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 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 African country, and the relative inefficiency of its financial systems can lead to serious frustration.
Angola’s currency is the Kwanza (Kz or AOA), which is divided into 100 centimos.
Notes are in denominations of 2,000, 1,000, 500, 200, 100, 50, 10 and 5 kwanza. Coins are in denominations of 5, 2 and 1 kwanza.
The kwanza is not convertible and it’s illegal to take kwanza out of Angola; thus expats will not be paid in this local currency, and are rather usually paid in US Dollars or Euros.
Banking in Angola
One of the first things expats will learn about banking in Angola is that it is extremely difficult, totally unnecessary and ultimately undesirable to open an Angolan bank account while in the country.
Without knowledge of Portuguese it’s a major challenge to deal with an Angolan bank. The process of opening a bank account in Angola also takes an inordinately long time and can be complicated due to the amount of paperwork required. Moreover, money is subject to strict government control; any amount can come into the country, but very little can leave.
It suffices to say that expats simply do not open bank accounts in Angola. Instead expat salaries are paid directly into a bank account in their home country, and it’s made in a previously agreed currency - usually US Dollars or Euros.
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, be vigilant in checking account balances online, and make sure all debits reflected in statements are accounted for.
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.
A minority of hotels and restaurants accept foreign credit cards in Angola - usually only Visa. The vast majority of places, over and above the attendant security concerns, will simply not accept foreign credit cards 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.
Expats usually request a cash advance against their salary from their employer. If arranging for a salary to be paid in US Dollars, they will be paid their advance in this currency. This way, they receive a portion of their salary in cash, while the bulk of it still goes directly into their overseas bank account each month.
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 anticipate monthly expenses.
Money will be advanced as new, or nearly new, very clean bills as dirty, wrinkled, torn or old money cannot be changed into kwanza. It will be paid in 50 or 100 USD or Euro notes, as other notes are not always accepted by money changers. When bringing foreign currency into Angola expats should ensure they are in possession of new, clean foreign bills.
Changing money in Angola
It’s possible to change 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. The bank doesn't always have sufficient kwanza to buy 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, they will carry more cash than they would ordinarily feel comfortable with. It’s strongly recommended that expats invest in a safe for their home – losing a cash advance, or having it stolen, could leave one with no immediate access to 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.
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: a company will pay all the tax the expat employee owes on their behalf and then will deduct a previously agreed amount from the base salary as compensation. Usually, the amount deducted is equivalent to the tax the employee (hypothetically) would have paid, if earning the same amount in their country of origin.
Countries like Angola – where the cost of living is so incredibly high, and the tax one owes on assets such as their house and car 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.