Instruction No. 03/95: Exchange Policy for Current Invisible Operations

INSTRUCTION No. 03/95
Subject: EXCHANGE POLICY

• CURRENT INVISIBLE OPERATIONS -

It is necessary to establish a reference framework containing, with sufficient detail, the elements necessary to verify the nature and reality of transactions and transfers that fall under the category of current invisible operations.

1. DOCUMENTATION
   The documents generally used to justify current invisible operations, which result in settlements with or from abroad, as well as some characteristics of these operations, are perfectly defined to constitute a file that can be analyzed at any time by the competent authorities for banking supervision purposes.

In this context, regardless of the specific information elements referred to in these instructions, transfer requests must be accompanied by:
a) A letter from the interested party or a payment authorization form for current invisibles (BAPIC), mentioning the essential elements of the operation to be carried out, namely: identification of the applicant and beneficiary, indication of the nature and purpose of the operation, amount, settlement currency, and destination country. b) Justifying documents for the value of the operation. c) Any other data that the interested party deems convenient to attach for the complete instruction of the file.

2. REGISTRATION OF OPERATIONS AND ARCHIVING OF RESPECTIVE PROCESSES
   Authorized financial institutions engaged in foreign exchange trade, regarding the current invisible operations they carry out, shall proceed with the orderly registration of these operations, preferably by assigning an annual sequential number to each file, differentiating payments from receipts.

The registration may be carried out in a map, book, or computer medium. Each file must consist of the set of all documents that served as the basis for the exchange settlement of the respective operation and be archived in numerical order. The retention period for these files shall be five years.

3. LICENSING OF CURRENT INVISIBLE OPERATIONS
   3.1 According to paragraph 3 of Article 5 of Decree No. 16/94 of April 22, current invisible operations, hereinafter designated as commercial operations, are subject to prior licensing by the National Bank of Angola.

3.2 As an exception to the provision in the previous paragraph, Commercial Banks may carry out, without any prior authorization from the National Bank of Angola, the current invisible operations hereinafter designated as commercial operations, provided they are carried out without recourse to exchange reserves and up to a limit of USD 50,000.00 per operation, with installment payments not permitted.
The carrying out of these operations must be communicated to the National Bank of Angola in the usual manner, i.e., via the current invisibles form and the monthly operations map, as established in the "Instructions".

3.3 The delegation of competence by the National Bank of Angola to authorized financial institutions engaged in foreign exchange trade for the licensing and carrying out of current invisible operations contained in Instruction No. 8/94 of April 22 remains in effect.

4. EXCHANGE RATE
   4.1 For current invisible operations, the exchange rate freely agreed upon between the client and the financial institution of their free choice is applied, with the exception of those that have obtained respective exchange coverage from the National Bank of Angola, for which the official exchange rates established for the clientele must be observed.

5. DOCUMENTATION REQUIRED FOR THE CARRIING OUT OF PRIVATE AND UNILATERAL OPERATIONS CONTAINED IN INSTRUCTION NO. 8/94 OF APRIL 22, AND ADMINISTRATIVE PROCEDURES TO BE COMPLIED WITH IN THEIR LICENSING
   Authorized financial institutions engaged in foreign exchange trade, according to the delegated competence, must scrupulously comply with the stipulated in Instruction No. 8/94 of April 22, regarding the licensing and carrying out of the current invisible operations mentioned in the heading and duly identified in the aforementioned "Instruction".

6. COMMUNICATION TO THE NATIONAL BANK OF ANGOLA OF CURRENT INVISIBLE EXCHANGE OPERATIONS CARRIED OUT BY AUTHORIZED FINANCIAL INSTITUTIONS
   6.1 Authorized financial institutions engaged in foreign exchange trade must fill out form "A", the model of which is attached, for each current invisible operation carried out in exchange terms and send it to the National Bank of Angola within five business days, counting from the date of the effective transfer, issuance of a check, or sale of foreign currency to the client.

6.2 Authorized financial institutions engaged in foreign exchange trade will send monthly to the National Bank of Angola a list of current invisible operations carried out, which will correspond to a copy of their own file register, preferably in computer medium.

6.3 Authorized financial institutions engaged in foreign exchange trade will continue to send to the National Bank of Angola, on the immediate next business day in which the exchange use occurs, the "B" copy of the BAPIC, annotated in exchange terms.

7. SYSTEMATIZATION OF CURRENT INVISIBLE OPERATIONS - COMMERCIAL OPERATIONS

TRANSPORTS

A) - PAYMENT TO ABROAD ORDERED BY THE IMPORTER OR EXPORTER TO THE CARRIER OR TO THE SUPPLIER OF THE MERCHANDISE

1. • TRANSPORT ALREADY CARRIED OUT

• Justifying documents
• Invoice or expense note from the carrier
• Copy of the import/export slip or, in its absence, indication of the respective number
• Commercial invoice of the merchandise
• Non-negotiable copy of the bill of lading or air or land waybill
  Note: If the cost of freight is stated in the document representing the transport, as often happens with the bill of lading, the presentation of the invoice or expense note is waived.

2. ADVANCE PAYMENT

• Proforma invoice of the freight, telex, telefax, or letter stating the transport conditions
• Copy of the import/export slip
  In this situation of advance payment, the applicant is obliged to present promptly:
• Definitive invoice of the freight
• Non-negotiable copy of the bill of lading or air or land waybill.
  Note: The operations referred to in previous nos. 1) and 2) are only justified if:
• In the case of export, the sale of the merchandise was made on a CIF or C&F basis, to be proven by the invoice or purchase and sale contract and export slip.
• In the case of import, the purchase of the merchandise was made at a price that includes the freight (FOB, FAS, EX-WORK, etc...)

3. CHARTERING OF A SHIP BY THE IMPORTER OR EXPORTER

• Charter party, duly signed by the contracting parties or telex stipulating the chartering conditions.
• Authorization from the competent Angolan official entity that gave its agreement to the chartering of the ship.
• Calculation note of the value to be transferred.
• Copy of the import/export slip or indication of the respective number.
• Non-negotiable copies of bills of lading or cargo manifests that confirm the effective realization of the transport and the fairness of the freight paid.
  Note: In the case where the last elements are not available, they must be presented promptly.

B) PAYMENT ORDERED BY FORWARDING AGENTS OR NAVIGATION AGENTS

1. FORWARDING AGENTS
   Justifying Documents

• Current account statement
  This document must, regarding each request presented, be linked to the previously provided statement, revealing correct continuity.
• Cargo manifests or bills of lading (in the case of maritime transport) or air or land waybills, justifying the credits on the current account of the most significant amounts.
• Possible debit notes, if any
  Note: When it is an isolated operation, the invoice from the foreign shipper, accompanied by the respective title proving the transport, is sufficient. By current account, we understand the bookkeeping document where the agent records the revenues and expenses of the ship or any other means of transport.

2. • NAVIGATION AGENTS
     JUSTIFYING DOCUMENTS

• Current account between the navigation agent and the foreign shipowner.
  This element must, regarding each case presented, be linked to the previously provided statement, if any.
• Disbursement account
• Cargo manifests or bills of lading relating to the freights charged in Angola ("Inward freights") or inbound or import freights and ("Outward freights") or outbound or export freights.
• Calculation note of the value to be transferred
  Note: Disbursement accounts usually have two components: the expense (charges with the ship at the port of call) and the revenue (freights received, inbound and/or outbound), with the balance being the value to be transferred. The competent Angolan entities may require navigation agents to provide advance proof from the foreign shipowner to cover disbursement expenses, via mandatory bank transfer from abroad, without permission, therefore, to offset the value of the freights charged.

C) - CHARTERING OF FOREIGN SHIP BY FORWARDING AGENTS OR NAVIGATION AGENTS JUSTIFYING DOCUMENTS

• Calculation note of the value to be transferred
• Charter party, duly signed by the contracting parties, telex or telefax stipulating the chartering conditions
• Authorization from the Angolan official entity for the chartering of the ship. Most usual types of ship chartering:
• Time charter (month, quarter, semester, or year) with indication of the rate, usually daily.
• Voyage charter (one or more voyages on the same route), with a global rate (Lumpsum) per voyage.
• For a specific cargo (rate to be paid by weight, measure, or other modality).
  The chartering of ships under a financial leasing regime constitutes a capital operation.

D) - CHARTERING OF AIRCRAFT ("charters" flights) Necessary Elements:

• Charter contract
• Invoice or calculation note of the value to be transferred
• Authorization from the competent Angolan official entity
  The chartering or leasing of aircraft under a financial leasing regime are capital operations.

E) - MARITIME PASSENGER TICKETS
Necessary Elements:

• Nominal list of passengers
• Statement demonstrating the value to be transferred

F) - AIR PASSENGER TICKETS

1. PAYMENTS ORDERED BY AIR NAVIGATION COMPANIES ESTABLISHED IN ANGOLA
   Necessary Elements:

• Letter from the company with the breakdown by headings of the revenue and expense movement relating to the period to which the transfer request refers
• Bank account statement, which must show a sufficient balance to cover the value intended to be transferred.

2. PAYMENTS ORDERED BY OTHER ENTITIES
   Necessary Elements:

• Letter from the payer explaining the reasons for bearing the charge
• Invoice or debit note of this charge

G) - PROVISION FOR DISBURSEMENT EXPENSES OF ANGOLAN SHIPS IN FOREIGN PORTS These operations may be authorized only based on the payer's letter, with estimated values, conditioning the authorization to the prompt presentation of justifying documents of the expenses actually made.

H) - OTHER CHARGES UNDER THE "TRANSPORTS" CATEGORY TO BE JUSTIFIED BY THE PRESENTATION OF INVOICES OR DEBIT NOTES AND EVENTUAL RECEIPT PASSED BY THE COMMANDER OR RESPONSIBLE OF THE SHIP OR AIRCRAFT:

• Supply expenses abroad for ships or aircraft
• Repair expenses for ships or aircraft
• Port or airport fees
• Customs duties
• Transit or warehousing expenses for merchandise or parts
• Demurrage expenses for ships "Demurrage" on loading or unloading resulting from an express condition of the charter party and with mandatory presentation of the "time sheet"
• Gains from dispatch money ("Despatch-money"), justified in the same way as demurrage. This refers to the time gained on loading or unloading, according to the transport contract, charter party "addendum" to this, and calculation sheet "time sheet".

INSURANCE

A) - PAYMENT OF INSURANCE PREMIUMS CARRIED OUT ABROAD, RELATING TO MERCHANDISE, ON ACCOUNT OF IMPORTERS Necessary Elements:

• Contract or order note of the merchandise containing the conditions of the respective transaction, namely regarding the location and method of carrying out the insurance
• Insurance premium invoice or letter claiming its payment or even the receipt from the insurer itself
• Copy of the import slip
  Note: The carrying out of insurance abroad by residents requires a favorable opinion from the competent Angolan entity.

B) - PAYMENT OF INSURANCE INDEMNITIES RELATING TO MERCHANDISE TRAFFIC

1. • WHEN REQUESTED BY THE EXPORTER
     Necessary Elements:

• Documentary proof that the applicant (resident) received from the national insurer the amount they intend to transfer in favor of the foreign client.
• Insurance certificate or the policy itself.
• Invoice of the merchandise, whose value, obviously, must include the cost of insurance (C&I or CIF)
• Copy of the export slip.
• Proof that the value of the exported merchandise to which the indemnity refers was received.

2. • WHEN REQUESTED BY THE INSURER
     Necessary Elements:

• Insurance policy or copy of the certificate
• Calculation note of the indemnity value to be transferred
• Invoice of the merchandise
• Report ("Survey report") from the entity responsible for analyzing the damages, whenever it exists
  Note: If the report ("Survey report") establishes the value of the indemnity, this element accompanied by a clarifying letter from the insurance company regarding the operation is sufficient.

C) - PAYMENT OF INSURANCE PREMIUMS BY PRIVATE INDIVIDUALS (Personal insurance made abroad) Necessary Elements:

• Document justifying the value to be transferred issued by the beneficiary company of the payment
• Insurance policy

D) - PAYMENT, BY COMPANIES, OF PERSONAL INSURANCE PREMIUMS Necessary Elements:

• Letter explaining the charge to be settled
• Document (receipt, invoice) justifying the value of the insurance premium

E) - REINSURANCE
Payments relating to reinsurance business between companies in the sector Necessary Elements:

• Letter from the foreign reinsurer stating the amount due, or
• Current account statement, or
• Copy of the reinsurance contract
• Opinion from the competent Angolan official entity on the reasonableness of the costs involved
  Note: - Documents issued abroad, presented as justifications for these operations, must be authenticated by the national company considering the value to be paid correct:
• When it concerns values arising from the purchase or sale of securities or repayment of bonds, the respective requests must be assessed within the scope of private capital operations.

CAPITAL INCOME

A) - PROFITS AND DIVIDENDS
In this matter, it is necessary to take into account, in the first analysis of the files, the same instructions or legislation applicable to Foreign Investment in Angola and verify documentally if the capital of foreign companies, or national companies with foreign participation, was legally imported and exchange-processed. Elements necessary for the assessment and justification of this type of operations:

LIMITED LIABILITY COMPANIES (SOCIEDADES POR QUOTAS):

• Letter from the company indicating the calculation of the value to be transferred; stating the beneficiary's participation in the capital, profit attributed (and the capital tax to be deducted) and the fiscal year to which the profits refer,
• Copy of the minutes of the general assembly in which the accounts of the fiscal year and the distribution of profits were approved,
• Copy of the duplicates of the balance sheet and the statement of net income referred to the closing date of the bookkeeping of the year to which the profits relate (development of the profit and loss account) from which the receipt stamped by entry in the respective Finance Directorate must appear (if such a legal provision exists),
• Copy of the guide proving the payment of the capital tax (if required by Angolan fiscal law), whose value must be proportionally deducted from the value to be transferred.

JOINT STOCK COMPANIES (SOCIEDADES ANÓNIMAS)

• Letter from the company indicating the calculation of the value to be transferred, also stating the foreign beneficiary's participation in the capital (number of shares subscribed and paid), amount of the distribution to be deducted, and the fiscal year to which the dividends refer,
• Copy of the minutes of the general assembly in which the report and accounts of the fiscal year were approved and the distribution of dividends was deliberated,
• Report and accounts of the fiscal year and eventual stamp from the Finance Department or similar document,
• Copy of the document proving the payment of the capital tax due to the State (if required);
  Note: Both for limited liability companies and joint stock companies, upon the first transfer of profits or dividends; the indication of the numbers of the capital import licenses or, given their "non-existence", proof of the exchange realization of the foreign capital will be required. The same will apply whenever there is an increase in foreign participation in the capital.

DELEGATION, BRANCHES, AGENCIES OR ANY OTHER FORMS OF REPRESENTATION, IN ANGOLA, OF COMPANIES WITH HEADQUARTERS ABROAD.

• Letter from the interested party indicating how the amount to be transferred was obtained, indication of the fiscal year to which the results refer, noting that the amount to be transferred should not be higher than the net results ascertained in the same fiscal year
• Copy of the balance sheet and the statement of net income referred to the closing of the fiscal year to which the transfer refers,
• Copy of the document proving the payment of the last industrial contribution due, if required by Angolan fiscal law (receipt and respective declaration).

TRANSFERS OF "CARRIED FORWARD RESULTS", "RESERVES AND PROFITS NOT WITHDRAWN UNTIL THE END OF THE YEAR OF THEIR ATTRIBUTION These operations fall within the scope of capital operations and as such must be licensed, with the same proof elements referred to in the previous headings. Note: Values relating to "Revaluation reserves of fixed assets", regardless of the legal basis of their formation, are not subject to distribution among partners or shareholders, and therefore transfers of these values will not be authorized.

B) - INTEREST ON PUBLIC OR PRIVATE DEBT SECURITIES Necessary Elements:

• Letter from the financial institution where the securities are deposited (presuming such obligation) with the indication of the name of the titular owner, the number of securities, and the calculation of the value to be transferred.

C) - INTEREST DUE FOR DEFERRED PAYMENT OF IMPORTED MERCHANDISE (Short-term commercial credit) Necessary Elements:

• Invoice or debit note of the interest,
• Calculation note of the invoiced or debited value, if not stated in those documents,
• Clarification of the reasons why interest payment is due,
• Numbers of the import slips and invoices of the merchandise whose deferred payment originated the formation of interest.
  Note: - It must always be verified if the applied interest rate is acceptable in view of the rate practiced, for the respective currency and time period, in the creditor country at international rates.

D) - INCOME FROM RURAL AND URBAN PROPERTIES
Necessary Elements:

• Letter from the applicant, explaining the payment to be made, with indication of the amount to be transferred and how it was determined, the name and domicile of the beneficiary, the nature of the income, and the period to which it refers,
• Document proving that the beneficiary of the transfer resides habitually abroad,
• Copy of the deed proving ownership of the property,
• Copy of the lease contract, in the case of a rural property, or copy of a document stamped by the Finance Department, when it is an urban property (the latter, if required by fiscal law),
• Copy of the receipt justifying the last payment due of the property tax or document proving its exemption (if required by Angolan fiscal legislation),
• Proof of the import of capital for the acquisition of the rural or urban properties, or indication of how they were acquired and justification of the reasons why there was no import of capital.

COMMISSIONS AND BROKERAGE

A) - ON EXPORTED MERCHANDISE, SALE OR PROVISION OF SERVICES TO NON-RESIDENTS Necessary Elements:

• Copy of the debit note issued by the beneficiary or credit note from the payer or current account statement (statement) of the commissions,
• Copy of a banking document proving that the value of the export of merchandise or services was transferred to Angola,
• Indication of the numbers of the export slips and the commission rate agreed upon between the seller (exporter) and the agent, of which proof must be made, by presenting a commercial representation contract or correspondence exchanged between both,
  Note: Verbal agreements are only accepted if the commission rate does not exceed 5% to 8% of the exported values. It should be mentioned, however, that without the payment of commissions, it is hardly possible to maintain or increase exports.

OPERATIONS CARRIED OUT BY DEDUCTION FROM THE VALUE OF EXPORTS Necessary Elements:

• Invoice of merchandise,
• Copy of the instructions of the applicant or commercial bank intervening in the collection operation of the export value;
  Note: - When it concerns commissions on exports, the parameters referred to in the previous heading should be taken into consideration. On the other hand, commission operations by deduction must be annotated on the copy of the export slip.

B) - COMMISSIONS ON SHIP CHARTERING
Necessary Elements:

• Charter party of the ship, from which the commission (Brokerage) of the agent (Broker) must appear
• Calculation note of the commission or debit note from the beneficiary

C) - COMMISSIONS ON TOURIST REVENUES
Necessary Elements:

• Possible commercial representation contract (if it exists)
• Document justifying the value to be settled (invoice, debit note or "statement")
• Proof of receipt from abroad of the exchange revenues on which the commission is levied

D) - COMMISSIONS ON IMPORTATION OF MERCHANDISE OR SERVICES In principle, the payment of commissions of this type (import) should never be authorized, given that the seller is the one who can make discounts or pay commissions as an incentive to purchase.

Exceptions to the base principle:
Importation of merchandise
The payment of commissions on imports may be authorized, provided the following conditions are verified and proven:

• Acquisition of goods essential to the country, whose scarcity or restrictions in international trade obliged the intervention of an agent capable of overcoming the pointed difficulties and achieving the promptness of the business
• Better price, quality, and favorable payment conditions, in terms of product quotation at the international level.
  Note: Commissions on the provision of services are hardly accepted, except in matters of national interest and, as such, confidential.

RE