INVESTORS GUIDE TO ANGOLA

Table of contents 1. Introduction ___________________________________________________2 2. Angola: Characteristics and economic data ________________________3 2.1 General information ___________________________________________3 2.2 Economic Indicators___________________________________________3 2.3 Commerce and Investment Opportunities in Angola __________________4 3. Angolas Legal System __________________________________________5 3.1 Private Investment Law ________________________________________6 3.2 Incentives __________________________________________________10 3.3 Public-private Partnerships ____________________________________12 3.4 Corporate Law ______________________________________________13 3.4.1 Incorporation ____________________________________________14 3.4.2 Local forms of representation _______________________________16 3.5 Real Estate Investment _______________________________________18 3.6 Visas______________________________________________________19 3.7 Labour Law_________________________________________________22 3.8 Tax Context ________________________________________________27 3.9 Money Laundering ___________________________________________30 3.10 Specific Schemes: Oil and Diamonds ___________________________31 3.11 Intellectual Property _________________________________________33 3.12 Dispute Resolution __________________________________________35 4. Privileged Relations with Other Countries _________________________36 4.1 Portugal ___________________________________________________36 4.2 Brazil _____________________________________________________37 4.3 India ______________________________________________________37 4.4 China _____________________________________________________37 4.5 United States of America ______________________________________38 4.6 South Africa ________________________________________________38

1. Introduction
Over the past few years, Angola has shown very attractive economic growth rates and is currently the greatest pole of concentration and attraction of investment in the African continent. Given the economic potential and the investment opportunities that the Angolan market offers in various sectors of activity, it becomes vital for those who decide to invest to know the countrys current legal framework.

The main attraction of Angola for foreign investors is particularly focused on its existing riches such as oil and other natural resources, and infrastructure rehabilitation.

To this extent, this Investors Guide is primarily intended to convey some general and summary information regarding the current legal environment in Angola, stress being laid to the areas of Private Investment, Commercial Law, Tax Law and Labour Law.

The information conveyed in this Investors Guide does not dispense with the respective legal advice on each specific investment project.

2. Angola: Characteristics and economic data

2.1 General information

Official Name: Republic of Angola Total area: 1,246,700 Km2 Population: 18.5 million inhabitants Official Language: Portuguese Capital: Luanda (5.5 million inhabitants) Other Important Cities: Cabinda, Huambo, Lubango, Lobito and Benguela Currency: Kwanza (KZ) Date of Independence: 11 November 1975

International Relations: African Union since 1975 ONU United Nations Organization since 1976 IMF International Monetary Fund since 1976 World Bank since 1989 WTO World Trade Organization since 1996 CPLP Community of the Portuguese Speaking Countries (founding member) since 1996 OPEC Organization of Petroleum Exporting Countries since 2007

2.2 Economic Indicators

Angola is one of the economies with the greatest and fast-paced growth across the world, as it has become the largest oil producer in sub-Saharan Africa, implemented economic policies addressed to private investment, and benefitted from a privileged geographical location. To this extent, Angola is a fairly attractive market for investors.

The International Monetary Fund (IMF) expects that, in 2011, Angola will show a real economic growth of 7.5%, directly depending on the oil sector. This projection is justified by the average output level expected (which is an approximate indication of its maximum production capacity 2 mbd). The non-oil sector is expected to grow by 8.8%.

2.3 Commerce and Investment Opportunities in Angola

Angola is undeniably rich in oil and mineral reserves, particularly diamonds and iron ore.

In order to boost the economy and promote employment, which are the key objectives of the Angolan government, the country needs to increase initiative and competitiveness of its private sector.

Oil and diamonds account for nearly 99% of Angolas exports. Nevertheless, the country has a huge potential to develop a diversified economy, namely regarding the production and export of agricultural products, industrial products and services.

To this extent, the Angolan government recognizes the importance of attracting private investment, not only to contribute to diversify the economy, but also to reduce the Angolan economic dependence on volatile sectors such as oil and diamonds and has therefore implemented legislative measures towards creating a more attractive environment for investment.

The sectors of activity which provide the best business opportunities are: a) Oil; b) Minerals; c) Civil construction and road, rail, port and airport infrastructure; d) Agriculture; e) Telecommunications; d) Banking; f) Tourism and g) Energy.

3. Angolas Legal System

The Angolan legal system is based upon the Portuguese civil law and customary law. For instance, it should be mentioned that the Angolan Civil Code corresponds to the original version of the Portuguese Civil Code of 1966. It is typically shaped by the Romano-Germanic law, whose legislation is mostly codified and legally established.

Without direct correspondence to the Portuguese legal scheme, there are two extremely important diplomas in Angola: The Petroleum Act and the Diamond Act.

The current Constitution of the Angolan Republic was published in the Official Journal of Angola on 5th February 2010. Compared to the previous version, significant amendments have been brought about, especially under the scope of the Fundamental Rights, as it has become wider by including free enterprise, private property, the right to environment and intellectual property.

The judicial system includes municipal and provincial courts, which operate at the trial level, while the Supreme Court operates at the appellate level. The Constitutional Court deals exclusively with the examination of constitutionality matters.

3.1 Private Investment Law The new Private Investment Law (PIL), approved by Law No. 20/11, of 20th May, strategically redefines the principles regarding the already existing scheme and the procedures needed for access to the benefits and incentives granted by the State, namely in terms of profit and/or dividend repatriation.

The purpose of the new diploma is to adapt more effectively the tax incentives granted to investors and the socio-economic impact of the investments made in the country and to adjust the system to the new constitutional reality of Angola and to the tax reform that has been underway.

The new Law does not apply to investment projects approved under the previous legislation. It, however, applies to projects that are still outstanding from the date of entry into force of the diploma.

This new law brings about significant changes to the private (internal and external) investment scheme, namely aiming at: - attracting larger investments (preferably in the structural sectors of the Angolan economy); - avoiding investments below USD 1,000,000.00 into the country, per project and per investor. To put a private investment into practice in Angola, it is necessary to obtain a priori authorization of the National Agency for Private Investment (ANIP), which is responsible for conducting the Angolan policy regarding private investments.

The new Private Investment Act has also introduced the concept of External Reinvestment, which consists in applying, within the Angolan territory, all or part of the income generated in virtue of an external investment previously made and already implemented under the framework of ANIP. This reinvestment may take advantage of new benefits, and the reinvestment commitment ab initio may help grant larger incentives to the initial investment.

The main operations of foreign investment include: a) Transfer of funds from abroad; b) Investment of liquid assets in foreign currency bank accounts held by nonresidents in Angola; c) Investment of funds under external reinvestment; d) Import of machinery, equipment, accessories and other tangible fixed assets; e) Incorporation of technologies and know-how.

This

new

Law

established

unique

procedural

mechanism

for

the

implementation of private investments in Angola: the contractual regime. Thus, the a priori declaration regime was abolished.

This new regime requires the existence of negotiations between the potential investor and the relevant authorities of the Angolan state, in any submitted draft investment proposal. Submission and Approval Stages: 1st) Submission of Proposal to ANIP The draft investment proposal to be submitted to ANIP should include: i) all supporting documents of legal, economic, financial and technical characterization of the investor and the investment (feasibility study,

evaluation of the suitability of access to incentives and aids, implementation schedule, among others); ii) environmental impact assessment study (if applicable). 2nd) ANIP sends notice for proposal rectification (possible) 3rd) Investor has 15 days to reply 4th) ANIP accepts offer 5th) Beginning of the general deadline of 45 days for negotiation (extendable for more 45 days) 6th) Beginning of the general deadline of 30 days to evaluate the proposals and negotiation with the Negotiation Committee for Aids and Incentives (known as CNFI) 7th) CNFI issues final opinion 8th) Delivery of final opinion to the approval body, by ANIP, within 5 days: a) Investments up to USD 10 million: approval, within 15 days, by the Board of ANIP (taking into account the binding opinion to be delivered by the Finance Ministry, as regards the tax incentives to be granted); b) Investments over USD 10 million: approval, within 30 days, by the Head of State (the President of the Republic of Angola, as head of Government), after a priori evaluation of the Council of Ministers; c) Investments over USD 50 million: the Head of State may set up and define the composition of an ad hoc CNFI in order to negotiate with the potential investor and then to deliver a final decision. 9th) Adoption or rejection of the proposal 10th) ANIP issues the Certificate for Registration of Private Investment (known as CRIP), within 15 days (if the proposal is approved).

For the purpose of granting incentives to investors, the projects must be carried out in priority sectors such as agriculture, manufacturing industry, transport infrastructure, telecommunications, fisheries, energy, water, social housing, health and education, as well as being located at development poles, special economic zones or off-shores, to be created by the Angolan government.

The investors may have access to tax and customs incentives and/or benefits, namely: a) deductions to taxable income; b) accelerated depreciation and reincorporation; c) tax credit; d) exemption/reduction of rate of tax, contributions and other import duties.

In this regard, the major innovation brought about by the new regime relies upon the exceptional character of incentive/benefit granting procedure, given that it is no longer automatic, indiscriminate and unlimited in time, now depending basically upon an analysis of each investment project.

The decision-making power of granting tax benefits is also the Finance Ministers responsibility, without prejudice to the ANIP competence in following up the whole process.

The tax and customs benefits show specific features according to each Development Zone for the purposes of maximum time and value limits: a) ZONE A (Province of Luanda, the capital-municipalities of the Provinces of Benguela, Hula, Cabinda and the Municipality of Lobito); Industrial Tax from 1 to 5 years, max.;

Capital Gains Tax from 1 to 3 years, max.; b) ZONE B (remaining Municipalities of the Provinces of Benguela, Cabinda and Hula and Provinces of North Kwanza, South Kwanza, Malange, Namibe, Bengo and Uge); Industrial Tax from 1 to 8 years, max.; Capital Gains Tax from 1 to 6 years, max.; c) ZONE C (Provinces of Huambo, Bi, Moxico, Kuando-Kubango, Cunene, Zaire, North Lunda and South Lunda); Industrial Tax from 1 to 10 years, max.; Capital Gains Tax from 1 to 9 years, max.

3.2 Incentives

Among the various possible incentives, special attention should be paid to the exemption from or deduction of the Industrial Tax, up to 50%, regarding the profit arising from private investment, which varies according to the investment Development Zone.

The tax benefits regarding the Real Estate Transfer Tax (Sisa) translate into the exemption from or percentage deduction of the payment of this tax, due to the acquisition of land and real property used in the project and that must be requested from the relevant tax service of the respective Development Zone.

As regards the granting of investment incentives, the priority sectors are as follows: - Agriculture production; - Manufacturing industries; - Technology and modernization of the respective industry;

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- Fishing and derivatives industry; - Health and Education; - Road, railroad, port and airport infrastructure, telecommunications, Energy and Water; - Social Housing; - Hospitality and Tourism.

After implementing the project and giving proof of payment of the due taxes, the investor is thereby authorized to repatriate: a) distributed dividends/profits; b) proceeds of the settlement of investments (including capital gains); c) amounts due that are deemed private investment (arising from acts and contracts); d) proceeds of indemnities; e) royalties.

According to criteria that refer to the previously identified Development Zones, the repatriation of capital, to be effected after the implementation of the project, should observe the following aspects:

a) ZONE A - Investments below USD 10 million: capital repatriation is only possible 3 years after project implementation effectively commences. - Investments equal to or larger than USD 10 million up to USD 50 million: capital repatriation is only possible 2 years after project implementation effectively commences.

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b) ZONE B - Investments below USD 5 million: capital repatriation is only possible 2 years after project implementation effectively commences. c) ZONE C - Capital repatriation may be effected 2 years after project implementation effectively commences.

3.3 Public-private Partnerships

The legal framework of the Public-private Partnerships in Angola, which was established by Law No. 2/2011, of 14th January, entered into force on 15th March 2011.

In terms of economic policy, these regulations are a further element to foster private investment in the country, giving consideration to the decentralization of management of difference sectors of activity.

The most important sectors of activity under the public-private partnerships include: a) road concessions (rehabilitation and management of the construction of approximately 8000 km of paved roads); b) energy sector (construction and maintenance of small hydro-plants, power stations and other energy infrastructure projects); c) infrastructure (airport, port, sanitation and sewerage systems); d) farming sector.

The provisions of this Law do not apply to public works contracts, public procurement contracts, public-private partnerships below Kz 500,000,000.00 and

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goods and services supply contracts whose term is equal to or greater than 3 years, in which the public partner does not take on obligations on or after the contract expiry date. Under the provisions of the legal diploma, public partners are the State, the Local Authorities, the Funds and the Autonomous Services, as well as public corporate entities.

The public entity will be vested with the responsibility of following up and monitoring the partnership purpose, in order that the public interest purposes are, in fact, achieved. In turn, the private partner will be responsible for financing and managing the activity agreed upon.

The repatriation of risk between the public and the private partner will go through regulation in terms of the contract.

The evaluation of public-private partnerships is subject to a specific procedure, regulated by the law, namely as regards sectoral programmes, bodies with responsibilities in this area, rules for approval, follow-up, supervision and amendment and call for proposals.

3.4 Corporate Law The Companies Act (Law No. 1/04, of 13th February), provides for and governs five types of companies: a) partnerships b) private limited companies c) public limited companies d) limited partnerships e) limited partnerships with a capital stock

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Taking into consideration the very complex nature of limited companies and the almost lack of patrimonial autonomy of partnerships, the corporate types which are more attractive for economic agents that intend to operate in Angola are private limited companies (Lda.) and public limited companies (S.A.).

In private limited companies, a minimum number of two partners (subscribers) are required. The capital stock is divided into quotas and each subscriber represents a portion of the capital stock. The minimum amount of the legal capital stock for private limited companies is of USD 1,000.00, which is updated according to the fluctuation rate of the Angolan currency. In addition, none of the quotas shall be lower than USD 100.00 USD (in the equivalent amount of Kwanzas). The initial subscriptions in cash may be deferred up to 50%, for up to 3 years.

In public limited companies, the minimum number of 5 shareholders is required and the capital stock is divided into shares. The capital stock of public limited companies shall not be lower than USD 20,000.00 (expressed in Kwanzas). The minimum value of each share cannot be lower than USD 5.00 (expressed in Kwanzas). The contributions may be deferred up to 70% of the capital stock, for up to 3 years.

3.4.1 Incorporation

Let us look at each step of incorporation. 1st Definition of main activity and business name The investor wishing to set up a company in Angola should first obtain the business name certificate at the Ministry of Commerce, which will be approved

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by the Central Business Name File. The business names should reflect the intended business and should not create confusion with other previously registered companies/businesses. 2nd Capital stock deposit As a general rule, the capital stock shall be deposited with a banking institution duly authorized to operate in Angola. The capital stock amount may only be handled prior to the business registration and may only be used to cover incorporation expenses or other type of authorized expenses and expressly set forth in the memorandum of association. 3rd Celebration of public incorporation deed The companys incorporation instrument translates into the celebration of a public incorporation deed with an Angolan Notary Office, by means of which its statues are adopted and its corporate bodies appointed. 4th Publication of companys statutes in the Official Journal The incorporation shall be published in the 3rd Series of Angolas Official Journal by way of a request addressed to the Imprensa Nacional. 5th Trade register at the Trade Registry The company shall be registered in the relevant jurisdiction of the Trade Registry, within 90 days after incorporation. 6th Registry at other public entities The company shall be registered at the relevant tax service, the National Institute for Social Security and the National Statistics Institute.

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7th Commercial Warrant In order for the company to be able to pursue its activity, it should obtain the respective commercial warrant at the Ministry of Commerce. In virtue of the activity carried out by the company, there may be additional formalities such as getting the authorization to carry out external trade or obtaining specific permits. Note: Decree No. 7/00, of 3rd February created the so called One-stop shop for companies, which has facilitated the incorporation, change and winding-up of companies and all related acts. Currently, this service is only available in Luanda.

3.4.2 Local forms of representation

Branches The Angolan Companies Code does not establish a special legal scheme addressed to branches. Thus, some aspects regarding their functional structure, namely their corporate bodies and responsibilities, remain unregulated.

There has been a unanimous agreement that an Angolan branch of a foreign company is qualified as a legal, non-autonomous entity of the parent company, which operates as its local extension, despite its own corporate capacity and autonomy. The parent company shall be held unlimitedly liable for the obligations taken on or imputed to the branch.

The administration of an Angolan branch of a parent company is, as a general rule, entrusted to an attorney, in there are neither corporate bodies nor representation bodies.

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Representation Offices Decree No. 7/90, of 24th March establishes the set-up of representation offices by non-resident entities in Angola, in fiscal and exchange terms.

The representation office is responsible for catering for the interests of the entity that it represents in Angola, namely by following up its business there. Nevertheless, the representation office cannot practice legal acts and receive national or foreign currency revenue, solely for the purpose of covering their own expenses.

Note: The representation offices of financial institutions are regulated by their own legal scheme.

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3.5 Real Estate Investment Law No. 9/04, of 9th November, known as Land Act (Lei das Terras), establishes the general basis of the property regime, including the originating State property as well as any subsequent land rights that may exist, and the general transmission regime.

The Land Law is applicable to all urban and rural properties, except for public domain properties or other properties that, by their nature, are not susceptible to appropriation or subject to private rights.

The urban areas that have recently been developed are broadly owned by the State, and different surface rights may be set up, or rights under concession, towards individuals or private entities, whether national or foreign.

The main rights on property are as follows: a) Right of Property b) Horizontal Property c) Usufruct d) Surface rights

Acquisition of the Right of Property The acquisition of the right of property is only valid by means of a public deed and is subject to various legal obligations of different nature, which requires: a) getting an updated ownership certificate; b) getting a legal description certificate or a tax certificate issued by the relevant tax service; c) paying the conveyance tax (IMT) and the stamp duty;

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d) executing the deed of transfer at a Notarys Office; e) applying for the provisional registration at the Land Registry Office; f) receiving definitive registration from the Land Registry Office; g) applying for definitive registration from the relevant Tax service.

Real Estate Investment Funds The creation and management of real estate investment funds in Angola is regulated by the Securities and Exchange Commission (an authority that is subject to the supervision of the Ministry of Finance), which is responsible for granting the respective registration, ensuring the proper functioning of the market and the necessary protection of investors.

The economic agents and investors have high expectations regarding these new mechanisms, given the potential of professional development of collective real estate property and capital attraction into the market.

The first Angolan real estate investment fund was created in 2008.

3.6 Visas

There are different types of visas (whether personal or work/company visas) to enter and stay in Angola, such as:

a) Ordinary Visas These visas are destined to authorize the entry in Angola for family or business development reasons, and exclude the performance of any paid activity in the country.

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Ordinary visas are requested from the Angolan Consulates of the country of origin and are valid for 60 working days, as from the date of issue. They allow every traveler to stay in Angola for 30 days, which can be extended at the Angolan Migration and Foreigner Service, for two more times (30-day permanence for each extension granted).

b) Work Visas This type of visas is destined for non-resident foreign citizens who intend to perform a paid activity in Angola and who: a) have reached the age of majority; b) have professional, technical or scientific qualification, c) have an employment contract or a confirmation of an employment offer; d) be mentally and physically fit, proven by medical certificate; e) have no criminal record; and f) have means of subsistence in the amount of USD 200.00 or the equivalent in convertible currency, for each day of permanence in the Angolan territory, or give proof by any appropriate means that board and lodging are guaranteed. The Wok Visa is valid for 60 days as from the date of issue, allowing the traveler to enter the country for several times until the expiry of the employment contract (nevertheless it does not allow establishment of residence in Angolan territory). The Wok Visas are also divided into different categories, according to the sectors of activity: a) oil, mining and civil construction sector work visa (type C); b) trade, industry, fisheries, maritime and aeronautics work visa (type D); c) other sectors work visa (type F).

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c) Privileged Visas This type of visa allows foreign citizens wishing to implement and make investment proposals, to enter and stay in Angola under the provisions of the Private Investment Law, being identified as investors.

It should be noted that both the criteria for granting visas and the paperwork needed for requesting these visas go through to regular revision. In this respect, and given the substantial entry, permanence and exit flux of Portuguese citizens in Angola, both countries celebrated a bilateral protocol in September 2011 to facilitate visa issuance with the purpose of making migratory routes and travel between both countries flexible.

In accordance with this protocol, which has already entered into force, multiple entries in the country are now allowed, by way of issuing short duration visas. The 90 days of permanence can also be spent on a consecutive or nonconsecutive basis. This type of visa is issued by the competent Angolan consulates established in Lisbon and Oporto, from now on, within 8 working days.

Long duration Work Visas shall be issued 30 working days after they are requested; when applying for an extension of these visas, a deadline of 5 working days shall be applied, as from the date they are required.

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3.7 Labour Law

General Labour Law The General Labour Law (Law 2/00, of 11th February) governs the labour relations in Angola.

Employment Agreement Types Typically, labour agreements are indefinite and fixed-term agreements. Indefinite agreements are not required in written form and both the employer and the employee do not establish a fixed term for the end of the agreement, which can only cease according to the legal standards for that purpose. Fixed terms agreements are required in written form and can only be celebrated in certain situations, with a view to satisfying the temporary needs of the company and as long as is strictly necessary for meeting those needs (such as the performance of occasional tasks, the recruitment of disabled persons or the execution, direction and supervision of civil and/or public constructions). There is also an agreement type that is worthy of note: the group agreement. The employer recruits a group of employees, and one of them is bound contractually as a representative of the group. This type of agreement may be a simplification mechanism of the recruitment process for the companies wishing to operate in Angola.

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Duration of Work The normal daily working period is 8 hours maximum and the weekly duration cannot go beyond 44 hours. However, it can be extended up to 54 hours, in cases where the employer adopts shifts or modulated or variable timetable regimes, in cases where a recovery schedule is in due course or when work is intermittent or of simple presence. On the other hand, the usual daily timetable can be extended up to 10 daily hours in the above situations, except for the shift work. Rest periods should last between 1 and 2 hours, and the employees should not perform their professional activities for more than 5 consecutive hours. Certain employees (those who hold management and executive positions, those who hold jobs based on trust, those who hold supervisory functions and those who perform their professional activity outside of a fixed location) may be exempt from a work schedule. This exemption shall not affect the weekly mandatory and supplementary rest period and the respective additional remuneration, which may be fixed by any labour collective regulation scheme or, in its absence, corresponds to one extra daily hour of work. The employer can only make use of supplementary work when it needs to respond to occasional and relevant circumstances of increased work, such as prevention or elimination of accidents, natural calamities or other abrupt situations or when temporary and unexpected atypical workloads occur. The general limits of supplementary work are the 2 daily hours, the 40 weekly hours and the 200 annual hours, but there are some exceptional situations in which these limits can be exceeded (for instance, in situations of natural calamity).

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Supplementary work gives employees the right to an overtime addition of 50% of their normal wage for the first hour, up to 75% when the employee works the 30 monthly hours of supplementary work.

Wages In Angola, wages can be fixed, variable or a mixture of both, depending on the length of work, the outcome of the work or both. There is an amount that corresponds to the national minimum wage, which is fixed every year, through any of the following modalities: a) Sole guaranteed minimum wage; b) National minimum wage per major economic groups; c) National minimum wage per geographical area. Employees are also entitled to a vacation bonus and a Christmas bonus, each equivalent to 50% of a months wage. Official holidays are considered normal working days for the purposes of payment of wages. Night work entitles employees to receive an addition of 25% above normal daytime wages.

Holidays Employees have the right to a holiday period, which corresponds to 22 working days per year. The employees hired for a fixed term, whose initial period or agreement renewal does not exceed one year have the right to two vacation days for each complete working month.

Termination of Labour Agreements In Angola, the labour agreement may end over different causes: a) Objective causes (which are beyond the parties control)

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Death, permanent incapacity, retirement, bankruptcy or winding-up of the company or the termination of activity, fall into the scope of the objective causes that determine the expiry of the labour agreement. b) Parties decision By voluntary agreement of the parties, the labour agreement may be terminated due to expiry, in fixed-term agreements, by mutual agreement and in the conditions of valid written clauses. c) Termination by unilateral decision of the labour agreement The unilateral decision to terminate a labour agreement may be established upon the initiative of both the employee and the employer. The employer may terminate the agreement grounded on individual or collective dismissal, thereby requiring specific formalities and procedures. Individual dismissal may be grounded on just cause (facts charged to the employee) on objective causes (proven economic, technological or structural motives), which makes it clearly impossible to maintain a labour relationship. Collective dismissal shall always occur as a result of the extinction of work posts for economic, technological or structural reasons, involving the dismissal of 5 or more employees, successively though, within a period of 3 months. Also, the employee may terminate his/her labour agreement with or without just cause. Just cause may be grounded on facts charged to the employees (namely lack of payment of wage) or other motives (compliance with legal obligations). The employee may also terminate his/her labour agreement, at any time, at 15 or 30 days notice, if the labour agreement has a duration of less or more than 3 years, and the notice is extended to 30 or 60 days in the case of middle and senior management.

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Foreign Employees in Angola Law No. 2/07, of August 31st, establishes the Legal Scheme for Foreigners in the Republic of Angola. This diploma has been recently regulated by Presidential Decree No. 108/11, of 25th November, which establishes the equivalent in terms of rights, guarantees and duties, between Angolan citizens and foreigners who are within the territory (i.e., the right to work and freedom of association to trade unions and professional organizations). Foreign employees residing in Angola shall abide by the general standards included in the General Labour Law. In turn, foreign employees, who do not reside in Angola, shall abide by special regulations and, in addition, by the previously mentioned General Labour Law. Thus, foreign employees who have professional, technical or scientific qualifications in areas in which Angola is not self-sufficient, may be recruited to perform their activity for a definite period of time. The legal scheme allows these employees to celebrate a labour agreement with private companies, state-owned companies, mixed companies or cooperatives, as long as they are adults, hold proven qualifications, are physically and mentally apt and do not have any criminal record. Labour agreements of non-resident foreign citizens are required in the written form and shall expressly include the reference that the employee will return to his/her homeland after the termination of the respective labour agreement (minimum of 3 and maximum of 36 months). The regime established in the General Labour Law shall apply to aspects concerning working time, discipline and termination of the labour agreement. Within the scope of the oil sector, the recruitment of foreign employees is only possible if a priori authorization is given by the Ministry of Petroleum.

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3.8 Tax Context

Labour Income Taxation and Social Security Contributions The rate to be charged to employees and managers and other members of the corporate bodies of legal persons, depending on the labour income obtained in Angola, is progressive, and ranges from 2% to 17% (marginal rates). Such income is subject to withholding tax. Salaries, allowances, bonuses, commissions and other extra income are subject to Social Security contributions, which correspond to a rate of 8% payable by the employer and 3% payable by the employee. Employees who perform their activity in Angola for a temporary period and give proof of paying social security contributions in another country, may choose not to be subject to pay contributions in Angola.

Industrial Tax Angola does not have a single general corporate income tax. Taxation is therefore made gradually. The Industrial Tax applies to companies and legal persons that perform commercial and industrial activities (at a rate of 35%) or agricultural, forestry and cattle breeding activities (at a rate of 20%) and that generate profits in Angola. The Industrial Tax is divided into three taxation regimes (A, B and C), according to the size of the taxable legal person. The Industrial Tax also includes a Minimum Profit Table, according to the category of the business, the location and the branch of activity.

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Capital Gains Tax The Capital Gains Tax concerns income earned from financial applications, namely interest, distributed profits and royalties (with taxes of 15% or 10%). Credit institutions are exempt from this tax regarding loan arrangement interest, credit opening and default interest, as long as they are subject to the Industrial Tax.

Consumer Tax In Angola, the manufacturing of products (with a few exceptions), the import of products, the consumption of water, energy, telecommunications and hospitality or related services are subject to Consumer Tax. Nevertheless, the Consumer Tax is only required when the sale has been made to the end consumer, and it is stated and paid on a monthly basis. The general tax rate is currently 10%, notwithstanding other taxes, defined by law regarding a wide variety of consumption types.

Urban Real Estate Tax Income from urban buildings located in Angola is subject to the Urban Real Estate Tax. Leased buildings are subject to a general rate of 25% and nonleased buildings to a general rate of 0.5% when the property value does not exceed Kz 5,000.00. The new rates came into force in 2011, following the amendments to the Industrial Tax Code. It is aimed at reducing the taxable load in the Angolan real estate market and promoting its dynamic nature. Among other entities, the State, the Public Institutes and the Associations that hold a public interest body status are exempt from this tax.

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Real Estate Transfer Tax The Real Estate Transfer Tax (Sisa) is paid over the transmission value of the real estate located in Angola, as well as leasing situations for 20 or more years, transmissions of governmental concessions for the operation of industrial companies and, finally, the acquisition of capital stock in any incorporated company, which has real estate assets, when, by way of acquisition, amortization or any other facts, some of the shareholders hold, as a result of that, 50% or more of the capital stock, after giving proof that the acquisition of the shareholdings was chiefly aimed at acquiring real estate assets. The Real Estate Transfer Tax is currently fixed at 2%.

Stamp Duty The Stamp Duty is paid over acts, facts, documents, contracts and operations and is charged at a variable rate, according to the transaction value at issue, such as: a) insurance policies between 1% and 5% of the premium value; b) leases for commerce or industry at the rate of 10/thousand over the contract value; c) powers of attorney between Kz 10.00 and Kz 600.00; d) fixed value works contracts at the rate of 4/thousand over their value; e) credit opening operations through private written agreement or public deed at the rate of 2/thousand over its value; f) bank guarantees at the rate of 3/thousand of their value.

Taxation on Construction Works There is a special taxation regime regarding construction works contracts, which apply to natural and legal persons that perform this activity and that are not subject to the Income Tax.

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The rates are as follows: a) Real estate construction, improvement, repair, conservation, 10% over the contract value; b) Other cases, 15% over the final value.

Mining Industry tax Taxation on Mining Industry is organized as follows: a) Profit taxation (Industrial Tax: the highest rate stands at 40%); b) Mining royalties tax (royalty: taxes between 2% and 5%); c) Taxation according to the license (surface rate: between USD 1.0 and 4.0 per Km2).

Taxation on Oil Activities Oil-related activities are subject to a special taxation scheme, under the terms that follow: a) oil production tax; b) oil income tax; c) oil transaction tax; d) surface rate; e) contribution to train Angolan qualified staff.

3.9 Money Laundering Law No. 12/10, of 9th July, regulates the measures of fight against money laundering and terrorism financing. This diploma imposes various requirements on credit institutions, financial companies, insurance companies, pension fund management companies, currency exchange dealers, casinos and liberal

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professions (i.e., Statutory Auditors, Chartered Accountants, among others) in the performance of their activities. Stress should be laid on the duty to inform the National Bank of Angola whenever one knows of or suspects that there was or there is in progress an event susceptible of embodying the practice of the crime of money laundering and terrorism financing.

3.10 Specific Schemes: Oil and Diamonds

Oil Sector The Petroleum Activities Act (Law No. 04/10, of 12th November), defines the oil prospecting, assessment and production activities in Angola. In January 2009 the Petroleum Operations Procedures Document, which applies to onshore and offshore oil-related operations, but does not apply to crude oil refining, storage, transport, distribution, commercialization operations.

Prospection License Oil-related operations require an oil prospection or concession license, which shall be issued by the Angolan Government. The Prospection License grants its holder the possibility of carrying out operations with a view to potentially exploring a certain area (location of oil deposits). Nevertheless, the Prospection License does not grant its holder any right of preference or exclusiveness regarding the area that is object of the license. The license is valid for a period of 3 years and can be extended. The national or foreign entities wishing to perform this activity, out of the scope of an exploration license, should join SONANGOL E.P. by way of the incorporation

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of a company, the celebration of a consortium contract or a production sharing contract.

Oil Concession Oil concession is regulated by Decree No. 48/06, of 01st September, and may be effected by a call for proposals or direct negotiation. The risk of investment shall fully be at the investors expense and the invested capital shall not be reimbursed in any way whatsoever. After the oil concession expires by any legal means, all instruments, equipment and other acquired goods for the performance of the oil-related operations shall revert to SONANGOL E.P. with no compensation.

Diamond Sector Prospection, research, recognition and commercialization of diamonds, within the Angolan territory, are governed by Law No. 16/94, of 07th October the so-called Diamond Act. The rights regarding these activities shall be exclusively exercised by the National Diamond Company (ENDIAMA, E.P.) or by mixed companies in which it participates. Foreign investments in the Diamond sector are governed by the Mining and Geological Activities Law (Law No. 1/92, of 17th January) and, in a subsidiary way by standards and principles of the new Private Investment Law. Investment contracts are negotiated exclusively with ENDIAMA, E.P., whose contractual terms shall be approved by different state-owned bodies, such as the National Bank of Angola and by the respective government of the province in which the investment is located. As a general rule, the contract has two phases:

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1st Mining-geological research phase the potential investor submits its investment intent, stating the area and the respective work programme; 2nd - Exploration phase the investor submits the technical and economic feasibility study, which shall be subject to approval, being an integral part of the concession contract of mining rights. Only ENDIAMA, E.P. or another company incorporated specifically for the purpose may commercialize diamonds, so that the producers rights may be protected. The commission for operational costs of the commercialization company shall not exceed 2.5% of the value of exported diamonds. Diamond export activities are subject to licensing by the Ministry of Commerce.

3.11 Intellectual Property

Angola is a member of International Conventions and Agreements, such as the Convention of the World Organization of Intellectual Property (since 1985), the TRIPS Agreement (since 1996), the Paris Convention on Intellectual Property Protection and the Cooperation Treatise on Patents (since 2007).

Industrial Property Law No. 3/92, of 28th February, known as Intellectual Property Law, aims at defining the protection rules governing the intellectual property rights in industry (patents, utility models, drawings or industrial models) and trade (brands, rewards, names, insignias of the business and source information). The registration regime of the Angolan industrial property rights is constitutive, that is, the rights are only subject to legal protection after the relevant registration with IAPI (Angolan Institute for Industrial Property) has been effectively filed.

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The property rights last: a) for an unlimited period of time in relation to the rewards and source information; b) for 6 years regarding utility models (extendable); c) for 5 years regarding industrial models and drawings (extendable up to 15 years); d) for 10 years after the deposit, regarding brands (extendable); e) for 15 years after the deposit, regarding patents; f) for 20 years regarding business names and insignias (extendable).

Unfair Competition Unfair competition means all acts that go against honest practices and uses, in any branch of the economic activity, namely as follows: a) discredit acts; b) confusion acts; c) deceitful acts; d) double-dealing acts; e) undue disclosure or seizure of third partys industry or trade secrets. Within the scope of the Intellectual Property Law, infringement of the respective rights can be punished as follows: - Patents prison up to 6 months or fine; - Illegal brand use fine or prison up to 3 months; - Other rights fine.

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Copyright Copyright protection in Angola is ensured by Law No. 4/90, of 10th March, which applies to all literary, artistic or scientific work: a) whose authors are Angolan citizens or usually reside in Angola; b) which is published for the first time within the Angolan territory; c) whose foreign authors do not reside in Angola, as long as it results from the international conventions of which Angola is a member and there is reciprocity of the work of Angolan authors in the respective countries. As a rule, copyrighted content expires 50 years after its authors death, but this deadline is shortened to 25 years in terms of photography work. After this time limit, the work falls into public domain and no longer enjoys the said protection.

3.12 Dispute Resolution

Organization of the Judicial System The Unified Court System includes the Municipal Courts, the Provincial Courts and the Supreme Court. The Municipal Courts have broad competence in civil and criminal matters within the Municipality. They are responsible for judging civil cases up to Kz 100,000.00 and, irrespective of their value, whenever the parties agree upon the exclusive application of non-codified customary law. The Provincial Courts are divided into Chambers: i) civil and administrative law, ii) family law, iii) labour law, iv) common crime, v) crimes against the States security and safety. The Supreme Court is the highest court within the hierarchy of the Angolan judiciary organization, which is responsible for examining appeals of the decisions given by the Provincial Courts.

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Arbitration Law 16/2003, of 25th July, establishes the possibility of solving disputes by arbitration. Arbitration provides Angolan and foreign economic agents with an alternative to solve disputes within the scope of commercial relations. Arbitration includes both internal and international arbitration (in cases where international trade interests are at issue), and such direct feasibility decisions are not at all dependent on justice courts. On 30th August 1995, Portugal and Angola celebrated a Legal and Justice Cooperation Agreement, which includes provisions dealing with civil and criminal issues.

4. Privileged Relations with Other Countries

Angola has been strongly investing in Foreign Direct Investment (FDI), as a factor of sustained development of the country. Within this scope, Angola has been strengthening international relations with several countries, such as Portugal, Brazil, India, China, United States of America and South Africa.

4.1 Portugal The relations between Portugal and Angola have been increasingly strengthened over the last years, both within the political and economic framework. Except for the oil and diamond sectors, Portugal is the main investor in Angola, and there is a wide variety of Portuguese companies solidly set up and implemented within the Angolan territory. Currently, the relations between both countries have reached their peak, and consequently various bilateral agreements and protocols have already been celebrated.

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4.2 Brazil The relations between Angola and Brazil are not only confined to the trade sector but have historical and cultural roots. In the last decade, exports from Brazil to Angola have sharply increased, almost ten times. Recently, the Brazilian state authorities have assumed that their main objective is to continue to contribute and play a part, as an active partner, to Angolas growth.

4.3 India The Republic of Angola and India have celebrated a cooperation agreement regarding the technical training of Angolan senior staff. As a consequence, there are presently 5000 Indian citizens residing in Angola. In January 2010 a Memorandum of Understanding has been entered into between both countries in order to reinforce bilateral cooperation. Currently, the sector that most contributes to the relations between Angola and India is the oil sector (6.5% of Angolas total oil production has been exported to India), but also the agricultural and small industry sectors. Indian authorities have already expressed their interest to extend bilateral cooperation, in particular in the education and health fields.

4.4 China The year 1983 was an important milestone as it was the beginning of the diplomatic relations between Angola and China. Since then, bilateral cooperation has substantially increased and Angola has become Chinas major commercial partner, overcoming the role that had been played by South Africa. Currently, China plays a very important role within the Angolan territory, as regards the construction sector, in which China is broadly represented.

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Commercial relations between both countries have had a considerable growth, accounting for 45% in 2010.

4.5 United States of America The relations between Angola and the United States of America have been widely strengthened as a consequence of the very strong movement of imports within the scope of the oil sector: nearly USD 18.91 thousand million. Notwithstanding the huge and insuperable weight of this sector in bilateral relations between both countries, the USA have shown a strong interest in expanding bilateral cooperation to agriculture, civil construction and public works, information technologies, tourism, telecommunications and energy.

4.6 South Africa The increasing intensification of existing commercial relations between Angola and South Africa is clearly seen, namely through the celebration of some Memoranda of Understanding, encompassing the areas of Public Works, Infrastructure, Telecommunications and Information Technologies. There is also a growing interest of both countries in giving a further boost to their business and commercial relations, by intensifying their diplomatic relations. In addition, trade forums between both countries have been increased, which include the presence of South-African business delegations in Angola and the presentation of the Reconstruction Programme of Angolas South-Centre and East Regions, which aims at the construction of integrated and housing infrastructure in Angola and relies upon various bilateral agreements.

Vtor Carvalho & Associados

Advogados|Angola
Rua Rainha Ginga, 187 - Edifcio Rainha Ginga Luanda - Angola Tel: +244 222 33 67 87 Fax: +244 222 39 06 34 vca@vca-angola.com www.vca-angola.com

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ABBC Angola Link

Largo S. Carlos, N 3, 1200-410 Lisboa - Portugal Tel: +351 21 358 36 20 Fax: +351 21 315 94 34 angolalink@abbc.pt www.abbc.pt

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