Banking, Money and Taxes in Angola
Expats are likely to find that banking, money and taxes in Angola can be a little disorientating. While working in the country, expats will probably have to get used to new ways of receiving payment, conducting their banking affairs and paying taxes.
Despite the monetary advantages of living in the country, life in Angola is challenging. The cost of living is the highest in Africa, and the relative inefficiency of its financial systems can be frustrating.
Money in Angola
Angola’s currency is the Kwanza (Kz or AOA), which is divided into 100 centimos.
The following denominations are available:
Notes: 5 AOA, 10 AOA, 50 AOA, 100 AOA, 200 AOA, 500 AOA, 2,000 AOA and 5,000 AOA
Coins: 1 AOA, 2 AOA and 5 AOA
The kwanza is not convertible and only a small amount can be taken out of the country; so most expats are paid in US Dollars or Euros.
Angola remains a cash-based society and expats are warned that they will likely carry more cash than they would ordinarily feel comfortable with. It’s strongly recommended that to invest in a home safe – losing a cash advance could leave one with no immediate access to money.
Banking in Angola
One of the first things expats will learn about banking in Angola is that it’s difficult, unnecessary and, ultimately, undesirable to open an Angolan bank account.
Without speaking Portuguese, dealing with local banks is difficult. Opening a bank account in Angola takes a long time and can be complicated by the amount of paperwork required. Moreover, money is strictly government controlled – any amount can come into the country, but little can leave.
Most expats simply don’t open bank accounts in Angola. Instead, their salaries are paid directly into their home-country account in a foreign currency - usually US Dollars or Euros.
Few ATMs in Angola allow access to foreign accounts – and when they do, fraud concerns are present and the charges are exorbitant.
Credit and debit cards
A few hotels and restaurants accept foreign credit cards in Angola, but most places don’t. Expats should reconsider using credit or debit cards in Angola, since safeguards against identity theft aren’t always sufficient. If having to use cards, expats should be vigilant in checking balances online, and making sure all debits reflected in statements are accounted for.
Without a local bank account, and without ATM access to their overseas funds, expats may wonder how they should be expected to pay for anything. Luckily, they can circumvent these issues.
Expats usually request a cash advance against their salary from their employer. This way, they receive a portion of their monthly salary in cash, while most of it goes directly into their overseas bank account.
Most companies only allow one or two advances per month, and require prior notification – so it’s important that expats research the cost of living in Angola before arriving to anticipate their monthly expenses.
Taxes in Angola
Income tax in Angola is calculated on a scale up to 17 percent.
Tax equalisation agreements are widespread in Angola, and many expats insist their company offers tax protection as a benefit of their employment contract.
Also called hypo-tax agreements, these arrangements guarantee the employee a specified monthly wage, regardless of the actual deductions that should come off their earnings in both their country of origin and Angola.
Put more simply, the company pays all the employee’s taxes on their behalf and deducts a previously agreed amount from the base salary as compensation. The deducted amount is usually equivalent to the tax the employee would hypothetically have paid if they earned the same amount in their home country.
Countries like Angola – where the cost of living and taxes are so high – could be financially crippling places to work, if not for tax equalisation agreements. Tax protection arrangements are designed to let expats enjoy their high salaries, without fear of being penalised by the exorbitant income tax.