Mozambique: State expects ‘good sense’ from Galp in capital gains tax dispute

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Mozambique: State expects ‘good sense’ from Galp in capital gains tax dispute

10:27 CAT | 24 Oct 2025

File photo: Lusa

The Mozambican government said on Thursday that there were no negotiations with Galp over the $175.9 million tax dispute over the sale of its stake in a gas project. However, it believes in the “good sense” of the Portuguese oil company.

“We believe in the good sense of the companies involved in honouring their tax obligations,” said Mozambique’s Secretary of State for the Treasury and Budget, Amílcar Tivane, when questioned by journalists in Maputo about this dispute, asking for “patience” and admitting that “soon” the Tax Authority (AT) will inform about the outcome of the process.

Lusa reported on 8 October that the Mozambican Tax Authority is claiming $175.9 million from Galp in connection with the sale of the oil company’s stake in a gas project, warning that the amount “may rise” and that an enforcement process is underway.

In a statement, the Tax Authority explained that what is at stake is the “transfer of all of Galp’s shareholdings” in Mozambique’s Area 4, a deal in which the oil company “requested the issue of a binding opinion, under the terms of the Mozambican legal system”, on the “tax implications of the transaction”.The AT statement added that “technical clarification meetings” were also held, with the “participation of other Mozambican state entities”, in addition to the binding opinion being sent to Galp.

Galp announced the previous day that it had formally taken the first step towards resolving the dispute with the Mozambican tax authorities by filing a claim in an international arbitration court, in this case concerning the amount of capital gains tax.

“There are no negotiations. What there is is following the law’s intentions. What are we going to negotiate? If I’m a company, I declared profits of 100 meticais, and the IRPC [tax] is 32.5%, I have to pay 32.5% to the State. And there’s no discussion. Now I’m negotiating to pay 10, when I should be paying 32.5? That’s how we see it from a purely economic point of view,” said Amílcar Tivane.

READ: Portugal’s Galp takes step to start arbitration over Mozambique capital gains tax dispute

The government official sees it as natural that the company intends to “dispute” this decision: “I too, if I were CFO of that company, if I were on the board, would dispute it. The less any company pays, the better. But, well, we operate in a world where the expectation is that these companies, particularly those listed on stock exchanges, honour their obligations.”

He also said he believed in a “positive outcome” to this process.

“If we could close this dossier without the need to take it to international arbitration, fine. But this was not a scenario that materialised, and we will let the AT do its job. It is acting in accordance with the law,” said Tivane.

At issue is the “tax dispute” that followed the conclusion of the sale, last March, of Galp’s 10% stake to the United Arab Emirates state oil company (ADNOC), in Area 4 of the Rovuma Basin, in the north of the country, for the production of natural gas, in a deal worth around $950 million (€819 million).

READ: ADNOC makes first foray into Mozambique with 10% stake in GALP concession – Reuters

The AT “announced that, on completion of the transfer of shares from the sellers” – Galp group companies – to the buyer “on the gain made”, the companies “must pay the tax due on that operation, namely in the amount equivalent to $175,923,515.72″, equivalent to €151.6 million at the current exchange rate.

‘In addition,” it reads, since the transaction in question is ‘subject to deferred payments, to occur at the time of the Final Investment Decision for the Rovuma and Coral Norte projects” – meanwhile signed on 2 October in Maputo – “a tax obligation equivalent to $160 million (€137.8 million) will be generated”.

The AT admits that Galp “did not agree” with the binding opinion and “asked for it to be revised”, but says that it did not find “elements to support the change” and has announced that it will maintain its position.

Source: Lusa