The transfer pricing regime approved for Angola, while generally in line with Organisation for Economic Co-operation and Development (OECD) recommendations concerning the arm’s length principle—includes, however, some unique measures.
For example, the tax authorities may make adjustments to determine the tax basis whenever, due to the existence of “special relations” between the taxpayer and another entity (whether a resident of Angola or not, and whether subject to, or not, Angola’s industrial tax), the parties have agreed to conditions that differ from those that would usually be agreed upon by unrelated parties, leading to the computation of taxable income that is different to which would be determined in the absence of such relations.
For these purposes, “special relations” are deemed to exist (among other factors) when:
- The directors or managers of a company, as well as their spouses, ascendants or descendents hold, directly or indirectly, a shareholding not less than 10% of the capital or of the voting rights in the other entity.
- The majority of the members of the management bodies are the same persons or, if different persons, are linked by marriage, non-marital partnership or direct kinship (in a “straight line”).
- The entities are engaged by a subordination contract.
- The entities are in a dominant position in the relationship (or which have crossholdings), as well as are engaged by subordination contracts, group agreements, or the equivalent under the terms of the Commercial Companies’ law.
- Commercial relations between the entities represent more than 80% of the total operational volume.
- One entity finances the other for more than 80% of its credit portfolio.
Under Angola’s transfer pricing regime, the only methods accepted by the tax authorities to analyze the transactions conducted by related entities are the "traditional methods“ (i.e., the comparable uncontrolled price method, the resale price method, and the cost plus method).
Some ancillary transfer pricing rules are introduced for “major taxpayers” (those taxpayers that report, during the respective period, total profits greater than 300 million UCF (approximately U.S. $3.15 million). The main reporting requirement consists of the preparation of a transfer pricing documentation file, to be filed by the end of the sixth month following the tax year’s end.
For more information, contact a KPMG tax professional:
Luís Magalhães
+244 227 280 101