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IMF Recommends VAT For Angola

by Lorys Charalambous, Tax-News.com, Cyprus

09 September 2014


Angola should introduce a value-added tax (VAT) to complement the recently adopted non-oil tax reform, the International Monetary Fund (IMF) has said.

The long-awaited non-oil tax reform was approved by the National Assembly on July 4, 2014. The IMF welcomed the package as a "crucial step toward reducing the budget's heavy reliance on oil revenue."

After running a surplus over the last four years, the authorities expect an overall fiscal deficit of about four percent of GDP in 2014, reflecting a ten percent decline in oil revenue during the first quarter of 2014. "While this is unlikely to be a permanent phenomenon, significant steps have been taken in non-oil tax reform under the recently approved fiscal legislation aimed at diversifying the sources of non-oil revenues," the IMF said.

The reform included the adoption of three laws: the general tax code, the tax procedure code, and the tax collection code. In addition, changes to personal and corporate income taxes were introduced to boost consumption and investment.

The corporate income tax rate was reduced from 35 to 30 percent, while the personal income tax threshold was increased to a monthly income of 34,450 kwanza (USD353), from 25,000. At the same time, the tax base was expanded by closing loopholes. A partial tax amnesty for some tax debts prior to December 2012 was also approved.

"Staff welcomes the recent approval of the core decrees comprising the non-oil tax reform. The approval of this legislation should be followed by improvements in the tax and customs administrations to fully realize the potential for higher non-oil revenue collections. A value added tax (VAT) could also be introduced in due course and, if implemented diligently, would provide more stable revenue for the budget, thus reducing the dependency on oil revenue and shielding the budget better from oil revenue volatility," the IMF concluded.

TAGS: tax | investment | value added tax (VAT) | law | budget | International Monetary Fund (IMF) | Angola | legislation | tax reform

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