Tax Inspectors without Border (TIWB) Initiative Strengthens Angola’s Tax Audit Capabilities

4 de November de 2024

By: Lorenzo Mancini, UNDP Angola, Economist

Angola, the fifth-largest economy in Sub-Saharan Africa, relies heavily on commodity exports, making it vulnerable to external shocks. In 2023, the oil sector accounted for about 30 percent of Gross Domestic Product (GDP), 95% of total exports, and nearly 55 percent of fiscal revenues. Non-oil revenues in the same year amounted to only 7.1 percent of GDP, compared to 10.3 percent for oil-related revenues.[1]

To promote economic diversification and boost revenues, the Government of Angola, through the Public Finance Reform and Sustainability Program and the National Development Plan 2023–2027, concentrated their efforts on Domestic Resource Mobilization (DRM), with a focus on non-oil taxes.

In line with this strategy, the General Tax Administration (AGT) partnered with the Brazilian Federal Revenue Service (RFB) to implement the Tax Inspectors Without Borders (TIWB) initiative in 2022. This initiative focused on enhancing Angola’s tax audit capacity, particularly in international transfer pricing.

The impact of the TIWB initiative has been significant, particularly in enhancing tax audit capabilities and promoting regulatory reforms.

Through practical training, AGT auditors gained the skills and confidence needed to conduct high-quality audits. This capacity-building approach strengthened their ability to manage complex transfer pricing cases, which allowed them to independently select and conduct audits that achieved the desired results at the end of the partnership.

In addition, there has been substantial organizational reforms for promoting better collaboration with taxpayers. By fostering an environment of shared knowledge and best practices, this has helped enhance the effectiveness of tax investigations.

While it may be too early for a comprehensive assessment on the impact of tax compliance, early indications suggest that the TIWB Initiative will contribute to improving voluntary compliance with transfer pricing regulations. The initiative has also facilitated feedback from businesses and advisory firms, shedding light on perceived compliance issues within Angola’s tax system.

Lastly, a public consultation on the new Corporate Income Tax Law (IRPC) was launched, with a focus on transfer pricing reforms. This aims to align Angola’s regulations with international best practices and fill gaps in the existing legislation.

[1] Source: IMF Country Report No. 24/224. July 2024

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As a result of this collaboration between Angola and Brazil, several important recommendations have emerged from the implementation of the Tax Inspectors without Border (TIWB) initiative:

Strengthening the skills of tax auditors is vital and by employing a “learning by doing” approach, auditors benefit from both theoretical and practical experiences from their peers in other countries.
Creating an environment for open discussions on key gaps and constraints of Angola’s current transfer pricing legislation, resulted in a proposal for reform aimed at improving the regulatory framework.
The practical exchange from Brazil provided invaluable expertise in the execution of tax audits. However, to ensure these tax audits are conducted regularly and remain effective, sustained technical and financial resources are essential.

In conclusion, the TIWB Initiative has played a pivotal role in enhancing the capabilities of tax auditors, fostering regulatory reform, and facilitating international collaboration. For these gains to be fully realized and sustained, continued investment in both technical support and financial resources is essential. By building on the lessons learned, Angola can further strengthen its tax system, ensuring long-term financial stability and equitable growth.

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