As a result of the oil prices slowdown, which led to a reduction in public investment capacity, Angola needs more than ever to position itself externally in order to attract foreign investment.
As part of the strategy to increase Angola's attractiveness, a new investment law was enacted and entered into force on 11th August 2015 (Law no. 14/15). Expectations were high: the new law should create a more pleasant experience for investors; it should be able to facilitate doing business in Angola; and it should be straightforward, easy to understand and with fewer restrictions than previous laws.
However, there are serious doubts that this new law can achieve all its intended goals and act as a key driver of change in foreign investment behaviour.
On one hand, we congratulate ourselves on the elimination of a huge barrier for medium and small-size foreign investors--the obligation to invest $1m in Angola in order to be able to repatriate profits and dividends. Previous investment laws always required a minimum investment in the country to allow an investor to repatriate its profits, dividends and capital gains--Law 11/03 requested a minimum of $100,000 and Law 14/11 a minimum of $1m.
With the new law, 14/15, this barrier is removed. Any investor, small or large, can start up a business activity in Angola without a minimum capital investment and with the advantage of being able to repatriate profits, dividends and capital gains. This benefit could have less impact if the investment is located in Luanda, since the capital is one of the most expensive cities in the world to live as an expat.
For those who are willing to invest at least $1m, the new law could grant them tax incentives and advantages. These tax benefits will not be automatically awarded but only on a case-to-case basis depending on certain factors such as job creation for nationals; investment value; investment location; investment sector (agricultural, livestock, forestry, fishing industry and related agro-industries; production for export; percentage of participation of Angolan shareholders; and national value added). These tax benefits vary from one to 10 years depending on the fulfilment of the legal criteria.
Another positive aspect of Law 14/15 is the elimination of the former mandatory waiting period of three years before investors could start to repatriate dividends.
On the other hand, and on the most negative side of the law, there are new constraints for investors that are...