Angola is not the most obvious destination for foreign investment. Yet in the midst of a global financial crisis, Angola is growing at an amazing rate. It’s now the fourth fastest growing economy in the world.
In recent months, several clients have contacted me with serious investment proposals from Angola. Many of the Portuguese immigrant construction workers who were previously employed in Spain’s construction boom have headed to Angola. (Spain is actually where I first heard of this trend). My contacts in booming Brazil also report a roaring trade with Angola and Brazilian reals pouring in there. So what’s going on?
First, I should point out that in Angola they speak Portuguese – hence the obvious interest from Brazil and Portugal. But British expat clients in the construction business have also been headed out to Angola and have asked me to advise on tax structuring for their companies.
Although Angola’s main business and source of wealth is oil, sectors not related to natural resources are growing rapidly too – including construction, banks, communications and tourism.
Angola is being rebuilt following a durable peace agreement reached in 2002 after 27 years of civil war. Since 2005, the Angolan government has used billions of dollars in credit lines from China, Brazil, Portugal, Germany, Spain, and the EU to rebuild Angola’s public infrastructure – this is the construction boom that is occupying the workers who lost their jobs in Spain. The IMF just lent $1.4 billion to Angola as well, and they are busy spending it!
The Angolan government has also been active revamping company laws and laws regarding foreign investment, in order to create a business-friendly investment climate. Foreign and domestic investors are granted equal access to investment incentives for high-priority sectors such as manufacturing, agriculture, civil construction, energy and water, infrastructure development, tourism, processing industries and mining. These incentives include reduced rates and exemptions for corporate tax, withholding tax, customs duties and transfer tax on property for up to 15 years.
Even though Angola currently has no tax treaties in place, there are, according to Spanish corporate services provider Amicorp,
interesting opportunities to make use of the Investment Protection Agreement that exists between Portugal and Angola until the Double Tax Agreement is signed and ratified. There are currently opportunities for tax structuring through Madeira but this will become less attractive with the implementation of Madeira’s new regime as of 2012. This makes the introduction of the Double Tax Agreement between Angola and Portugal even more interesting, allowing access EU laws and directives.
What does Q Wealth think about all this? At one level, it reminds us of the world of opportunities out there. Maybe now is the ground level and if you are feeling adventurous you could get in on the boom and make some quick cash.
However, it is strangely similar to the story of Dubai: an oil rich state developing out of nothing and suddenly becoming a boom town for construction, real estate and anything else they can think of to diversify into. And we all know how Dubai has come tumbling down. So invest in Angola, but be careful!