Banking, Money and Taxes in Angola
Expats moving to Angola are likely to find that the lay of the land – at least in terms of banking, money and taxes – is a little disorientating. While working in Angola, expats will probably have to get used to new ways of receiving payment, conducting their banking affairs, and paying taxes.
In recent years, the Angolan economy has been one of the fastest growing in the world – and this trend has been reflected by the ever-increasing number of expats relocating to the Angola, enticed by the promise of adventure, and the large salary packages that are typically on offer. However, expats should bear in mind that life in Angola, despite its monetary advantages, remains a challenge: the cost of living is higher than in any other expat destination in Africa, and the relative inefficiency of its financial systems can lead to serious frustration.
The currency used in Angola is the New Angolan Kwanza (Kz). The kwanza is divided into 100 centinow. Notes are in denominations of 2,000, 1,000, 500, 200, 100, 50, 10 and 5. Coins are in denominations of 5,2 and 1.
The kwanza is not convertible and cannot be taken out of Angola; thus expats will not be paid in this local currency, and are rather usually paid in US dollars or Euro.
Banking in Angola
One of the first things expats will learn about Angola, is that it is extremely difficult, totally unnecessary, and ultimately undesirable to open an Angolan bank account while in the country.
If not fluent in Portuguese, it would be a major challenge to make yourself understood at an Angolan bank, and, moreover, the bank employees might treat your request to open an account with suspicion. The process of opening a bank account in Angola would also take an inordinately long time, as the chances of you arriving with the 'required documentation' first time around are virtually nil; for example, something could be rejected for lacking a translation or a notarisation. Moreover, money is subject to strict government control in Angola: any amount can come into the country, but very little can leave (it is, in fact, illegal to take a single kwanza outside of Angola).
It suffices to say, that expats simply do not open bank accounts while in Angola. Instead, the company for which you work (who are required to have an Angolan bank account), pays your salary directly into a bank account in your home country. The payment is made in a previously agreed currency; usually US dollars or Euro.
Note that it is possible for some expats, mostly of European origin, to set up off-shore bank accounts before leaving home, for the express purpose of receiving their Angolan salaries.
Credit cards, debit cards and ATMs
While in Angola, expats are strongly discouraged from using credit or debit cards, for the simple reason that the existing safeguards against identity theft in Angola are not stringent enough. If credit or debit cards must be used, you must be vigilant in checking your account balances online, and making sure that you can account for all the debits that are reflected in your statements.
Furthermore, it is important to note that there are very few ATMs in Angola that allow access to foreign accounts – and when they do, not only are the same fraud concerns present, but the charges are exorbitant, to boot.
There is an extremely small minority of fancy hotels and restaurants that accept foreign credit cards in Angola; usually only Visa, however. The vast majority of places – over and above the attendant security concerns – will simply not accept your foreign credit card as a form of payment.
Money in Angola
Without a local bank account, and without ATM access to their overseas funds, expats might well wonder how exactly they should be expected to pay for anything while in Angola. Luckily, there is a system in place to circumvent these issues.
What happens is that expats request a cash advance against their salaries from the companies that employ them. If you have arranged for your salary to be paid to you in US dollars, you will be paid your advance in this currency (the same goes for Euro, etc.). This way, you receive a portion of your salary in cash, while the bulk of it still goes directly into your overseas bank account each month.
Note that most companies will only allow one or two advances per month, and will require prior notification – so it is important to do some research on the cost of living in Angola before arriving in the country, to help you anticipate your monthly expenses. For a family of four, plan to request an advance of about 3,000 USD (or the equivalent in Euro) a month to cover living expenses.
You will always be advanced new, or nearly new, very clean bills – as dirty, wrinkled, torn or old money cannot be changed into kwanza. You will get your money in 50 or 100 US dollar or Euro notes, as other notes are not always accepted by money changers. Note that when bringing foreign currency into Angola, such as upon your arrival in the country, make sure you are in possession of new, clean foreign bills.
Changing money in Angola
You can change your foreign currency into kwanza at official bureaux de change establishments; at the bank; at the change window at the grocery store; or on the street, with a black market money-changer. Usually, the best rates are offered on the black market or by official money-changing outlets – the bank and the grocery store usually give a lower rate of exchange. Furthermore, the bank doesn't always have sufficient kwanza to buy your dollars, so it's best kept as a last resort for changing money.
Expats are warned that a reality of life in Angola is that, often, you will carry more cash on you than you'd ordinarily feel comfortable with doing (if you go out to the shops, or to change money, expect to carry at least 300 USD on your person). Moreover, it is strongly recommended that you invest in a safe for your home – losing your cash advance, or having it taken from you, could leave you with no immediate access to your money.
Fortunately, the expat community in Angola is quite close-knit, and borrowing money (when in a pinch) from friends or co-workers is quite a common phenomenon – even large amounts, such as hundreds of dollars. Rightly or wrongly, Angola is generally thought of as a 'hardship destination', and so an ethos of cooperation and care among expats has developed, to provide support for one another when it is needed.
Taxes in Angola
Tax equalisation agreements are widespread in Angola, and expats are strongly urged to only accept employment from a company that offers tax protection as a benefit of the employment contract.
Also called hypo-tax agreements, these are arrangements struck up between employer and employee, that guarantee the employee a specified monthly wage, regardless of the 'actual deductions' that 'should' come off their earnings due to salary and benefit taxation in both their country of origin and the country in which they are to be employed.
Put more simply: your company will pay all the tax you owe on your behalf (you won't even have to fill in the returns), and then will deduct a previously agreed amount from your base salary as compensation. Usually, the amount deducted is equivalent to the tax you (hypothetically) would have paid, if you were earning the same amount in your country of origin.
Countries like Angola, where the cost of living is so incredibly high, and the tax you owe on your house, your car, etc. is so great, would be financially crippling places to work, if not for tax equalisation agreements. Tax protection arrangements, therefore, are designed to let expats enjoy their high salaries, without fear of being penalised by exorbitant taxation – and without them, the attractiveness of working in 'hardship destinations' such as Angola would be severely tarnished.