10 February 2016
Over the past decade, Mozambique has been revising its regulatory framework on hydrocarbons. After a few years of discussion about the renewal of its legislation from 2004, the country issued new Laws in 2014 which defined a new legal framework for the sector. The respective regulations had been pending since then and were finally published at the turn of this year.
The Petroleum Law (Law No. 21/2014) defined the new regulatory framework for activities related to hydrocarbons in Mozambique. The Law established a regime for the concession of rights related to implementation of oil & gas operations in the Republic of Mozambique (including offshore). However, this left some legal questions surrounding the provisions pending further regulation. Therefore, a Regulation of Petroleum Operations was published (Decree No. 34/2015), which clarifies several points of the Law, including but not limited to: criteria, terms and procedures for the issuance, transfer, resignation and revocation of concessions; criteria for development, production and decommissioning plans; rules for the management and conduct of operations; and local content.
Within the revision of the regulatory framework the Specific Regime of Taxation and Tax Benefits of the Petroleum Operations was also published (Law No. 27/2014), which defined the taxation of oil & gas operations in Mozambique. The Law codified the format and the respective mechanisms of governmental participation, especially in relation to The Petroleum Production Tax - IPP (similar to a royalty) and the Production Sharing mechanism. However, the new tax Law was pending further regulation. The Regulation of the Specific Regime of Taxation and Tax Benefits of the Petroleum Operations (Decree No. 32/2015) was then published, which clarifies some elements of the Law, including but not limited to: levying event, taxable events, basis of calculation, rate, settlement and payment procedures of taxes; as well as the Production Sharing mechanism.