VAT in Angola, the turning point?

The introduction of the Value Added Tax (VAT) in the Angolan legal system had long been expected, however, it emerged in full swing, after successive derogations, only at the end of 2019, more precisely from the day October 1, 2019.

The need to obtain tax revenue, pressure from the International Monetary Fund and the determination to align the country’s policies with the Southern African Development Community (SADC), hastened the process of implementing VAT in Angola. The challenge was ambitious and profound changes were expected in the Angolan economic panorama since the tax itself imposed the modernization of the tax system and the formalization of a market known to be informal and marked by tax evasion.

Resistance to the entry into force of the legislative package, approved during the year 2019, which culminated in the entry into force of Law 7/19 of 24 April, was strong and marked by numerous debates, lectures and meetings between various agents in the Angolan market and the General Tax Administration (AGT).

Is the Angolan market prepared for this paradigm shift? Are economic agents prepared for this challenge?

It was in this context of uncertainty and contestation that VAT came into force in Angola.

Two years after the entry into force of VAT, what has changed?

The most striking change that occurred during 2019 was probably the obligation to issue invoices and equivalent documents based on the rules and procedures provided for in the Legal Regime of Invoices and Equivalent Documents, namely, through invoicing systems duly certified by the General Administration Tax. Along with this drastic change in the companies’ invoicing system, economic agents had to prepare themselves to (survive), in times of crisis, the coexistence of 4 VAT regimes, as well as broaden the range of their reporting obligations (in seat of VAT and SAF-T files).

The refund policy, characteristic of this type of tax, created high expectations among economic agents, who never recognized the State as an entity that reimburses the taxpayer.

The 2021 State Budget brought news regarding VAT and, as expected, we are faced with i) the disappearance of the transitional regime, with ii) the emergence of the simplified regime, with iii) the mandatory payment of stamp duty whenever taxpayers included in the general and simplified regime carry out operations that are exclusively exempt and with (unfortunate) iv) subject to tax on the goods that make up the basic food basket.

Today, (very) briefly, we can assess the introduction of VAT, in the Angolan legal system, as a real success, the latter is due, in part, to the creation of the VAT services department and the competent training given to tax technicians , exclusively prepared, to work with this type of tax.

Our experience in the Angolan market has shown us that we are slowly going a long way and proof of this is the profound change in the attitude of the (modernized) General Tax Administration towards taxpayers and, today, the contacts with tax technicians, the exchange of information and the VAT refunds are a reality.

The implementation of VAT in Angola was, without a doubt, a turning point in the Angolan market and profoundly changed the relationship of taxpayers among themselves and with the General Tax Administration. The need to comply with legal precepts, imposed by VAT reporting obligations and the delivery of SAF-T files forced taxpayers to review their internal policies and oblige their customers and suppliers to act in the same way.

2022 is just around the corner and the news of a reduction in the VAT rate for the next financial year sweetens the mouths of the most optimistic. Changes are expected, in terms of VAT, with the entry into force of the OGE for 2022 and at that time we will return to share our position with the reader.

Re-evaluating these last 2 years of VAT existence, are there any aspects to improve? Yes, there are. But overall, Angola has to be congratulated!

Joana Calado

Senior Consultant