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Wednesday, May 23, 2018
Marginal tax rates have been cut in half by the government of Angola. The change in tax rates is part of the government’s bid to increase investment and reverse declining output.
The new tax rate is part of a series of presidential decrees which were recently gazetted and made available by the Ministry of Petroleum on May 21. The decrees gazetted outline new legislation for the development of marginal fields, the creation of a regulator for fuel products, and natural gas rights.
Angolan oil production is on track to decline 36% by 2023, according to government data.
Under Presidential Legislative Decree No. 6/18, which the law defines as a discovery with reserves of less than 300 million barrels or marginal, the production tax was cut to 10% from the usual 20%, while petroleum income tax was reduced to 25% from 50%.
A separate decree published at the same time, Presidential Legislative Decree No. 5/18, calls for a more flexible approach to concession boundaries, with reserves that spread beyond the original limits being rolled into current blocks as long as they did not cross into an area already under contract.
Presidential Legislative Decree No. 7/18 revolves around new gas legislation. The decree gives oil companies a specific legislative framework to explore, develop and sell natural gas. This is a first for Angola’s gas sector. It outlined a tax regime on predominantly gas fields of 5% on production and 25% on income.
The series of decrees created a new body to regulate the oil derivatives market, including the import and distribution of fuels. The body known as the Regulatory Institute for Oil Derivatives (IRDP) will be based in the capital Luanda and its head will be chosen by the minister for oil and mines.
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