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Angola VAT system introduced, replacing old consumption tax

Non-resident digital service providers must comply with the new Angola VAT system from their very first sale. New rules were introduced in October 2019.

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A new VAT system was introduced in Angola on October 1, 2019. This came after previous plans aiming for an implementation date of July 1, 2019, had been delayed.

The Angolan parliament, in a historic vote, passed the introduction of the new VAT code back in February 2019 by a margin of 166 votes for, none against, and one abstention.

Angola VAT: no threshold for non-resident digital service providers

A threshold of USD$250,000 applies only to local companies, in effect there is a zero threshold for non-resident digital service providers. The Angola VAT rate is 14%, this is one percentage point lower than that of the South African Development Community (SADC) average. The new VAT system will replace Angola’s Consumption Tax code.

Customer location determination challenges

It is difficult to pay in foreign currencies in Angola using locally issued cards. In some cases, Angolan-based customers use credit cards issued by Portuguese (or some other country’s) banks to pay for online goods and services. This may affect customer location determination.

Determining the customer’s end location (via IP address, credit card billing address, etc) is an important feature of many VAT/GST implementations globally specifically in relation to cross-border digital sales. As a result, this purchasing trend may impact the expected volume of sales recognised as being from Angola.

B2B sales exemption

When non-resident service providers do not register the reverse charge mechanism will be applied by the local business.

It is still unclear as to how B2B transactions will be assessed once the non-resident registers. It is possible that a type of company identification number validation system will become available online via the Angolan tax authority website.

Angola VAT registration

Those non-resident digital service suppliers that want to register for Angola VAT will need to appoint a local fiscal representative. The law in its original form (October 2019) referred to a simplified registration system for non-resident digital service suppliers. This simplified registration is still not in place but we understand that the Angolan tax authorities are working hard to ensure it is part of future regulation.

In the meantime, an Administrative Ruling issued in January 2020 means non-resident digital service suppliers are required to register with the Angolan Tax Authority and comply with the following requirements.

  1. Appoint a fiscal representative in Angola. In practice, however, it is not a simple task to source such a fiscal representative. This creates issues for affected non-resident digital suppliers. 
  2. Pay VAT to the Angola Tax Authority via an Angolan bank account in the local currency: the Kwanza (AOA)
  3. Issue invoices with certain details via software that is certified by the Angolan Tax Authority

Remember, here at Taxamo, we will update our Insights section when we obtain more information on the new VAT system in Angola.

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