatory period of three years, removing an obstacle set by previous regulation. Under these new provisions, the only requirement to making such payments is that evidence of the completion of the project can be provided.

It is still important to note that the tax benefits provided by APIL are granted on a case by case basis, after evaluation by the Angolan government. This evaluation is made based on certain criteria, namely:

• jobs created by the investment for Angolan citizens
• the amount of the investment
• the location of the investment (for this purpose, APIL divides Angola into two different Zones, where “Zone B” (the provinces of Cabinda, Bié, Cunene, Huambo, Cuando Cubango, Lunda-Norte, Lunda-Sul, Moxico, Zaire, Bengo, Cuanza-Norte, Cuanza-Sul, Malange, Namibe, Uije, and all counties of the provinces of Benguela and Huila) offers greater benefits than “Zone A”), (the g province of Luanda, and the head counties of Benguela, Huila, and Lobito)
• level of natural resource output
• output designated for export
• percentage shareholding held by Angolan shareholders, and
• national added value.

In addition to this, any investments greater than USD 50m that create at least 500 jobs for Angolan citizens in “Zone A”, or 200 jobs for Angolan citizens in “Zone B”, may grant extraordinary tax benefits to the relevant investor, which will need to be negotiated with the Angolan government on a case by case basis.

Finally, whilst investment projects approved prior to the implementation of the APIL are not automatically caught by its provisions, an investor may make a request to the competent authority requesting that it become so subject. Any determination by the competent authority in this regard will be based on the value and characteristics of the project.

in http://www.elexica.com, 20 Outubro de 2015