Angola to simplify tax code in bid to reduce reliance on crude

(Bloomberg) – Angola, Africa’s second-biggest oil producer, plans to simplify taxation and more than double revenue from sources other than petroleum to curb the government’s reliance on crude.

The target is to pass three tax codes this year that will cut fees and modernize laws, some which date from 1948, Gilberto Luther, director of the reform project, said in an interview.

The changes will increase receipts from industries including manufacturing and retail to about 20 percent of gross domestic product by 2017 from 8 percent in 2011, he said. In Nigeria, Africa’s largest crude producer, non-oil tax was 6.3 percent of GDP in 2011.

Oil-industry tariffs accounted for 79 percent of tax revenue in 2011.

Plans to earn more from other areas come as Angola continues to rebuild from a 27-year civil war that ended in 2002 and as growth excluding oil reached 9.1 percent last year.

The US$114 billion economy is forecast to expand 7.1 percent this year from 7.4 percent in 2012, according to the government and budget documents.

By 2017 or soon after, a value-added tax on finished products and services will replace a consumption tax that’s charged on each stage of manufacturing, Luther said. The new levy will cut the “cascading effect” of the previous tax, which increased inflation by making prices higher than a lone tariff on the final product, he said.

Angola has separate tax regimes for petroleum, negotiated with companies including Total SA, Exxon Mobil Corp. and BP Plc., in production-sharing agreements. Tax authorities are guiding the reforms by looking at South Africa, Ivory Coast, Morocco, Zambia and Mozambique, Luther said. The International Monetary Fund (IMF) forecasts Angola’s government revenue this year at 44 percent of GDP, the second-highest in sub-Saharan Africa.