Oil and gas

VAT impacts different economic sectors in different ways. With the NBR only issuing refunds after conducting a detailed review process, businesses operating in the oil and gas sector will need to plan their cash flow. Suppliers of oil and gas products through pipeline distribution systems must carefully determine the place of supply since these supplies follow special place of supply rules. In the absence of a prescribed mechanism for suppliers of businesses working in the oil and gas sector to determine whether their supplies would be used directly and exclusively for making oil and gas related supplies, as a risk mitigation strategy, suppliers should maintain adequate documentation to support their position in the case of an NBR audit or review. Given the complexity of arrangements such as Concession and Production Sharing, Joint Operation, Borrow and Return, Cash Calls and Swaps oil and gas businesses must assess their contractual obligations independently and assign VAT treatments accordingly.

Our oil and gas VAT specialists will assist you to navigate through the complexities and challenges by providing the right advice with practical solutions to the challenges faced by this sector.