1. Legal analyses
1.1 Concept of Angolan oil company
Under Presidential Decree Law no. 3/12, of 16 March 2012 (hereinafter the “Presidential Decree”), an oil company – one which has its scope or object participating in oil operations – is deemed Angolan (= owned by Angolan) if the respective share capital are 100% owned by Angolan citizens.
1.2. Benefits to the Angolan oil company
The benefits granted to Angolan oil companies under the Presidential Decree are as follows:
- Exemption from the signature bonus. Given the phase of the operations, this benefit is not applicable to this case;
- Reduction of petroleum production tax rate from 50% to 30% (i.e., equal to the industrial tax rate);
- Reduction of petroleum income tax rate from 65,75% to 30% (i.e., equal to the industrial tax rate);
- Exemption from the contribution for the financing of the affiliates of the Concessionaire ;
- Exemption from the contribution for social projects.
1.3. Effectiveness of the benefits
The aforementioned benefits are automatically granted, i.e., they do not depend on any further request, claim or submission from the oil company and respective authorization or recognition by the Government authorities (Ministry of Finance or of Petroleum). Nevertheless, the beneficiary companies must adapt their account statements in order to evidence the benefits.
1.4. Other benefits out of the Presidential Decree
In addition to and cumulative with the benefits of section 2.2 above, it is worth mentioning that under article 43 of the Petroleum Tax Law, the Government may, on the basis of a duly justified application from the Ministries of Petroleum and Finance, approve the granting of investment allowances, the amounts and regulation of which shall be included in each of the respective concession act.
The incentives proposed by the Ministries of Petroleum and Finance which are referred to in the preceding paragraph shall be submitted to the Ministries by the State Concessionaire and shall obey the following two criteria: (a) Economic terms of the agreement; (b) Geological potential of the concession. This benefit must be required and negotiated with National Petroleum and Gas Agency after the granting of the concession.
2. Conclusions
A. The Angolan oil companies in the exploration phase may benefit automatically from the following benefits: Reduction of petroleum production tax rate from 50% to 30% (i.e., equal to the industrial tax rate); Reduction of petroleum income tax rate from 65,75% to 30% (i.e., equal to the industrial tax rate); Exemption from the contribution for the financing of the affiliates of the Concessionaire; Exemption from the contribution for social projects.
B. In addition and in the event of an initial concession, there is also the exemption from the signature bonuses.
C. Finally, if requested and negotiated, the Government may, on the basis of a duly justified application from the Ministries of Petroleum and Finance, approve the granting of investment allowances, the amounts and regulation of which shall be included in each of the respective concession act.
