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Economy

PT/AO business: companies should be mindful of the Double Taxation Convention

Portuguese tax inspector Mariana Gouveia de Oliveira considered that Portuguese companies should be aware of any taxation that is not in accordance with the double taxation agreement between Portugal and Angola, avoiding future difficulties in tax deduction.

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Speaking to Lusa, the tax lawyer and lawyer at Abreu Advogados pointed out that from the moment the convention to avoid double taxation - in force since January 1st - companies will have difficulty deducting from their IRC any amounts withheld in the source in Angola that exceed the convention.

This kind of situation, for example, can happen when a Portuguese company (without workers or physical presence in Angola) provides services to Angola and sees the value of the service subject to a withholding tax higher than that established in the agreement. double taxation, which may prevent it from deducting the difference in excess withholding tax.

Stressing that these types of situations happen quite often especially when the application of the convention is still new in the relationship of the tax administrations of the countries involved, Mariana Gouveia de Oliveira mentioned the importance of companies being alert and, detecting any possible non-conformity, seeking to inform themselves, document themselves and eventually expose the topic to TA.

For the taxpayer, the application of instruments such as the convention, namely the respective information exchange clause and the mutual administrative assistance agreement, makes it possible to foster “the increased efficiency of tax inspections”, since the tax authorities - the AGT in this case. Angola and TA in Portugal - “now have access to more information about taxpayers residing in one state and earning income in the other”, on the other, also increase their responsibility in dealing with problems such as deduction in credit residence by taxes withheld at source.

Prior to the convention, he noted, Portuguese companies operating in Angola were “often denied the right to deduct withholding tax for alleged lack of proof of payment of the tax”, as AT requires a certificate issued by AGT in how the tax was paid, and as a rule it is not possible to “obtain such a document”.

"With information exchange mechanisms now in place and an obligation under international law to eliminate double taxation, it seems to us that the TA's understanding will necessarily have to change in favor of the taxpayer", said the lawyer.

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