Angola: New Gas Consortium – Specific VAT regime

A project-specific Value Added Tax (VAT) regime for the New Gas Consortium was created by way of Presidential Legislative Decree 6/24, of 22 May 2024. Below is an outline of the new VAT regime:

• The regime is applicable to the Petroleum Companies (Azule Energy, Chevron, Sonangol P&P and TotalEnergies) that carry out exploration, production, transport and sale of natural gas in the Concession Area of the New Gas Consortium under the respective Risk Service Contract concluded with the National Concessionaire (ANPG);
• The Petroleum Companies are subject to the section of the VAT Code specifically applicable to the petroleum industry;
• The following operations are exempt from VAT:

                       1- The importation of equipment, raw materials and other products used in the petroleum
                             operations;

                       2- The acquisition in the Angolan market of equipment exclusively and directly used in the
                             petroleum operations.

• The sale of natural gas in the Angolan market made by the Petroleum Companies is equivalent to the exportation of gas for purposes of the right of VAT deduction;
• VAT refunds may be requested by the Petroleum Company 1 month after a situation of overpayment. If refund is not processed within 1 month of request, the tax office must issue a Certificate of Tax Credit within 5 business days;
• A Certificate of Tax Credit may be used against any owed tax (including customs duties, Industrial Tax withholding and Surface Fee), with the exception of the following: (i) Petroleum Income Tax, (ii) Petroleum Production Tax, (iii) Petroleum Transaction Tax, and (iv) Workers Compensation Tax;
• The Petroleum Companies must withhold (and pay to the tax office) the VAT amount included in the invoices for the acquisition of goods and services (captive VAT) in accordance with the VAT Code;
• The captive VAT must be paid in full to the tax office (including VAT relating to operations that grant right to deduct) except in relation to the aforementioned exemptions;
• If deductible VAT is included in the exploration, development, production and abandonment costs of the Petroleum Company, same VAT shall not be deducted against Petroleum Income Tax.

Each Petroleum Company described above must create a separate entity exclusively dedicated to the New Gas Consortium activities.

The New Gas Consortium is Angola’s first non-associated gas development project. It is operated by Azule Energy with a 37.4% interest, and also includes Chevron (31%), Sonangol P&P (19.8%) and TotalEnergies (11.8%).

Rui Amendoeira, OneLegal Partner.