Mozambique: Galp Must Pay Taxes Claimed By Mozambican State

Maputo — The Mozambican government has reaffirmed that the Portuguese oil company, Galp, must pay the taxes claimed by the country's Tax Authority from the sale of its stake in Area 4 of the Rovuma Basin.

The dispute emerged when Galp decided to sell, in2024, its position in the consortium exploiting natural gas in Area Four of the Rovuma basin, off the coast of the northern province of Cabo Delgado, to ADNOC, the state-owned oil company of the United Arab Emirates.

Galp sold its assets in Mozambique for 1.2 billion Euros (1.3 billion US dollars, at the current exchange rate). This amount, according to the AT's calculations, results in a taxable capital gain of 162 million Euros (based on the application of the standard 17.6 per cent rate). However, Galp claims that the fair capital gain only corresponds to 26 million Euros.

In order to defend its position, Galp decided to move forward with international arbitration against Mozambique. The company even decided to take the case to international arbitration, through the World Bank's International Centre for Settlement of Investment Disputes (ICSID).

However, according to the government spokesperson and Minister of State Administration, Inocêncio Impissa, speaking to reporters on Tuesday after a meeting of the Council of Ministers (cabinet), the government reiterated that the amount in question must be paid by Galp.

"It is a right of Mozambicans. It is a national resource and it must be paid. We believe that international arbitration could serve to bring positions closer together. It will discuss as far as it deems it should discuss, and the country will maintain its positioning as far as it deems reasonable. When there are different positions, it is necessary to place an arbitrator to analyze the interests, judge the positioning, analyze the reasonableness, and analyze the guarantees that exist for each of the parties", the spokesperson said.

According to Impissa, the formal process has not been received by the government. "The document [regarding international arbitration] has not yet been presented to the government. However, it does not ignore the possibility of it existing. Therefore, I recognize and it may effectively exist, but it was not dealt with in session", he said.

"This is not even a diplomatic relationship, this is a commercial relationship, and being a commercial relationship, it is directly dealt with at the sector level", he added.

Read the original article on AIM.