Angolan’s Republic Gazette of 1 October 2013 has been recently released thus publishing Presidential Decree no. 147/13, which introduces a new set of rules applicable to large taxpayers in Angola.

In addition to defining a new set of rights and obligations applicable to large taxpayers, this regime also introduces a new group taxation regime and new transfer pricing rules.

I. Large taxpayers

Even though the regime under analysis does not set forth the legal requirements for an entity to be qualified as a large taxpayer, it is established that the Minister of Finance shall publish a list containing the names of the qualifying entities, which shall be selected in accordance with a set of criteria to be defined at the discretion of the Tax Authorities.

On general terms, large taxpayers benefit from a direct relationship with a dedicated tax office (the Large Taxpayers Unit – “LTU”) and may benefit from special instalment plans to pay their tax debts.

On the other hand, large taxpayers shall be audited, and have their accounts certified, by a certified chartered accountant and shall, from now on, give notice, in writing, to the tax administration, of any change in its holding or management structure or in its headquarters or place of effective management.

The LTU is competent to assess taxes due by large taxpayers, as well as receive the related payments, except for the personal income tax, the stamp duty and consumption tax, which shall be paid in the headquarters’ tax office.

II. Group Taxation Regime

Included in this regime is also the possibility of companies being taxed as a group on the basis of their aggregated results.

A group, for these purposes, is deemed to exist when one company holds, directly or indirectly, 90% or more of the share capital of others, as long as such holding entitles the parent company to, at least, 50% of the voting rights. Moreover, for this regime to apply all entities involved must have their headquarters and place of effective management in Angola and the relevant holding must be held, at least, for a period of two years prior to the application of the regime. Additionally, none of the entities involved can be considered as dependent of any other company with headquarters or place of effective management in Angola.

Entities which do not have any commercial activity for a period of over one year, are facing bankruptcy, liquidation, dissolution or tax enforcement proceedings, entities which have registered losses in the two previous years or entities which benefit from tax incentives under the Private Investment Law cannot qualify for this regime.

This being an optional regime, entities must apply for it until the last day of February of each year.

III. Transfer Pricing

Even though the Industrial Tax Code already had a rule referring, in general terms, to the arm’s length principle, the large taxpayers regime also introduces a real transfer pricing regime in Angola, according to which transactions between related parties must be agreed on at market conditions.

Such rules apply to related parties which are defines as entities which can exercise, directly or indirectly, significant influence in the management decisions of the other. In particular, two entities are considered to be related parties in the following situations:

(i) The managers or directors, including their spouses, ascending or descending relatives, hold, directly or indirectly, a holding of 10% or more in the share capital or voting rights of another entity;

(ii)The majority of the board members is common or the board is composed by people who are married or are unmarried partners, or by people who are relatives in a direct line;

(iii) The entities are in a controlling relationship, have cross-shareholdings, or are bound to each other by a subordination contract or one with equivalent effect;

(iv) There are commercial relationships between the entities which represent more than 80% of the turnover; or (v)One of the entity’s debts towards the other represent more than 80% of the first entity’s debts.

In addition, taxpayers with a turnover over 7bn kwanzas (roughly USD 70 million) shall produce and maintain a transfer pricing file with a description of all transactions – including prices – carried out with related parties, which shall be submitted to the tax authorities until the sixth month after the end of the taxable year.