More recently, Order no. 599/14 (24 March 2014) sets out the list of “major taxpayers” and their requirements to prepare a transfer pricing report.
Transfer pricing reports
Under the Angolan transfer pricing regime, taxpayers subject to the new transfer pricing compliance rules—i.e., the preparation and submission of the transfer pricing report—are:
- Taxpayers with an annual turnover (determined by amounts of sales and of provisions of services) equal to or greater than 7 billion Kwanza (approximately U.S. $70 million)
- Taxpayers listed on the “major taxpayers” list
- Taxpayers with activities in the financial, oil and gas, diamond, and telecommunication sectors or industries
Scope of transfer pricing rules
The new transfer pricing rules apply to all domestic (“in-border”) and cross-border commercial and financial transactions entered into between a qualifying taxpayer and its related entities, for transactions beginning or occurring on or after 1 January 2013.
Specific rules apply to the definition of a “related entity.”
Transfer pricing documentation
The transfer pricing documentation must be prepared in Portuguese language and submitted to the National Directory of Taxes by the end of the sixth month after the close of the fiscal / tax year (30 June 2014 for calendar year 2013).
The Angolan transfer pricing law notes that the transfer pricing report is to follow the following structure and contain the following information:
- Executive summary
- Macroeconomic overview
- Company description
- Functional analysis
- Identification of related-party transactions
- Economic analyses of related-party transactions
The Angolan tax authorities accept only three “traditional” transfer pricing methods to determine the arm's length nature of intra-group transactions:
- The Comparable Uncontrolled Price Method
- The Resale Price Minus Method
- The Cost Plus Method
Thus, tax professionals anticipate there may be a need to reassess the pricing policy and economic analysis that are centrally prepared by foreign headquarters of multinational entities.
The recent implementation of the transfer pricing rules in Angola provides a number of challenges for multinational and domestic companies operating in Angola. For instance, there are pending unresolved questions regarding the application of the Angolan transfer pricing regime.
Taxpayers affected by the new transfer pricing regime need to consider how best to address these challenges in order to be compliant with these new rules.
For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group:
+35 121 248 7391
+35 121 011 0087