Duties, royalties and taxes
Duties, royalties and taxes payable by private parties
What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?
Industrial tax (income tax on mineral activities)
The tax rate currently in force is 25 per cent. For purposes of determining the taxable income, costs of exploration, evaluation and reconnaissance, contributions to the Mining Development Fund, among others, are considered as tax deductions additional to those provided for in the general tax law.
Royalty (tax on the value of mineral resources)
The tax rates currently in force are as follows:
- strategic minerals (including industrial diamonds) and precious metals and stones: 5 per cent;
- semi-precious stones: 4 per cent;
- metallic minerals, semi-industrial and artisanal diamonds: 3 per cent; and
- construction materials of mining origin and other minerals: 2 per cent.
Surface fee (fee levied on the concession area awarded payable during the exploration phase)
The surface fee value varies according to the size of the concession area, the type of mineral explored and the exploration year in question, and can range from US$2 to US$40 per square kilometre. These amounts are doubled in the event of an extension of the exploration period.
Contributions to the Mining Development Fund and Environmental Fund
Law No. 31/11 of 23 September 2011 (the Mining Code) imposes holders of mineral rights the duty to make annual contributions to the Mining Development Fund and the Environmental Fund (contributions raging from roughly US$1,250 and US$3,000).
Other taxes and contributions
Other (non-industry-specific) taxes or contributions are also worth noting, such as:
- capital gains tax (on profits or distributed dividends);
- personal income tax and social security contributions; and
- stamp duties.
Tax advantages and incentives
What tax advantages, tax credits and incentives are available to private parties carrying on exploration and mining activities?
According to the Mining Code, holders of mineral rights may apply for and be granted investment premiums (uplift), grace periods for the payment of income tax and any other tax incentive provided for by law. A new tax benefits code is under review in the Angolan National Assembly. However, based on the available information, said tax benefits code will not apply to the mining industry.
Tax advantages and incentives are negotiated and set out in the relevant mineral investment contract and must be applied for with the Minister of Finance (subject to an opinion of the Ministry of Mineral Resources, Petroleum and Gas (MMRPG)). The application for tax exemptions is discussed and negotiated during the contractual stage of the investment procedure and is attached to the contract, after approval by the negotiations committee and issue of a favourable opinion by the MMRPG. The negotiations committee comprises representatives from:
- the MMRPG;
- the national concessionaire (if applicable);
- the Ministry of Finance (in the event fiscal and customs benefits and exemptions are to be negotiated); and
- the regulatory authority (should it be created).
The executive branch may also authorise tax and customs exemptions to Angolan companies exclusively engaged in the processing, dressing and cutting of minerals extracted in the country.
Does any legislation provide for tax stabilisation or are there tax stabilisation agreements in force?
There is no specific legislation on this matter in Angola. Nevertheless, investors often seek the inclusion of specific provisions on tax stabilisation under their relevant mineral investment contracts.
Is the government entitled to a carried interest, or a free carried interest in mining projects?
There is no express state free carried interest right under the Mining Code. Yet, financial commitments on the part of the state are not common, particularly where state participation in the mining and marketing projects (as opposed to exploration projects) is a statutory requirement.
Transfer taxes and capital gains
Are there any transfer taxes or capital gains imposed regarding the transfer of licences?
No. Gains resulting from the transfer of mineral rights will be taken into consideration when assessing the transferor’s liability in terms of industrial tax (corporate income tax). However, a 2 per cent conveyance tax may apply in certain cases.
Distinction between domestic parties and foreign parties
Is there any distinction between the duties, royalties and taxes payable by domestic parties and those payable by foreign parties?
There is no distinction between duties, royalties and taxes payable by domestic parties and foreign parties.