Angolan government turns to McKinsey for tax reform

Angola has hired McKinsey & Company to support the implementation of the country’s strategic plan of the General Tax Administration (AGT) for the period 2015-2020. The work follows on from McKinsey’s earlier work for the tax department, supporting the development of a new tax regime in 2010. The value of the contract has not been disclosed.

Angola is situated on the west coast of the African continent, with the Republic of Congo and the Democratic Republic of Congo to its north and Namibia to its south. The country was first colonised by Portugal in the 16th century, and, was ruled until 1975 when independence was won. In the years to 2002 a bitter and devastating civil war raged across much of the country. The country has, with the support of a range of regional and global actors, undergone an economic transformation – enjoying double digit growth on the back of its mineral riches, particularly diamonds and oil.

Following almost a decade of double digit economic growth, the country’s administration, in 2010, turned to transforming with the tax system it had inherited following the end of hostilities in 2002. To support the development of the country’s tax vision, McKinsey & Company were called on. The aim of the new taxation policy was to lower its debt to GDP ratio, which in 2010 stood at 38.7%, through increased tax revenues.

McKinsey has been active in Angola since 2007, and has established an office in the country’s capital, Luanda – for a total of seven on the African continent. The firm has supported the government with a number of different project types, from driving infrastructure projects to supporting institutional reform. The consultancy firm is also working with the country’s growing business community as well as supporting the business community.

To support the country’s tax reform process, which is currently underway according to the country’s strategic plan of the General Tax Administration (AGT) for the period 2015-2020, McKinsey has again been called in. The firm will support the country implement its strategy, as well as providing technical support for the development of tax practices employed by AGT. The value of the deal has not been disclosed, while the motivation is said to be related to a "need to ensure the continuity of the tax reform process.”

The country’s debt to GDP ratio stood at 31% in 2015. The country has again stepped to the International Monetary Fund (IMF) for an assistance programme covering the coming three years.