Mauritanian cabinet to study H2 tax regime next week

Market: Hydrogen
07/05/24

Mauritania could soon pass tax laws for its renewable hydrogen sector, including several tax breaks designed to lure project developers to the windy coastline of northwest Africa.

Officials are set to present the so-called "hydrogen code" draft laws to the cabinet next week, Khroumbaly Lehbib, Mauritania's project manager for the energy transition and the development of green hydrogen, told Argus. The government will then present it to parliament for approval, he said.

Key terms include exemption from value added tax (VAT) and export tax for renewable hydrogen projects.

Mauritania will cut import customs duties to 2pc for projects starting construction before 2030, and 4pc for projects built thereafter, compared with the standard rate exceeding 16pc. This will reduce capital costs of building materials and equipment such as electrolysers, solar panels, and wind turbines.

Corporate income tax will be levied at 15pc until the project's revenue exceeds the investment costs, after which it would rise to 25pc. In the event developers earn revenues three times higher than their costs, which the government termed "super profits", the tax rate would rise to 30pc.

Lehbib stressed the draft incentives are still subject to approval.

Other countries in north Africa have also set out their stalls to attract hydrogen developers, notably Egypt which finalised tax breaks in January, and Morocco, which in March outlined plans for a land allocation process.

Mauritania trails both of these in "ease-of-doing business" according to the World Bank's ranking system but has not struggled to attract project proposals.

Mauritania would have 80GW of electrolyser capacity if all its planned hydrogen projects come to fruition, a government minister said last year. The promise of government incentives and strong renewable resources are attractive, one developer in the country said recently. Mauritania could potentially produce renewable hydrogen for $2.2/kg by 2030, according to Paris-based International Energy Agency (IEA).

By Aidan Lea

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