INVESTOR™S GUIDE TO ANGOLA - Vitor Carvalho & Associados

39 Pages·2012·0.34 MB·English

INVESTOR’S GUIDE TO ANGOLA
Table of contents

1. Introduction ___________________________________________________2
2. Angola: Characteristics and economic data ________________________3
2.1 General information ___________________________________________3
2.2 Economic Indicators___________________________________________3
2.3 Commerce and Investment Opportunities in Angola__________________4
3. Angola’s Legal System__________________________________________5
3.1 Private Investment Law ________________________________________6
3.2 Incentives__________________________________________________10
3.3 Public-private Partnerships ____________________________________12
3.4 Corporate Law ______________________________________________13
3.4.1 Incorporation ____________________________________________14
3.4.2 Local forms of representation _______________________________16
3.5 Real Estate Investment _______________________________________18
3.6 Visas______________________________________________________19
3.7 Labour Law_________________________________________________22
3.8 Tax Context ________________________________________________27
3.9 Money Laundering___________________________________________30
3.10 Specific Schemes: Oil and Diamonds ___________________________31
3.11 Intellectual Property_________________________________________33
3.12 Dispute Resolution__________________________________________35
4. Privileged Relations with Other Countries_________________________36
4.1 Portugal ___________________________________________________36
4.2 Brazil _____________________________________________________37
4.3 India ______________________________________________________37
4.4 China _____________________________________________________37
4.5 United States of America______________________________________38
4.6 South Africa ________________________________________________38

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1. Introduction

Over the past few years, Angola has shown very attractive economic growth rates and is
currently the greatest pole of concentration and attraction of investment in the African
continent. Given the economic potential and the investment opportunities that the
Angolan market offers in various sectors of activity, it becomes vital for those who decide
to invest to know the country’s current legal framework.

The main attraction of Angola for foreign investors is particularly focused on its existing
riches such as oil and other natural resources, and infrastructure rehabilitation.

To this extent, this Investor’s Guide is primarily intended to convey some general and
summary information regarding the current legal environment in Angola, stress being
laid to the areas of Private Investment, Commercial Law, Tax Law and Labour Law.

The information conveyed in this Investor’s Guide does not dispense with the respective
legal advice on each specific investment project.

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2. Angola: Characteristics and economic data

2.1 General information

Official Name: Republic of Angola
Total area: 1,246,700 Km2
Population: 18.5 million inhabitants
Official Language: Portuguese
Capital: Luanda (5.5 million inhabitants)
Other Important Cities: Cabinda, Huambo, Lubango, Lobito and Benguela
Currency: Kwanza (KZ)
Date of Independence: 11 November 1975

International Relations:
African Union – since 1975
ONU – United Nations Organization – since 1976
IMF – International Monetary Fund – since 1976
World Bank – since 1989
WTO – World Trade Organization – since 1996
CPLP – Community of the Portuguese Speaking Countries (founding member) – since
1996
OPEC – Organization of Petroleum Exporting Countries – since 2007

2.2 Economic Indicators

Angola is one of the economies with the greatest and fast-paced growth across the
world, as it has become the largest oil producer in sub-Saharan Africa, implemented
economic policies addressed to private investment, and benefitted from a privileged
geographical location. To this extent, Angola is a fairly attractive market for investors.

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The International Monetary Fund (IMF) expects that, in 2011, Angola will show a real
economic growth of 7.5%, directly depending on the oil sector. This projection is justified
by the average output level expected (which is an approximate indication of its maximum
production capacity – 2 mbd). The non-oil sector is expected to grow by 8.8%.

2.3 Commerce and Investment Opportunities in Angola

Angola is undeniably rich in oil and mineral reserves, particularly diamonds and iron ore.

In order to boost the economy and promote employment, which are the key objectives of
the Angolan government, the country needs to increase initiative and competitiveness of
its private sector.

Oil and diamonds account for nearly 99% of Angola’s exports. Nevertheless, the country
has a huge potential to develop a diversified economy, namely regarding the production
and export of agricultural products, industrial products and services.

To this extent, the Angolan government recognizes the importance of attracting private
investment, not only to contribute to diversify the economy, but also to reduce the
Angolan economic dependence on volatile sectors such as oil and diamonds and has
therefore implemented legislative measures towards creating a more attractive
environment for investment.

The sectors of activity which provide the best business opportunities are: a) Oil; b)
Minerals; c) Civil construction and road, rail, port and airport infrastructure; d)
Agriculture; e) Telecommunications; d) Banking; f) Tourism and g) Energy.
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3. Angola’s Legal System

The Angolan legal system is based upon the Portuguese civil law and customary
law. For instance, it should be mentioned that the Angolan Civil Code
corresponds to the original version of the Portuguese Civil Code of 1966. It is
typically shaped by the Romano-Germanic law, whose legislation is mostly
codified and legally established.

Without direct correspondence to the Portuguese legal scheme, there are two
extremely important diplomas in Angola: The Petroleum Act and the Diamond
Act.

The current Constitution of the Angolan Republic was published in the Official
Journal of Angola on 5th February 2010. Compared to the previous version,
significant amendments have been brought about, especially under the scope of
the Fundamental Rights, as it has become wider by including free enterprise,
private property, the right to environment and intellectual property.

The judicial system includes municipal and provincial courts, which operate at the
trial level, while the Supreme Court operates at the appellate level. The
Constitutional Court deals exclusively with the examination of constitutionality
matters.
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3.1 Private Investment Law

The new Private Investment Law (PIL), approved by Law No. 20/11, of 20th May,
strategically redefines the principles regarding the already existing scheme and
the procedures needed for access to the benefits and incentives granted by the
State, namely in terms of profit and/or dividend repatriation.

The purpose of the new diploma is to adapt more effectively the tax incentives
granted to investors and the socio-economic impact of the investments made in
the country and to adjust the system to the new constitutional reality of Angola
and to the tax reform that has been underway.

The new Law does not apply to investment projects approved under the previous
legislation. It, however, applies to projects that are still outstanding from the date
of entry into force of the diploma.

This new law brings about significant changes to the private (internal and
external) investment scheme, namely aiming at:
- attracting larger investments (preferably in the structural sectors of the
Angolan economy);
- avoiding investments below USD 1,000,000.00 into the country, per project
and per investor.

To put a private investment into practice in Angola, it is necessary to obtain a
priori authorization of the National Agency for Private Investment (ANIP), which is
responsible for conducting the Angolan policy regarding private investments.

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The new Private Investment Act has also introduced the concept of “External
Reinvestment”, which consists in applying, within the Angolan territory, all or part
of the income generated in virtue of an external investment previously made and
already implemented under the framework of ANIP. This reinvestment may take
advantage of new benefits, and the reinvestment commitment ab initio may help
grant larger incentives to the initial investment.

The main operations of foreign investment include:
a) Transfer of funds from abroad;
b) Investment of liquid assets in foreign currency bank accounts held by non-
residents in Angola;
c) Investment of funds under external reinvestment;
d) Import of machinery, equipment, accessories and other tangible fixed assets;
e) Incorporation of technologies and know-how.

This new Law established a unique procedural mechanism for the
implementation of private investments in Angola: the contractual regime. Thus,
the a priori declaration regime was abolished.

This new regime requires the existence of negotiations between the potential
investor and the relevant authorities of the Angolan state, in any submitted draft
investment proposal.

Submission and Approval Stages:
1st) Submission of Proposal to ANIP
The draft investment proposal to be submitted to ANIP should include:
i) all supporting documents of legal, economic, financial and technical
characterization of the investor and the investment (feasibility study,
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evaluation of the suitability of access to incentives and aids, implementation
schedule, among others);
ii) environmental impact assessment study (if applicable).
2nd) ANIP sends notice for proposal rectification (possible)
3rd) Investor has 15 days to reply
4th) ANIP accepts offer
5th) Beginning of the general deadline of 45 days for negotiation (extendable for
more 45 days)
6th) Beginning of the general deadline of 30 days to evaluate the proposals and
negotiation with the Negotiation Committee for Aids and Incentives (known as
CNFI)
7th) CNFI issues final opinion
8th) Delivery of final opinion to the approval body, by ANIP, within 5 days:
a) Investments up to USD 10 million: approval, within 15 days, by the Board
of ANIP (taking into account the binding opinion to be delivered by the
Finance Ministry, as regards the tax incentives to be granted);
b) Investments over USD 10 million: approval, within 30 days, by the Head of
State (the President of the Republic of Angola, as head of Government), after
a priori evaluation of the Council of Ministers;
c) Investments over USD 50 million: the Head of State may set up and define
the composition of an ad hoc CNFI in order to negotiate with the potential
investor and then to deliver a final decision.
9th) Adoption or rejection of the proposal
10th) ANIP issues the Certificate for Registration of Private Investment (known as
CRIP), within 15 days (if the proposal is approved).
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For the purpose of granting incentives to investors, the projects must be carried
out in priority sectors such as agriculture, manufacturing industry, transport
infrastructure, telecommunications, fisheries, energy, water, social housing,
health and education, as well as being located at development poles, special
economic zones or off-shores, to be created by the Angolan government.

The investors may have access to tax and customs incentives and/or benefits,
namely:
a) deductions to taxable income;
b) accelerated depreciation and reincorporation;
c) tax credit;
d) exemption/reduction of rate of tax, contributions and other import duties.

In this regard, the major innovation brought about by the new regime relies upon
the exceptional character of incentive/benefit granting procedure, given that it is
no longer automatic, indiscriminate and unlimited in time, now depending
basically upon an analysis of each investment project.

The decision-making power of granting tax benefits is also the Finance Minister’s
responsibility, without prejudice to the ANIP competence in following up the
whole process.

The tax and customs benefits show specific features according to each
Development Zone for the purposes of maximum time and value limits:
a) ZONE A (Province of Luanda, the capital-municipalities of the Provinces of
Benguela, Huíla, Cabinda and the Municipality ofLobito);

Industrial Tax – from 1 to 5 years, max.;
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Capital Gains Tax – from 1 to 3 years, max.;
b) ZONE B (remaining Municipalities of the Provinces of Benguela, Cabinda
and Huíla and Provinces of North Kwanza, South Kwanza, Malange,
Namibe, Bengo and Uíge);
Industrial Tax – from 1 to 8 years, max.;
Capital Gains Tax – from 1 to 6 years, max.;
c) ZONE C (Provinces of Huambo, Bié, Moxico, Kuando-Kubango, Cunene,
Zaire, North Lunda and South Lunda);
Industrial Tax – from 1 to 10 years, max.;
Capital Gains Tax – from 1 to 9 years, max.

3.2 Incentives

Among the various possible incentives, special attention should be paid to the
exemption from or deduction of the Industrial Tax, up to 50%, regarding the profit
arising from private investment, which varies according to the investment
Development Zone.

The tax benefits regarding the Real Estate Transfer Tax (Sisa) translate into the
exemption from or percentage deduction of the payment of this tax, due to the
acquisition of land and real property used in the project and that must be
requested from the relevant tax service of the respective Development Zone.

As regards the granting of investment incentives, the priority sectors are as
follows:
- Agriculture production;
- Manufacturing industries;
- Technology and modernization of the respective industry;
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