Foreign Exchange Regime Applicable to the Diamond Sector (Notice No. 13/2020 of May 29)

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PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 73, OF MAY 29 NOTICE NO. 13/2020 SUBJECT: EXCHANGE RATE POLICY

• Foreign Exchange Regime Applicable to the Diamond Sector Considering the need to update the regulations governing foreign exchange operations of entities active in the diamond sector, taking into account the publication of Law No. 31/11 of September 23, which approves the new Mining Code and complementary legislation applicable to the diamond sector, namely Presidential Decree No. 175/18 of July 27 approving the Diamond Marketing Policy, Presidential Decree No. 35/19 of January 31 approving the Technical Regulations for the Marketing of Rough Diamonds, and Decree No. 85/19 of March 21, which regulates semi-industrial diamond mining, as well as the significant update in the regulations governing the national foreign exchange market; Therefore, under the combined provisions of paragraph 2 of Article 28 of Law 5/97 of June 27 (Foreign Exchange Law) and Article 51 of Law No. 16/10 of July 15 (Law of the National Bank of Angola); HEREBY DETERMINE:

Article 1. (Subject Matter) This Notice establishes the foreign exchange regime applicable to the diamond sector, namely to entities engaged in mining, cutting/polishing, or any type of processing of diamonds, as well as their marketing, in accordance with the Mining Code and complementary legislation.

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Article 2. (Scope) This Notice covers authorized Banking Financial Institutions engaged in foreign exchange trading, as well as the following diamond sector entities: a) Producers holding mining rights for industrial, semi-industrial, and artisanal diamond production; b) National diamond cutting/polishing factories; c) National buyers of rough cut diamonds; d) The Angolan public diamond marketing authority; e) The national concessionaire for mining rights in the diamond sector; f) Any other national companies buying or selling diamonds.

Article 3. (Sale of Diamonds to Foreign Buyers)

1. Sales of diamonds, whether rough, cut, or in jewelry form, to non-resident foreign entities must be fully settled in foreign currency.
2. Services provided by national entities in marketing diamonds to foreign entities must be fully paid in foreign currency.
3. All foreign currency revenue acquired from the sales specified in paragraph 1 of this Article must be deposited into a foreign currency bank account opened with a domestic bank, held by the seller, in compliance with the rules set forth in Presidential Decree No. 35/19 of January 31 approving the Technical Regulations for the Marketing of Rough Diamonds and any other applicable legislation in force.

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Article 4. (Purchase and Sale of Diamonds in the National Market)

1. Payments for the operations listed below are made in national currency, but may be made in foreign currency by agreement between the parties involved in each operation, namely: a) Purchase by the public diamond marketing authority from producers (industrial, semi-industrial, or artisanal); b) Purchase by national diamond cutting/polishing factories from industrial producers; c) Purchase by national diamond cutting/polishing factories from the public diamond marketing authority, and vice versa.
2. The purchase and sale of diamonds between the following national entities must be conducted exclusively in national currency, namely by: a) National buyers of rough cut diamonds ("jewelry manufacturers") from national diamond cutting/polishing factories; b) Goldsmiths/jewelers to "jewelry manufacturers".
3. Payments for the sales referred to in the preceding paragraphs of this Article must be made exclusively via bank transfer to foreign currency-denominated accounts opened with Banking Financial Institutions domiciled in the country, held by the sellers.

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Article 5. (Opening and Operation of Bank Accounts)

1. The opening of a bank account in the name of any national entity active in the diamond sector at a foreign-domiciled Financial Institution, including an "escrow" account for contracted external debt service, is subject to prior authorization from the National Bank of Angola.
2. For this purpose, the interested party must submit a complete justification of their request to the national Banking Financial Institution domiciled where their account is held, and such Institutions must forward this information to the National Bank of Angola to enable request evaluation and decision issuance.
3. Diamond sector entities covered by this Notice must open national and foreign currency accounts with Banking Financial Institutions domiciled in the country.
4. Unconverted export revenues for the purposes referred to in Article 7 of this Notice may be retained in foreign currency at banks domiciled in the country and used for: a) Payments abroad, including settlement of imports of goods and services intended exclusively for consumption by the account-holding company; b) Payments to foreign shareholders, as provided in current regulations; c) Other payments required in foreign currency according to applicable national legislation, including taxes.
5. Foreign currency export revenues cannot be transferred to other companies nor used to pay for imports of goods and services on behalf of those companies, regardless of whether they are related or unrelated to the exporting company.

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Article 6. (Procedures for the Sale of Foreign Currency)

1. The negotiation and sale of foreign currency by industrial producers, the Angolan public diamond marketing authority, and the national mining rights concessionaire must be conducted in accordance with Instruction No. 02/2020 of March 30.
2. The negotiation and sale of foreign currency by the remaining entities covered by this Notice must be conducted, in accordance with Banking Financial Institutions domiciled in Angola.

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Article 7. (Acquisition of Goods and Services in the National and International Markets and Other Payments)

1. Entities covered by this Notice may only pay domestic service providers or goods suppliers in national currency.
2. Taxes, fees, and other statutory obligations are paid in the currency defined by their respective legislation.
3. To make the national currency payments referred to in the preceding paragraphs, entities covered by this Notice may use resources deposited in their bank accounts in that currency; any balance deficiency must be covered by the sale of foreign currency, according to the procedures defined in Article 6 of this Notice.
4. Payments for merchandise imports by entities covered by this Notice must first utilize available balances in their foreign currency accounts, with freely negotiable payment methods without applicable limits, subject to compliance with other current regulations on the matter.
5. Entities covered by this Notice may purchase foreign currency to pay for merchandise imports once their own foreign currency resources are exhausted, in which case they remain subject to the limits established in relevant payment method regulations.
6. Payments for services contracted abroad must be made in accordance with the rules and procedures applicable to current invisible foreign exchange operations by legal entities in the Republic of Angola, following the same rules for foreign currency utilization referred to in the preceding paragraphs applicable to merchandise imports.

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Article 8. (Capital Operations and Transfers of Profits and Dividends)

1. Capital export and import operations by foreign investors holding diamond mining rights, as well as profit and dividend transfers attributable to these investors, must be conducted in accordance with current foreign exchange regulations regarding external investment, capital operations, and associated income.
2. Capital export operations and profit or dividend transfers must be settled by debit of the foreign currency account held by the paying entity, with foreign currency purchase permitted only after exhausting that account's balance.

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Article 9. (Contracting of External Financing)

1. Contracting external financing for export-oriented projects is not subject to authorization from the National Bank of Angola, provided that debt service repayment is guaranteed by export revenues.
2. The opening of an "escrow" account is subject to prior approval by the National Bank of Angola under Article 5 of this Notice, so external financing borrowers must not enter into contracts including this condition without first obtaining said approval.
3. For registration purposes, the company borrowing external financing must submit a copy of the executed contract to the Foreign Exchange Control Department of the National Bank of Angola.

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Article 10. (Penalties) Violations of this Notice are punishable under Law No. 5/97 of June 27 (Foreign Exchange Law) and Law No. 12/2015 of June 17 (Framework Law for Financial Institutions).

Article 11. (Questions and Omissions) Questions and omissions arising from the interpretation and application of this Notice shall be resolved by the National Bank of Angola.

Article 12. (Repeal) Notice No. 02/2003 of February 28 is repealed, along with all regulations contrary to the provisions of this Notice.

Article 13. (Entry into Force) This Notice enters into force 30 days after the date of Publication. PUBLISH. Luanda, May 27, 2020. THE GOVERNOR JOSÉ DE LIMA MASSANO