VAT and legal regime of invoices

New paradigm in the consumption taxation in Angola

As from July 1, 2019, VAT will come into force in Angola, with the Consumer Tax being revoked.

The rate is expected to be 14%.

Soon, the new Legal Regime of Invoices and Equivalent Documents will also be published, which will include rules regarding the software for issuing invoices and their communication to the Angolan Tax Authorities (AGT).

VAT is characterised by:
  • Taxing the final consumption;
  • Covering all phases of the economic circuit (multi-phase);
  • Being neutral for economic operators.

In a simplified way, each economic operator will assess VAT on the supplies of goods/services rendered and will pay that amount of VAT to the State, deducting the VAT that has been paid on the purchase of the goods and services necessary for his activity.

This “assessment-deduction" mechanism ends with the last element of the economic chain –the final consumer –which will fully support the tax.

The supply of basic goods, education, medicines and rental for residential purposes, among others, will be exempt from VAT. Economic operators in these business sectors will not assess VAT. However, they will not be entitled to deduct input VAT.

Exports and, for the most part, services provided to non-resident entities will not be subject to VAT. However, economic operators will be entitled to deduct the input VAT.

It is expected that during the interim period of two years (2019 and 2020) only Large Taxpayers will be subject to the standard VAT regime.

The remaining taxpayers will be covered by a simplified scheme, under which they will not assess VAT, being obliged to proceed with a quarterly payment on the amount of half of the VAT rate (=14%x50%) of the sales received in such period.

By fulfilling certain conditions, taxpayer with a turnover exceeding USD 250,000 may apply for authorization to join the normal VAT regime.

A tailor-madetax

The VAT regime in Angola will have the following particularities:
  • VAT captivation regime on supplies to the oil, banking, insurance, telecommunications and state sectors
  • VAT is applicable to banking and insurance transactions
  • VAT cash regime to Small Companies
  • VAT refunds in cash or tax credit certificates

The new Legal Regime of Invoices and Equivalent Documents will extend to all operators the obligation to issue an invoice for each supply of goods or service rendered, including those carrying-out VAT exempt transactions.

Taxpayers with a turnover of USD 250,000 or higher will be required to use billing systems previously certified by the AGT.

It is expected that one of the features of these systems will be the capacity of generating a SAF-T file, containing the detail of the contents of the invoices issued, to be sent to AGT.

It is undeniable that VAT will be a major advance in the Angolan tax system. However, its implementation will give raise to doubts, such as:

  • I do not belong to the Large Taxpayers List.
  • Will it be beneficial to join the standard VAT regime?
  • I am an exporter, so I anticipate to be in a VAT credit position. Can I request a VAT refund?
  • I carry out taxable and exempt operations.
  • Can I deduct the input VAT related with my activity?
  • I purchase services performed abroad from non-resident entities. Is VAT due in Angola?
  • Who is responsible for paying the VAT?
  • Will the invoices issued by my suppliers allow me to deduct the VAT mention therein?
  • How should I organize my accounting system?

"Companies will assume more compliance obligations and, in return, will benefit from a more neutral, fairer and less burdensome tax in their business dealings"

Susana ClaroPartner, PwC Angola

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