The Tax Authority (AT) has warned Galp that the amount of tax it owes on the sale of its stakes in the Rovuma Basin could rise if it does not settle the 175.9 million dollars that the Mozambican tax authorities say the Portuguese oil company has to pay to Mozambique..

In a statement released on Tuesday, the same day that Galp also announced that it would resort to international arbitration to resolve the dispute over the amount to be paid in relation to the sale of its stake in the Coral Sul project in the Rovuma Basin, the AT stressed that the "payment of the tax due" of 175.9 million dollars in capital gains after the transfer of the stakes of Galp's companies (Galp and its branches) "is a legal imperative".

However, the AT also stresses that "the amount owed may rise if it is not paid on time", stating that it will maintain its stance until it receives the amount it says is missing, while respecting confidentiality.

"With regard to the procedures adopted in the analysis of this type of transaction, the AT would like to make it known that it will always maintain its firm commitment to pursuing actions to comply with the requirements of Mozambican tax law, in close partnership with all relevant entities, always observing the limits of confidentiality, as provided for in the tax legislation of the Republic of Mozambique," reads the AT statement, quoted by Carta de Moçambique.

At issue is the lack of consensus on how much Galp should pay in capital gains to the state, specifically to AT, after the company and its branches sell their stakes in Area 4 of the Rovuma Basin to XRG P.J.S.C., a wholly-owned subsidiary of ADNOC, from Abu Dhabi, in March 2025.

With the sale of its stakes, namely in the Coral South FLNG project, in operation since 2022; Coral North FLNG, whose final investment decision was taken on October 2, 2025 and Rovuma LNG, Galp received a payment of around 881 million dollars. Based on this, the AT calculated and concluded that the Portuguese oil company should pay 175.9 million dollars in capital gains to the Mozambican state.

However, Galp never agreed. As a result, the case ended up in the Mozambican courts, where the Portuguese company twice appealed to the Maputo City Tax Court not to pay the debt coercively. In these proceedings, Galp presented guarantees which, in the AT's opinion, were not suitable. It is not public how much Galp thinks is fair to pay the Mozambican state in capital gains.

Without a favorable response in Mozambique, Galp announced on October 7 that "in view of a dispute, which has not yet been resolved, regarding the taxation of capital gains on the sale of the stake in Area 4 of the Rovuma Basin, it has formally notified the State of Mozambique of the existence of a dispute, under agreements on the promotion and international reciprocal protection of investments."

 

(Photo DR)