Madeira’s IBC advantages for Investments in Angola

The International Business Centre of Madeira (Madeira IBC) offers great opportunities for investments in Angola, as it grants the combination of its own benefits regime with other advantages specially provided by law.

In fact, Madeira’s IBC advantageous regime, which provides the investor with a unique package of benefits such as reduced direct taxation with effective rates ranging from 4 to 5%, until the end of 2020, as well as an exemption from withholding tax on dividends distributions and on interest and royalties payments to shareholders, becomes even more attractive when it comes to investing in Angola.

The introduction of article 42nd in the Portuguese Statute of Tax Benefits, in 2007, has made it possible not to include dividends distributed by subsidiaries resident in Angola in the taxable base of companies resident in Portugal, as long as the following requirements are met:

• The company incorporated in Portugal, as well as in Madeira’s IBC, is subject to corporate income tax;
• The company receiving dividends holds a minimum participation of 25% for at least 2 years;
• The subsidiary resident in Angola is subject to a corporate income tax similar to the Portuguese corporate tax;
• The profits distributed have been subject to a tax rate not less than 10% and do not result from passive income (royalties, capital gains...), from real state activities outside its territory, or from financial or insurance activities.

As long as these conditions are fulfilled, dividends paid from the Angolan subsidiary to the company incorporated within Madeira’s IBC will not be considered on the calculus of its corporate income taxable base, thus being exempt from taxation in Portugal.

As for other income received by the company incorporated within Madeira’s IBC, such as income from services rendered to the Angolan subsidiary, interest from loans and royalty payments due to industrial property management, or to the use or right of use of trademarks, patents, technical know-how, as well as industrial or commercial equipments, will be taxed at reduced tax rates of 4 to 5%.
Moreover, investors with activities in Angola through Madeira’s IBC are likely to invoke and benefit from the Agreement on the Promotion and Reciprocal Protection of Investments concluded between Portugal and Angola, as soon as the agreement is ratified by the Angolan Government.

Thus, an investor who opts to incorporate a company within Madeira’s IBC to invest in Angola will, certainly, optimize its investment, since it will not only benefit from Madeira’s IBC unique regime, but also from the exemption of taxation of dividends received from Angolan subsidiaries, as long as the conditions above mentioned are met.