A new tax code was passed in May 2009 – and modified in July 2009, February 2010, January 2011, January 2012 and January 2013 – to reflect Gabon’s new political climate. The code is a modernised framework that will likely be complemented by tax and Customs incentives for both foreign and local investors.
Along with implementation of the new general tax code and salaries taxation reform – passed in 2010 to codify exemptions regarding incurred expenses within the framework of labour contract execution – the finance bill of 2011 has created a tax system exclusively relevant to companies located in Gabon. This measure shows the will to encourage the development and establishment of affiliated corporations on a local and regional scale, by favouring national and foreign investments in Gabon within dynamic groups structured and organised according to international best practices.
MODERN & SECURE: Until 2009 Gabon had a different set of tax rules provided in a variety of frameworks. The 2009 tax code had several objectives, including consolidating and simplifying general taxation rules, and modernising Gabon’s taxation and tax procedures.
The code will also secure the tax environment, as certain former tax decisions and instructions (usually advantageous for the taxpayer) had never been endorsed through an act of parliament as requested by the Gabonese constitution and were no longer in conformity with the regulations of the Economic Community of Central African States (Communauté Économique des États d’Afrique Centrale, CEMAC).
The modernised and secured framework can be found in the rules applying to, in particular, corporate income tax (CIT), personal income tax (PIT) and tax on wages, withholding tax on non-residents, value-added tax (VAT), other property taxes, registration and stamp duties, and tax procedures. Gabon is a CEMAC member, and most of the general tax rules that apply in the six Central African states (Cameroon, Chad, Central African Republic, Equatorial Guinea, Gabon and Republic of Congo) are derived from CEMAC regulations.
CIT: The new main CIT principles may be summarised as follows. The Finance Law 2013 adjusted CIT, with the standard rate now 30% (against 35% in 2012). Special CIT rates apply: 35% for companies operating in oil and mining, and 25% for companies holding intellectual property rights, companies licensed to perform tourism business, companies licensed to operate in land development and building of low-rent housing, public undertakings, non-profit associations and for the Gabonese Bank of Development. A minimum company tax is payable annually and is equal to 1% of the company’s turnover. This is payable when business operations result in a taxable loss, or in cases when the minimum tax is more than 30% of taxable profits.
Company tax is a levy on profits made by companies and other corporate bodies, including branches. It also applies to partnerships and financial syndicates that elect for their profits to be assessed on the basis of this tax. Taxable profits are determined after deducting allowable expenses and charges from various revenues. All revenues earned by a company during the fiscal year in question are taxable, whether derived from the company’s normal course of activities or from the sale of assets or revenues derived from interests in other businesses or areas. Within this, there are specific rules concerning some of these sources of income.
DIVIDENDS & CAPITAL GAINS: Dividend income is no longer taxable at the company level as dividends face final taxation on distribution by the distributing firm. Capital gains are treated as ordinary business income and taxed at normal company tax rates, which may be altered or suspended in certain situations.
TRANSFER PRICING: Gabon introduced rules governing transfer pricing in April 2009. If sums corresponding to industrial property rights, interest or services are paid in a tax haven or to a resident of a country that has a low tax rate, those sums can be considered taxable revenues in Gabon if it is not demonstrated to the Gabonese Tax Administration that said payments are fair and correspond to true services provided.
DEDUCTIONS: Deductions are allowed for reasonable expenditure incurred in performing activities that produce assessable income. Expenditure not supported by documentation or considered unnecessary for the reasonable needs of the business will not be considered deductible from revenues. There are rules concerning the deductibility of depreciation, royalties, interests, management fees, bad debts, rents and losses.
DEPRECIATION: Depreciation is calculated using the straight-line method, but accelerated depreciation may be applicable to certain assets. Rates depend on the useful life of the asset but may not exceed those allowed by the General Tax Code. Intangible assets are depreciated at rates of between 20% and 50%. Goodwill is not depreciable. The rates for tangible fixed assets range from 8% to 33.33%. Depreciation must be recorded in the books to be deductible. Depreciation deferred during earlier periods of trading at a loss may be carried forward indefinitely. Accelerated depreciation is applicable by authorisation of the CEO of the tax office in the three months following the acquisition of the assets if the following conditions are satisfied:
• Materials and equipment are used for at least three years, and the value of these materials and equipment is at least CFA20m (€30,000);
• Materials and equipment have been used in industrial activities of manufacture, handling and transport of agricultural and lumber production;
• Activities are being carried out to set up development sites in order to construct low-cost housing built by public or private real estate companies;
• Activities are for the purpose of building low-cost housing by public or private real estate companies. If an authorisation for accelerated depreciation is granted by the CEO of the tax office, the depreciation allowance during the first year will be double.
ROYALTIES: Royalties paid to entities in the CEMAC zone are deductible if their amount is considered fair. Royalties paid to an entity outside the zone that participates in the management or capital of a Gabon entity are non-deductible and deemed distributed profits.
INTEREST: Interest on capital borrowed for business purposes is normally deductible. However, interest paid to the shareholders of a company on funds provided by them is deductible up to a limit of two points above the lending rate of the central bank at the time the interest payments were due. If the borrowing company is a company by shares, an additional limit applies for the deductibility of interest: sums lent by all its shareholders should not exceed half its capital.
MANAGEMENT FEES: These are deductible from gross profit payments to non-resident persons in respect of (i) head office expenses (those related to transactions carried out in Gabon), expenses related to studies, technical, financial or accounting assistance, commission, interest on bonds, debts, deposits and guarantees up to 10% of the taxable profits (Finance Law 2013) and (ii) the use of patents, licences, trademarks, designs and models. When paid to a person outside the CEMAC area, such payments will only be deductible if it can be proved that they correspond to real transactions and are not abnormal or exaggerated. Payments for the use of patents, etc. to an enterprise situated outside the CEMAC zone which participates in the management or capital of an enterprise in a CEMAC state will be regarded as profit distributions. The 10% cap does not apply to technical assistance fees connected with the assembly of factories in Gabon. Purchasing commissions of up to 5% of purchases are deductible.
BAD & DOUBTFUL DEBTS: Bad debts are deductible provided specific provisions for doubtful debts are justified and posted in the company’s accounts. If the debt provided for is subsequently recovered, however, the provision is added back to the results of the year in which recovery was made and is subject to tax.
TAXES: Taxes such as business licence tax and stamp duties are generally deductible. Corporate tax and employees’ PIT paid or withheld by the firm are not tax-deductible expenses. Fees such as settlement agreement payments, fines, confiscations or penalties imposed as a result of a breach of any legal, economic or tax provision are not deductible.
RENT: Rental payments are deductible in full, provided that they are reasonable. However, any rents paid to a shareholder of a company who owns at least 10% of the shares (or any rents paid to such a member’s family, including spouse, children or parents) may be deducted only for real estate property.
GIFTS, GRANTS & INSURANCE: Gifts and grants are not tax deductible, unless they correspond to true payment to Gabonese charities of up to 1% of the turnover. Insurance premiums paid for the interests of the company or its personnel are normally tax deductible. Self-insurance expenses are not deductible.
LOSSES: Losses may be carried forward for up to three years for tax purposes but may not be carried back.
TRANSFER PRICING: Gabon introduced transfer pricing rules in April 2009. As a consequence any act (expenses, grants, waiver to fair profits) that is not considered to be in the normal course of a business of a company may be considered as non-deductible and become taxable as revenue in Gabon.
OIL SUBCONTRACTORS: The profits of a branch or subsidiary of a non-resident company are subject to corporate tax in the same way as those of a resident firm. However, oil subcontractors operating in Gabon under a branch regime may elect for a simplified tax regime granted by the Tax Administration Act, which includes a tax of 5.95% on their turnover deemed to be CIT (apart from the 2.8% of turnover payable for the PIT of their non-resident employees). Oil subcontractors benefitting from the regime must keep their local accounts under the OHADA Simplified Accounting System.
TAX CREDIT: The state has established tax advantages for the recruitment of Gabonese citizens under unlimited-term labour contracts. Company tax is reduced at a rate of 20% of the total of new workers’ wages, constituting a tax credit for the firm in the case of:
• The creation of two positions in companies with fewer than 20 employees;
• The creation of three positions in companies with between 25 and 50 employees; and
• The creation of five positions in companies with more than 50 employees.
CORPORATE ASSESSMENTS & PAYMENTS: The tax year runs from January 1 to December 31. A company’s financial year must correspond to the tax year. A return showing the company’s results for the fiscal year must be filed by April 30, along with any necessary documents. The authorities may adjust the results shown in the return. The taxpayer has the right to respond to the adjustments and may take the matter to court if an agreement cannot be reached. CIT is payable in three instalments.
REDUCED PIT: Individual residents in Gabon are taxed on their worldwide income; non-residents are taxed only on income of Gabonese origin. A person is deemed to be resident if they have a principal place of residence or spend more than six months of the year in Gabon.
Anyone earning income in Gabon in any tax year is expected to file a tax return. Individuals are liable for a single tax on all types of personal income; it is the same proportional tax for all categories of income, which is levied at different rates.
Proportional tax rates represent the new tranches and reduced rates applicable since 2010. To calculate the tax, taxable income is divided into units, taking into account family circumstances. The tax is determined per unit based on varying rates:
• Up to CFA1.5m (€2250): 0%
• CFA1.5m-1.92m (€2250-2880): 5%
• CFA1.92m-2.7m (€2880-4050): 10%
• CFA2.7m-3.6m(€4050-5400): 15%
• CFA3.6m-5.16m (€5400-7740): 20%
• CFA5.16m-7.5m (€7740-11,250): 25%
• CFA7.5-11m (€11,250-16,500): 30%
• Above CFA11m (€16,500): 35% REDUCED ADDITIONAL TAX ON WAGES:Wages and salaries are subject to a monthly additional tax which amounts to 5% (against 5.5% before 2009) on the salary, allowances, premiums and advantages in cash and in kind. There is no tax on salaries under CFA150,000 (€225) a month.
INDUSTRIAL & COMMERCIAL PROFITS: Industrial and commercial profits are profits derived from activity in commerce, industry or mining, including craftworks. This includes profits accruing to holders of mining permits and concessions, lessees and sub-lessees of mining concessions, and prospectors of oil and combustible gas. The partnership profits of members of general partnerships and active partners of limited partnerships who have not elected to be assessed by company tax may be taxable either in the form of income from industrial and commercial profits or as professional earnings, depending on the nature of the profits. Those profits are included in the general income of the taxpayer according to the net profits assessed on rules similar to CIT. A simplified tax assessment may apply for professional earnings, services, and retail and manufacturing activities, which are taxed at 40%, 50% and 70%, respectively, of annual turnover of CFA20m-80m (€30,000-120,000). Below those amounts, individuals who carry out an activity listed in the Tax Code pay an annual lump sum tax depending on the activities in question. In other cases, the net income is the actual income as computed under corporate tax rules.
PROFESSIONAL EARNINGS: Professional earnings are subject to tax on the basis of real income. These include professional service income, profits of a non-commercial nature, income from regular stock exchange transactions and various types of royalty income. Income not included in any other tax category is also taxable as professional earnings. These are taxed on more or less the same basis as industrial and commercial profits.
REAL ESTATE: Real estate income is that from leased land and developed property, including plants and equipment that is a permanent part of such property. An amount equal to 30% of real estate income can be deducted as expenses to calculate net taxable income.
SALARIES, WAGES, PENSIONS & ANNUITIES: Income from salaries, wages, pensions and annuities is generally limited to that earned from employment activities exercised in Gabon. Benefits in kind and other non-cash allowances are usually assessed notionally, such as housing (6% of basic salary) and the use of electricity (5%). Since 2009 certain specific allowances are also non-taxable. Following the entry of the new tax code in 2009, Gabon developed a system of reduced and final tax on certain incomes.
INCOME FROM SECURITIES: Income from securities includes dividends, interest from bonds or deposits and similar income, and any amounts directly or indirectly available to shareholders of companies. The standard tax rate on such income is 20% for beneficiaries within the scope of PIT, but reduced rates apply for bonds with at least five years maturity (10%) and cash bonds issued by banks (15%). If the beneficiary is a company, the standard rate is 15%. If the beneficiary company holds at least 25% of the share capital of the paying company, both companies have their corporate seats in CEMAC and the shares belong to the holding company from subscription, or if the latter undertakes to keep the shares in its name for at least two years, the taxable rate on income from securities is reduced to 10%. The tax is withheld by the paying company.
CAPITAL GAINS: Capital gains that fall within the scope of PIT, as a result of sale, swap, contributions, liquidation of movables or immovable assets or rights of any nature, are subject to a final tax rate of 20% (after a 15% relief). There are exemptions for the sale of a main residence, furniture and vehicles, insurance allowances and minority stakes in companies.
DEDUCTIONS & RELIEF: The extent to which a deduction from income will be allowed depends on the category of income. Allowable total deductions include business expenses, contributions to pension funds and interest on loans taken to build the taxpayer’s first house in Gabon. Deductions for business expenses amount to 20% of income but cannot exceed CFA10m (€15,000). A deduction may also be applicable for life insurance subscriptions and pension schemes.
Individuals may carry business losses forward in the same way as companies. Annual bonuses are exempted from PIT up to CFA4m (€6000). The amount paid beyond that is added to the taxable income. Interest on housing saving accounts (Finance Law 2013) and on saving accounts up to a maximum balance of CFA10m (€15,000, Finance Law 2013) are exempted from PIT.
PERSONAL ASSESSMENTS & PAYMENTS: Individual taxpayers must file tax returns each year by March 1 for income from the preceding tax year. However, for income from agriculture, commercial and non-commercial sources, the returns must be submitted before April 30 of each year.
The procedures for the payment of PIT vary with the type of income. Payment of the tax on income from salaries, wages, pensions and annuities is made by withholding by the employer. Tax on income from securities and, in some cases, income from real estate is withheld by the employer. Except in some cases, excess tax withheld can be refunded once the return is filed. Payment by a Gabonese entity to an individual liable to noncommercial profits or to industrial and commercial profits and not registered as a VAT taxpayer leads to a withholding at source by the client at a 9.5% rate on any invoice. Some other PIT withholdings also apply on imports, on state payments and on the purchase of logs.
The taxpayer is directly responsible for paying PIT on the following types of income: industrial and commercial profits, professional earnings, agricultural profit and income from real estate.
Payments of income tax on agriculture, industrial, commercial profits and professional earnings are made in three installments: on February 28 (25% of the last year’s income tax), April 30 (25% of the last year’s income tax) and the balance upon receipt of notification from the tax administration.
An individual may elect to have exceptional income spread equally over a five-year period. If no tax is declared or if there are any discrepancies, tax may also be assessed by the tax office according to specific rates detailed in the new tax code.
WITHHOLDING TAX ON NON-RESIDENTS: Apart from the final and withholding taxes mentioned, there is a withholding tax applicable to non-residents. In case of a double taxation treaty, service fees paid by Gabonese entities to non-residents are subject to a 10% tax. Sums covered by the withholding tax include payments for:
• The use of patents and trademarks;
• The right to use films and television programmes;
• The supply of information concerning industrial, commercial or scientific experiments;
• Interest;
• The rental of industrial, commercial or scientific equipment for technical, financial or accounting assistance; and, from 2009,
• Net profits of branches having their home office outside Gabon.
DOUBLE TAXATION TREATIES: The above principles of taxation may have to be adjusted according to double taxation treaties signed between Gabon and other countries. Gabon has signed income tax treaties with France, Belgium and Canada, limiting double taxation on dividends, interest and royalties. Gabon has also signed treaties with other CEMAC states to improve tax cooperation between administrations and limit double taxation, as well as with other members of the African and Mauritius Common Organisation. Tax treaties signed with other countries should also enter into force upon ratification by both member states.
VAT: Gabon’s VAT system is similar to many others. The country introduced VAT in 1995 and has continuously extended its scope. Like other VAT regimes, it is a broadly based tax on consumer spending, levied on all commercial transactions and activities except those specifically exempted. Three different rates are applicable: 18%, 10% and 0%. The general rate of 18% is applicable to a number of goods and transactions, such as:
• The delivery of goods;
• Provision of services;
• Importation of goods;
• Transportation services for persons and goods;
• Utilities;
• Real estate activities;
• The construction and delivery of buildings by real estate professionals;
• The sale of second-hand goods and equipment by professionals;
• Transfers of non-exempt assets;
• Leasing of underdeveloped land and unfurnished premises by real estate professionals; and
• Financial and banking transactions. A reduced rate of 10% is applicable to specified items, such as mineral water produced in Gabon; imported meat and chicken, sugar, canned vegetables and canned fruit; and several other goods such as cement, replacement parts for automobiles and raincoats. A rate of 0% is applicable to exports and international carriage. This rate is only applicable to exports that have been properly declared to Customs. Other goods and services are exempt from VAT, such as local food, interest on foreign borrowings, gambling activities, certain real estate operations and insurance transactions.
VAT INPUT, OUTPUT, RETURNS: Input VAT paid on goods and the supply of services from vendors used in the production of output goods and services delivered to customers is deductible from output VAT billed on the sale of goods and services. The difference is paid to the public treasury. VAT paid on hotel, restaurant, car hire, entertainment and passenger transport services is not generally deductible as input VAT.
Exporters, mining and oil operators, and important investors may file claims for the repayment of VAT credit they cannot deduct for a given month. VAT payers must register and file monthly returns. Gabonese clients of non-resident VAT payers are required to declare and pay on behalf of foreign suppliers.
A SIMPLIFICATION OF OTHER TAXES: Gabon had various taxes that had a limited impact on the budget. The government therefore decided in 2009 to cancel several of them and retain the following five: A. Parafiscal Tax: There are certain taxes, royalties and contributions which are levied by state authorities. In order to be valid under the new tax code, however, those taxes need to be provided within the finance act of the year in question. The list of these taxes was provided in the amended Finance Act of 2009 and renewed in the Finance Act of 2010. B. Business Licence Tax: Enterprises must pay an annual business licence tax, calculated according to a graduated scale, based either on the annual turnover of each business establishment and, depending on the activities in question, on the number of employees, or on the power of machines used for business operations. C. Social Insurance & Housing Loan Fund: Employers and employees must contribute monthly to the National Social Security Fund and National Housing Fund. For the Housing Fund, employers must put in 2% of employees’ total salary and fringe benefits. For the Social Insurance Fund, employees contribute 2.5% of basic pay, plus allowances. Employers contribute 20.1% of basic pay, allowances and benefits. The basis cannot exceed CFA1.5m (€2250) per month per employee. D. Property Tax: Property tax is payable annually on real estate for which an ownership certificate or an administrative or judicial order has been issued. Tax payable is based on the property’s surface area, value and whether or not it is developed. This tax is payable by the owner and not by the occupant or the dealer. E. Registration & Stamp Duties: Generally, all legal documents must be stamped and registered. Acts that record contractual obligations, transfers or leases of property are also subject to ad valorem registration duties that range from 2-8%.
A MORE DETAILED PROCEDURE: In order to develop tax claims, procedures have been modernised and detailed for greater transparency and clarity. Abuse of rights, abnormal management acts and transfer-pricing procedures are now defined and part of Gabonese tax concepts when dealing with claims. To promote its “Emerging Gabon” development strategy, the government continues to extend its tax and Customs attractiveness by adopting advantageous tax and Customs treatment for specific activities and projects.
NEW BUSINESSES: According to the tax code, new businesses may be exempted, upon the tax office’s approval, from minimum CIT during the first two years, from CIT during the first profitable year and from 50% of CIT during the second profitable year. They may also enjoy accelerated depreciation on certain equipment.
A new business is defined as a newly formed company with no former activity in Gabon or an existing company developing a new and non-existing activity in Gabon related to the industrial, mining, forest, agriculture or fishing sectors.
SMALL & MEDIUM-SIZED ENTERPRISES (SMES): undefined According to the law on SMEs, commercial companies with their head office in Gabon that are held by nationals with an investment of less than CFA1bn (€1.5m) and a turnover of less than CFA2bn (€3m), employing at least 50% Gabonese people, are exempted from benefits tax for five years. The 2012 Finance Law has added an exemption from PIT for SMEs’ industrial and commercial profits during the first five years following the commencement of activity.
TOURISM: According to a presidential decree, enterprises operating in the tourism industry and investing at least CFA300m (€450,000) – against CFA800m (€1.2m) prior to the Finance Law 2013 – may be exempt from:
• VAT on hotel and tourism equipment and from stamp and registration duties and distribution tax;
• 100% of PIT for non-resident employees during the construction phase of the agreed project and one year thereafter, and of 50% in the eight following years;
• Property taxes for 10 years after the construction of the facility and benefit from reduced rates following the initial 10-year period; and
• Lease tax. They may also:
• Benefit from a 100% exemption from CIT or personal income tax during the construction phase and then during the eight following years, and from 50% of CIT or PIT during the next eight years;
• Carry forward their losses for three years after the end of the tax holiday period;
• Benefit from an exemption of CIT or personal income tax on capital gains made on transfer of assets;
• Not be liable for the withholding tax of foreign suppliers during the construction phase of the project and the following 10 years;
• Exempt from the business licence tax during the first five years of exploitation; and
• Take advantage of a stability tax clause.
AGRICULTURE: According to the agriculture code, certain agricultural enterprises may benefit from: temporary or permanent exemption from CIT; exemption from VAT on local products, equipment and other items; and temporary or permanent exemption from property tax.
FORESTRY: In accordance with the tax code, in order to develop local production, Gabon has decided to reduce certain forestry taxes on locally processed logs. While the scope of tax advantages seems limited at this stage, according to a recent state announcement, these are to be considerably increased for companies investing in sustainable forestry development.
MINING: According to the mining code, operators in the sector may benefit from the following:
• Exemption from distribution tax;
• Exemption from business licence and property tax;
• A specific VAT regime providing for either exemption from payment or reimbursement of VAT paid;
• Exemption from payment of CIT or PIT (if applicable), according to certain guidelines, some of which have to be negotiated and provided in the mining convention signed with the state;
• Payment of fixed mining duties, mining royalties and permit taxes according to provisions stated in the convention negotiated with the state; and
• Stable tax clause for five years of production.
OIL: According to the Hydrocarbons Law, the tax conditions for an exploration and production-sharing contract (EPSC) are negotiated with the Hydrocarbons Directorate, which operates under the Ministry of Mines, Oil and Hydrocarbons, using a model contract. A new hydrocarbons code has been drafted but has not yet been adopted by the parliament because the government has requested Alex Stewart International to audit the oil sector. While this EPSC model changes from time to time, usual tax terms are as follows:
• Declaration and payment of notional CIT via a production-sharing system according to the sharing of production negotiated between the oil operator and Hydrocarbons Directorate;
• Specific VAT regime providing mainly for exemption from VAT payment or reimbursement of VAT paid;
• Payment of withholding tax on foreign suppliers;
• Payment of property taxes; and
• Exemption from taxes not listed in the EPSC, aside from those which have been paid for services provided by public authorities or their representatives.
MULTI-SECTOR INCENTIVES: If a project raises more than CFA20m (€30,000) in tax expenses, it may be considered by the Specific Commission on Customs and Tax Advantages’ ruling on any request for exemptions, reductions or other advantages in regards to payment of corporate tax. Once the file is agreed to by the commission, it then must be approved by the minister of finance before finally being submitted to the parliament for approval of the proposed tax incentives in the finance act of the year in question.
WOOD: The 2012 Finance Law provided for numerous tax incentives for companies operating in the wood industry subject to the approval of the competent committee, the Commission for the Industrialisation of the Forestry Sector. The incentives include:
• Exemptions from CIT and minimum lump-sum tax in the first five years following the commencement of activity;
• Authorisation to apply the declining balance depreciation method (with a 30% depreciation rate) for certain equipment;
• Authorisation to create a special renewal reserve for certain equipment;
• Exemption from the tax on income from movable capital for five years following the commencement of business operations;
• Exemption from VAT on certain operating costs, such as oil, gas, electricity, chemicals, equipment and technical assistance fees paid to the parent company; and
• Exemption from real estate taxes on the lands and buildings utilised for business purposes. In addition, a logging tax has been introduced by the 2012 Finance Law, replacing the one provided in Article 204 and following the General Tax Code. It is set at a 3% rate on the mercurial value for logs and 1.5% on the freight-on-board value for transformed products.
CEMENT: To encourage the local production of cement, the 2012 Finance Law included incentives for companies investing in the cement industry. The incentives include exemption from CIT as of the commencement of production for a seven-year period; CIT on capital gains derived from the primary transfer of shares following the commencement of production; VAT on certain operating costs as of the commencement of production for seven years; Customs duties and import taxes on certain raw material, inputs and equipment; and all other taxes, duties and levies payable during the investment period. Other incentives include:
• Full deductibility of interest on debts contracted for the purpose of the project;
• Eligibility to refund of input VAT on equipment used for business purposes;
• A 10% rate on income from movable capital;
• Fixed duty of CFA20,000 (€30) payable on deed relating to restructuring;
• 50% reduction of the business licence duty; and
• Authorisation to import certain equipment under the temporary admission regime.
FREE ECONOMIC ZONES: The tax and legal framework of economic zones with special regimes in Gabon was adopted by parliament and is pending official publication. These privileged provisions are reserved for areas of investment such as the Nkok Special Economic Zone, which specialises in forestry, and Mandji Island Free Zone, which is dedicated to port activities and oil. The regimes applicable in each of these specific areas have been implemented by decree. The framework of these areas provides for exemption from:
• CIT for 10 years from the first sale of the company (beyond the 10th year, the taxation rate will amount to 10% for five years);
• Dividend tax for 25 years;
• Withholding taxes for 25 years from the first sale of the company;
• Land tax on properties, developed and undeveloped, for 25 years from the date of registration with the Trade Registry;
• Customs duties on imports of equipment and mechanical devices and spare parts for 25 years;
• Tax on services. Other incentives include VAT exemption for 25 years from the date of obtaining admission accreditation. For VAT paid, the company will be reimbursed by the state within a month. Sales to companies outside the economic zone will be deemed exports. Other advantages are provided regarding employment, with relaxation of immigration rules and employment of foreign labour (non-payment of the deposit for repatriation).
GROUPS OF COMPANIES: Gabonese tax law provides for a special tax regime for groups of companies. This regime does not allow for the option to file a consolidated tax return or to transfer losses between group members. Only companies that are resident in Gabon are qualified to be group holding companies, but resident and non-resident legal entities may qualify for the status of subsidiary company in a group.
The minimum participation threshold required to qualify as a group member company is 50% of the share capital of the subsidiary, which may be controlled either directly or indirectly. The group holding company must supply certain services to its subsidiaries, including financial, technical, accounting, legal, management, information technology, human resources, marketing, and research and development. A holding company whose sole purpose is to hold shares in its subsidiaries cannot benefit from the group special tax regime. The following rules apply under the group tax regime:
• Capital gains on the transfer of assets between group member companies which are liable to CIT are subject to a final 20% tax rate;
• The expenses of a company’s head office and technical assistance fees between group companies are deductible subject to an advance pricing agreement;
• Interest on current accounts is fully deductible. However, the rate must not exceed the central bank rate plus two percentage points;
• Rental payments for hiring movable assets between group members are deductible;
• Exemption is granted from the 10% withholding tax on payments for fees, royalty, services provided or interest paid to non-resident group member companies; and
• A tax-sparing credit is granted on incomes from moveable capital received from foreign sources which have been subject to a similar taxation in the source country, even in the absence of a tax treaty between Gabon and the source country. The tax credit may be carried forward for two years.
INTERCORPORATE DIVIDENDS: A total of 90% of dividends received by parent companies are now subject to exemptions from company tax. The remaining 10% of net income is taxable, on the following conditions:
• The shares owned by the parent company represent at least 25% of the capital of the subsidiary;
• Both the parent and subsidiary company have their seat within the CEMAC zone; and
• The holding company retains the shares registered in its own name for at least two years from their date of issue. Under the group tax regime, exemption is granted from withholding tax on income from movable capital paid by a member company to another resident or non-resident group member company. A 10% withholding tax is due on dividend payments made to its shareholders.
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