Angola, Africa’s largest oil producer after Nigeria, is imposing a consumption tax on petroleum companies that will raise some costs by as much as 10 percent, according to government documents.
The law, which comes into effect with its publication that may happen as early as today, requires companies to follow a tax schedule that adds five percent to most services and supplies and double that for equipment rentals, a presidential decree showed.
Angola set up a special tax reform branch in 2010 to work with government ministries on increasing revenue and closing loopholes in a bid to simplify taxation. The southwest African country, a member of the Organization of Petroleum Exporting Countries, pumped about 1.74 million barrels a day in September from offshore fields, according to data compiled by Bloomberg.
“Oil companies have benefited from tax exemptions even as government reforms have expanded the net of taxable services,” Emily Anderson, a researcher at the London School of Economics, said in an e-mailed response to questions. “Closing loopholes in the fiscal system will bring greater tax justice and taxpayer confidence across all industries while making good economic sense.”
Companies spend about $20 billion a year in petroleum exploration and production in Angola, according to London-based GlobalData Ltd. and Oilfield Support Angola Lda based in the capital, Luanda. Tapping fields under one mile of ocean and three miles below the seabed tests limits of current technology. Mercer ranks Luanda the world’s most expensive city for expatriates with an oil-driven economy that’s inflated prices. Angola is continuing to recover from a 27-year civil war that ended in 2002.
Source: Bloomberg
