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By Shrikesh Laxmidas
LUANDA, Oct 17 (Reuters) - Angola has hit oil companies witha tax of up to 10 percent of their spending on services,government documents showed, in a move that will raise costs ofexploration at a time it is trying to emulate the success ofBrazil in deep-water drilling.
Jose Agante, tax expert and manager at PwC in Luanda, saidon Thursday that the new rules, introduced last week, wouldraise costs mostly during exploration but companies can recoupthe tax for blocks that are already in the production stage.
Angola, Africa's second-biggest oil producer after Nigeria,is reforming its tax system to raise revenue. But it also aimsto increase oil output.
"The big problem for the oil companies is the additionalcost of exploration, which can only be recovered when the blocksstart producing," Agante said.
"For the blocks already in production, the companies willend up recovering the consumption tax they paid through thecosts they can deduct when they come to pay another tax, themain Petroleum Income Tax (PIT)," he said.
Agante said the law makes clear that oil companies are notexempt from consumption taxes and must pay them directly to thestate, ending a longstanding difference in interpretation of taxrules between the firms and the government.
Major companies such as BP, Chevron, Total and ENI operate in Angola's oil sector, whichproduces around 1.75 million barrels per day (mbpd).
Angola wants to raise output to 2 mbpd in 2015.
In 2011, the government signed 11 deals with seven oilmajors to drill thousands of metres under the Kwanza Basinseabed through a salt layer, which mirrors a formation offBrazil where major volumes of high-quality light oil have beendiscovered in recent years.
The tax applies to services such as equipment rental, water,energy, consultancy fees and hotels.
Officials at major oil companies declined to respond torequests for comment.
For blocks already in production, the issue for companies isonly timing, Agante said. "The companies have to pay theconsumption tax almost immediately, while the PIT accounts,whose calculation includes oil prices, production levels andother factors, are settled quarterly."
U.S. firm Cobalt International Energy Inc andDenmark's Maersk Oil last year announced they hadfound oil in the new blocks.
Analysts at Wood Mackenzie said in a research note in Augustthey expected a major increase in exploration in Angola in thenext 12 to 18 months, adding that the costs of drilling will bevery high, with each completed well costing around $150 million.
Angola collected around $36 billion in various taxes fromits oil sector in 2012, according to government data.
