The Maputo City Tax Court began proceedings on Thursday to examine an appeal filed by Galp against a capital gains tax assessment of €151.5 million (US$175.9 million) issued by Mozambique’s Tax Authority (AT) following the Portuguese energy company’s exit from the Area 4 natural gas project in the Rovuma Basin.
“This is a contentious appeal filed by Galp, contesting the capital gains figure calculated by the AT,” a source connected to the Mozambican tax authority’s legal defence told Lusa news agency outside the courtroom after the session, which ran past 7 p.m.
According to the same source, the preliminary hearing was dedicated to the presentation of evidence and the examination of the parties involved, with the aim of providing the court with the material necessary to determine whether the tax was calculated in accordance with Mozambican law.
“Today was the date designated for the preliminary hearing — the production of factual evidence — so that the court has the best possible basis on which to decide whether the tax was assessed in accordance with the law,” the source added.
At the centre of the dispute is a tax bill of US$175.9 million, equivalent to €151.5 million, issued by the AT following the sale by Galp Portugal Holdings B.V. and Galp East Africa B.V. of their entire stakes in Galp Rovuma to Abu Dhabi National Oil Company (ADNOC).
The transaction marked Galp’s full exit from the Area 4 natural gas project in the Rovuma Basin in northern Mozambique, generating proceeds of more than €760 million for the Portuguese energy group.
Following the transaction, the AT concluded that a taxable capital gain had arisen under the fiscal regime applicable to petroleum operations in Mozambique. Galp, however, contests the amount calculated, arguing that the taxable base determined by the authority is excessive and that the tax liability should be substantially lower.
“A capital gains tax was assessed and liquidated. Galp was notified, Galp disagreed with the assessment, and it challenged it before the Tax Court in accordance with the procedural rules in force in the Republic of Mozambique,” the source connected to the AT’s defence explained.
Galp co-chief executive João Diogo Silva has stated that the company sees no legal basis for the tax claim presented by the Mozambican authorities.
The hearing was suspended in the early evening and is expected to resume on a date yet to be announced. “Evidence was presented and we will await the subsequent procedural steps,” the source added.
The dispute is regarded as one of the largest tax litigation cases linked to Mozambique’s extractive sector and is running in parallel with an international arbitration process also initiated by Galp against the Mozambican state. The company grounded its international claim on bilateral investment treaties signed between Mozambique, Portugal, and the Netherlands, which provide for investor-state dispute resolution mechanisms.
The arbitration case was registered on 26 June at the International Centre for Settlement of Investment Disputes (ICSID), a World Bank Group institution, under the reference ARB/26/31, with Galp Energia SGPS, Galp Energia Portugal Holdings B.V., and Galp East Africa B.V. named as claimants against the Republic of Mozambique.
The Mozambican government has repeatedly stated that Galp must settle the tax demand. In July, Council of Ministers spokesman Inocêncio Impissa said that payment constitutes a right of the state. “What the government has said is that it must be paid. That is all. It is a right of Mozambicans. It is a national resource and it must be paid,” he declared.
Impissa nonetheless acknowledged that arbitration could serve as a mechanism to bring the parties’ positions closer together, with the arbitrator tasked with evaluating the arguments put forward by each side. For his part, Galp co-chief executive João Diogo Silva stated in October 2025 that the company saw no legal basis for the tax claim advanced by the Mozambican authorities, while expressing willingness to pursue a negotiated resolution.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=532203
