The Angolan government will reintroduce a 10% rate on foreign exchange transactions carried out abroad as part of service contracts, in accordance with the special contribution provided for in the general government budget (OGE) for 2024.
The special contribution for current invisible foreign exchange transactions focuses on transfers made under contracts for the provision of foreign technical assistance, management or unilateral transactions, according to Article 15 of the OGE bill, which was generally approved on Wednesday.
This special assessment was first introduced in 2015 to address the decline in tax revenue caused by changes in the price of a barrel of oil on the international market, and was repealed in 2021.
In an interview with Radio Angolan National (RNA), Finance Minister Vera Davez de Souza explained that the executive branch has decided to reintroduce the tax on foreign transfers with a dual purpose.
On the one hand, to solve the problem of falling incomes, taking into account debt service obligations, without harming the social sphere, and on the other, to “give a significant increase” to the budget of the Ministry of Agriculture.
Vera Daves acknowledged that servicing debt next year “will be a challenge”, explaining that the alternative would be to cut spending across all budget areas, including health and education.
“We had to think of solutions to prevent this, protect the social sector and be able to increase the budget of the Ministry of Agriculture and have a budget for capitalization of funds and BDA. [Banco de Desenvolvimento de Angola] to support the diversification program,” he emphasized.
The minister said the measure would help mobilize additional revenue and ease pressure on exchange rates.
“Under normal circumstances, the central bank could have taken measures to limit the amount transferred abroad due to less currency available, but the executive branch understood that restrictive measures were better in terms of prices than flows,” he told RNA , justifying this by the fact that “who can pay, pays,” which is preferable to not making transfers, “because a limit has been set.”
“It is from this perspective that this measure was conceived and we hope that it will help us protect the social sector, strengthen agriculture and create space so as not to create restrictive measures for those who want to move,” he added.
Under the proposed law, the special assessment would apply to individuals or legal entities governed by private law, as well as public companies incorporated or headquartered within the country, who approach a financial institution to make transfers subject to this regime.
The basis of calculation is the amount in the national currency that is the object of the transfer, while calculation and payment are carried out by bank withholding at the time of transfer abroad.
Author: Lusa
Source: CM Jornal
I am Michael Melvin, an experienced news writer with a passion for uncovering stories and bringing them to the public. I have been working in the news industry for over five years now, and my work has been published on multiple websites. As an author at 24 News Reporters, I cover world section of current events stories that are both informative and captivating to read.