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 of 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 km2. These amounts are doubled in the event of extension of the exploration period.

Contributions to the Mining Development Fund and Environmental Fund

The Mining Code imposes holders of mineral rights the duty to make annual contributions to the Mining Development Fund and to the Environmental Fund (contributions raging from roughly US$1,250 and US$3,000).

Tax advantages and incentives

What tax advantages and incentives are available to private parties carrying on mining activities?

Investments in the mining sector are covered by the Mining Code and, on a subsidiary basis, the PIL. Tax advantages and incentives are negotiated and set out in the relevant mineral investment contract.

Holders of mineral rights subject to industrial tax may obtain tax incentives by way of deductible costs. Tax incentives must be applied for with the Minister of Finance and are subject to an MMRP opinion. 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 MMRP. The negotiations committee is comprised of representatives of:

  • the MMRP;
  • the national concessionaire (if applicable);
  • the Ministry of Finance (in the event fiscal and customs benefits and exemptions are to be negotiated); and
  • a regulatory authority (should it be created).

Incentives may be granted for the following acts with relevance to the Angolan economy:

  • acquisition of supplemental goods and services on the local market;
  • carrying out mineral activities in remote areas;
  • a contribution to the training and development of local human resources;
  • carrying out of research and development activities in cooperation with Angolan academic and scientific institutions;
  • local processing and dressing of minerals; and
  • a significant contribution to increase exports.

Holders of mineral rights may also apply for and be granted investment premiums (uplift), grace periods for the payment of income tax (whenever they are covered by any of the above-mentioned situations) and any other type of tax incentive provided for by law.

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.

Tax stablisation

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, nor are there any tax stabilisation agreements in place. In turn, most (if not all) mineral investment contracts contain specific provisions on stability and supervening circumstances, which may, to a certain extent, protect the investors’ rights and interests in this regard.

Carried interest

Is the government entitled to a carried interest, or a free carried interest in mining projects?

Financial commitments on the part of the state are not to be expected even in the absence of any specific provision on the matter, as state participation in the mining and marketing projects (as opposed to exploration projects) is a legal requirement (notably by means of a shareholding interest in the relevant mining companies).

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.