Angola May Exempt Oil Companies From Services Tax, E&Y Says

From Bloomberg

By Colin McClelland

Petroleum explorers including Total SA and BP Plc in Angola, Africa’s second-largest crude producer, will probably be exempt from a consumption tax, the head of Ernst & Young’s local unit said.

The proposed 5 percent levy on services and supplies to oil companies and 10 percent on drill rig leases and other equipment rentals won’t be imposed after opposition from the Petroleum Ministry and companies led the Finance Ministry to revise the law, Luis Marques said in an interview in the capital, Luanda.

“What will happen in the draft law is that oil companies will be exempt,” said Marques, who advises foreign investors in Angola on changes to the tax and legal regime.

A call to the Finance Ministry wasn’t returned and Petroleum Ministry spokesman Jose Miguel said he couldn’t comment.

Angola, recovering from a 27-year war that ended in 2002, is attempting to update its tax laws to boost revenue. Companies including Exxon Mobil Corp. and Chevron Corp. spend an estimated $20 billion a year on exploration and production in the nation, and oil taxes contribute about 80 percent of revenue.

Gilberto Luther, head of the government’s tax-reform project, didn’t reply to a phone call and e-mail. Spokesmen for Exxon and Chevron in Houston declined to comment. BP and Total didn’t respond to e-mails.

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