Tax Guide for US Expats Living and Working in Angola
Who Is Liable For Income Taxes in Angola
Individuals receiving work-related income and/or business and professional income in Angola are subject to tax if the compensation is paid by an Angolan entity or if the respective cost of such income is allocated to an entity with a head office, residence or permanent establishment in Angola. Angolan law does not provide criteria for tax residence purposes to determine who is liable for tax in Angola.
Income subject to tax
Employment income. All employment income is subject to tax, including wages, salaries, directors’ fees, leave payments, fees, gratuities, bonuses, and premiums or allowances (for productivity or reaching certain goals), paid in cash or in kind. Allowances for travel and certain other expenses (for example, costs incurred for meals while representing the employer) are taxable to the extent that the amount paid to the employee exceeds the limits applicable to civil servants.
Self-employment income. Self-employed individuals are taxed on actual profit, which is gross revenue less deductible expenses (see Business deductions). In certain cases, business income is subject to Industrial Tax (corporate income tax).
Investment income. Income derived from the use of capital is generally subject to withholding tax. Interest on loans, including share holders’ loans, and late payment charges are taxed at a rate of 15%. Dividends, interest on bonds and royalties are taxed at a rate of 10%.
Deductions
Deductible expenses. No deductions from employment income are allowed, except for social security contributions.
Business deductions. The following expenses are deductible if properly documented:
- Rent paid for business premises
- Wages (subject to a maximum of wages paid to three employees), commissions and fees paid for services
- Water, gas, telephone and electricity expenses
- Insurance premiums
- Other necessary expenses required to carry out the taxpayer’s business
- Depreciation of the business premises
The total deduction for the above expenses is limited to 30% of the taxpayer’s total income if the taxpayer does not have an organized accounting regime.
Individual business owners receiving salary income are taxed at a flat rate of 20%.
Income from self-employment is taxed at a rate of 15%.
Capital gains and losses. A separate capital gains tax is not levied in Angola; however, capital gains derived from the disposal of business assets of a self-employed individual are included in operational profits and taxed at the regular Industrial Tax (corporate income tax) rate of 35%.
Capital losses may not be carried forward or back. However, under the Industrial Tax, tax losses may be carried forward for three years.
B. Other taxes
Inheritance and gift tax. Inheritance and gift tax is payable by heirs and donees. This tax is levied on gratuitous transfers of movable and immovable assets and rights located or transferred in Angola. Tax rates range from 10% to 30%, depending on the value of the estate or the gift and on the relationship of the heir or donee to the deceased person or donor.
Property tax. Property tax is levied at a rate of 30% on the official assessment value of real property, which is determined based on charged or deemed rent.
Property transfer tax. Property transfer tax is levied at rates ranging from 2% to 10% with respect to transfers of immovable property, including long-term leases (20 years or more).
C. Social security
Salaries and additional remuneration specified under law are subject to social security contributions. No ceiling applies to the amount of remuneration subject to social security contributions. The rates of the contributions are 8% for employers and 3% for employees.
Employees working transitorily in Angola are not required to make social security contributions if they can prove that they are covered by the social security system in another country.
Self-employed persons are subject to social security contributions based on a predefined monthly notional salary. The rate of the contributions is 8%, but it may be increased to 11% if additional benefits are covered.
To learn more about the history, culture, economy and other information about Angola
We have been preparing US income tax returns for US Citizens and permanent residents living in Angola for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.
We have scores of clients located in Angola and know how to integrate your US taxes into the local income taxes you pay. Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits. There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.
If you are self-employed while working in Angola, you will have to pay US self-employment taxes (social security). If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Angola.
We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident. You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.
Let us help you with your US tax returns, US tax planning and other US tax and legal concerns. Download our expat tax questionnaire or request a request a consultation by phone, skype or email