VAT in the Upstream oil sector

On April 12, 2024, a meeting was held at the Atlantic Palace Hotel, at the initiative of the Ministry of Hydrocarbons, in response to the difficulties encountered in applying the new provisions on value-added tax (VAT ) in the oil sector. These difficulties, raised by UNICONGO, are linked to the promulgation of decree no. 2023-1337 of October 12, 2023, setting the terms and conditions for VAT application. The purpose of this decree is to extend the application of VAT to operations that were previously exempt, in accordance with current production sharing contracts.

The meeting organized by the Ministry of Hydrocarbons was attended by representatives of oil and oil-related companies, who were faced with the practical challenges posed by this decree. The decree, presented as the result of the transposition of Directive n°11 /22 CEMAC UEAC 010-A-CM 381 on the harmonization of Member States' VAT legislation (hereinafter "the CEMAC Directive") into national law. The Minister indicated that the preparation of the decree had involved close collaboration between the Congolese government, the World Bank and the International Monetary Fund.

The aim of the meeting was to gather information on the difficulties encountered in implementing this text, and to find solutions.

Following a question-and-answer session, the Minister urged companies to invoice inclusive of VAT under their commercial contracts with oil companies. Invoices issued without VAT since January 1ᵉʳ, 2024, will have to be re-invoiced with VAT to be regularized. However, the Ministry of Hydrocarbons and the Ministry of Finance are planning an interministerial order proposing transitional measures, pending an order specifying the mechanisms for implementing the decree. Pending these mechanisms, the problem remains unchanged.

On the bangs of the discussions, the issue of the accumulation of VAT credits by oil and gas companies was raised, and companies were asked to send in their complete files as soon as possible so that they can be studied. This will be followed by a meeting with the companies concerned in Brazzaville.