A new tax code was passed in May 2009 and modified in July 2009, February 2010 and January 2011 in order to reflect the new political climate of Gabon. The new code is a modernised tax framework that will likely be complemented by tax and Customs incentives offered to foreign and local investors. Additional tax reforms have also been planned. Along with implementation of the new general tax code and the salaries taxation reform, which was passed in 2010 to codify exemption measures regarding the incurred expenses within the framework of the labour contract execution, the finance bill of 2011 has created a tax system exclusively relevant to companies located in Gabon. This innovative 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 different sets of tax rules that were provided within a variety of frameworks. The 2009 tax code had several objectives: to consolidate and simplify general taxation rules, and to modernise Gabon’s taxation and tax procedures. It 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 tax framework can be found in the various rules which apply to, in particular, corporate income tax, personal income tax and tax on wages, withholding tax on non-residents, value-added tax (VAT), other property taxes, registration and stamp duties, and tax procedures.
CORPORATE INCOME TAX: Gabon is a member state of CEMAC. Most of the general taxation 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. The new main corporate income tax principles may be summarised as follows.
COMPANY TAX RATES: Company tax is currently levied at the rate of 35% on net profits. A minimum company tax is payable annually and is equal to 1% of the turnover of the company. This tax is payable when conducting business operations results in a taxable loss, or in cases when the minimum tax is more than 35% of taxable profits. The common rate for company tax is 35%. A lower rate of 20% exists for public businesses, associations and non-profit organisations, as well as for some real estate firms. There is a rate of 18% for the Gabonese Bank of Development.
TAXABLE INCOME: Company tax is a levy on net 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 normal course of activities of the firm 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 POLICY: Gabon introduced rules governing transfer pricing in April 2009. As a result, if sums corresponding to industrial property rights, interest or services are paid in a tax haven or to a resident of a country with a low tax rate, those sums can be considered as taxable revenues in Gabon if it is not demonstrated to the Gabonese Tax Administration that said payments of sums outside of Gabon are fair and correspond to true services provided.
DEDUCTIONS: Deductions are allowed for reasonable expenditures incurred in performing activities that produce assessable income. Expenditures either not supported by relevant documentation or considered unnecessary for the reasonable needs of the business will not be considered deductible from revenues. There are specific rules concerning, notably, 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 varying between 20% and 50%. Goodwill, however, is not depreciable. The rates for tangible fixed assets range from 8% to 33.33%. To be deductible, depreciation must be recorded in the books. 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, given 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 (€30,400);
• The materials and equipment have been used for purposes of 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 build low-cost housing built by public or private real estate companies;
• Activities carried out 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 within the CEMAC zone are deductible if their amount is considered fair. Royalties paid to an entity outside the CEMAC zone that participates in the management or capital of a Gabon entity are non-deductible and are 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: Head office expenses and remuneration for technical, financial or accounting assistance are deductible if reasonable and a real service is provided. Lump sum fees are considered nondeductible, with some exceptions. 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’ personal income tax 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.
RENTS: 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.
TAX TREATMENT OF 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.
TAX TREATMENT OF 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 company. 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 special tax of 5.6% on their turnover deemed to be corporate income tax (apart from the 3.08% of turnover payable for the personal income tax of their employees).
TAX CREDIT: The state has established some 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 amount of new workers’ wages, constituting a tax credit for the company in the following occurrences: 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; the creation of five positions in companies with more than 50 employees. Oil subcontractors benefitting from the regime must keep their local accounts under the OHADA Simplified Accounting System (Système Comptable Allégé).
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 May 1, 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. Corporate income tax is payable in three instalments.
REDUCED PERSONAL INCOME TAX: 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 a resident of Gabon if the individual has a principal place of residence or spends 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 a certain number of units, taking into account family circumstances. The tax is determined per unit based on varying rates:
• Up to CFA1.5m (€2280): 0%
• CFA1.5m-1.92m (€2280-2918): 5%
• CFA1.92m-2.7m (€2918-4104): 10%
• CFA2.7m-3.6m(€4104-5472): 15%
• CFA3.6m-5.16m (€5472-7843): 20%
• CFA5.16m-7.5m (€7843-11,400): 25%
• CFA7.5-11m (€11,400-16,720): 30%
• Above CFA11m (€16,720): 35% REDUCED ADDITIONAL TAX ON WAGES: Wages and salaries are subject to a monthly additional tax on wages 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 CFA100,000 (€152) a month.
INDUSTRIAL & COMMERCIAL PROFITS: Industrial and commercial profits consist of profits derived from the exercise of an activity in commerce, industry or mining, including craftworks. This also 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 corporate income tax. 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 (€30,400-121,600). Below those amounts, individuals who carry out an activity listed in the Tax Code pays 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 taxation on the basis of real income. These earnings 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 of the other tax categories is also taxable as professional earnings. These are taxed on more or less the same basis as industrial and commercial profits.
INCOME FROM REAL ESTATE: Real estate income includes income from leased land and developed property, including leased 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 the net taxable income.
SALARIES, WAGES, PENSIONS & ANNUITIES: undefined Income from salaries, wages, pensions and annuities is generally limited to income 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.
TAX ON INCOME FROM SECURITIES: Income from deemed 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 personal income tax, 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 firm, 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, then the taxable rate on income from securities is reduced to 10%. In any case, the tax is withheld by the paying company.
TAX ON CAPITAL GAINS: Capital gains that fall within the scope of personal income tax, 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 certain exemptions for the sale of a person’s 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 (€15,200). 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 personal income tax within the limit of CFA4m (€6080). The amount paid beyond that limit is added to the taxable income.
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 tax returns must be submitted before April 30 of each year. The procedures for the payment of personal income tax 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 non-commercial 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 personal income tax withholdings also apply on imports, on state payments and on the purchase of logs. The taxpayer is directly responsible for paying personal income tax 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 instalments: 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 above, there is also 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, for 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 and Belgium, 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 SYSTEM: Gabon’s VAT system is similar to many others. The country introduced VAT in 1995 and has continuously extended its scope. It is, like other VAT regimes, a broadly based tax on consumer spending which is levied on all commercial transactions and activities except those that are specifically exempted. With regard to VAT, three different rates are applicable: 18%, 10% and 0%. The general rate of VAT at 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.
Some transactions are taxable at a reduced rate of 10%. This rate 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. The law mentions that 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, the amount of which is 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 contribute 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 can’t exceed CFA1.5m (€2280) per month, per employee. D. Property Tax: Property tax is payable annually on real estate for which either an ownership certificate or an administrative or judicial order has been issued. The tax payable is based on the surface area of the property, its value and whether or not the property 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 TAX PROCEDURE: In order to develop tax claims, tax 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 tax claims. Furthermore, 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 corporate income tax during the first two years, from corporate income tax during the first profitable year and from 50% of corporate income tax during the second profitable year. They may also enjoy accelerated depreciation on certain equipment. A new business company 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: According to the law on small and medium-sized enterprises (SMEs), commercial companies with their head office in Gabon that are held by nationals with an investment of less than CFA1bn (€1.52m) and a turnover of less than CFA2bn (€3.04m), employing at least 50% Gabonese people, are exempted from benefits tax for five years. The 2012 Finance Law has added an exemption from personal income tax for SMEs’ industrial and commercial profits during the first five years following the commencement of activity.
TOURISM INDUSTRY: According to the presidential decree on tourism, enterprises operating in the agreed tourism industry and investing at least CFA800m (€1.2m) may be exempt from: VAT on hotel and tourism equipment and from stamp and registration duties and distribution tax; 100% of personal income tax for nonresident 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 corporate income tax or personal income tax during the construction phase and then during the eight following years, and from 50% of corporate income tax or personal income tax 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 corporate income tax or personal income tax (if applicable) 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 INDUSTRY: According to the agriculture code, certain agricultural enterprises may benefit from: temporary or permanent exemption from corporate income tax; exemption from VAT on local products, equipment and other items; and temporary or permanent exemption from property tax.
FORESTRY INDUSTRY: In accordance with the tax code, in order to develop local production of processed wood, Gabon has decided to reduce certain forestry taxes on logs that are locally processed. 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 INDUSTRY: According to the mining code, operators in the sector may benefit from exemptions from the following during the exploration period:
• Corporate income tax or personal income tax;
• Minimum corporate income tax;
• Distribution tax;
• Business licence and property tax;
• Tax advantages including a specific VAT regime providing for either exemption from VAT payment or reimbursement of VAT paid;
• Payment of corporate income tax or personal income tax (if applicable) during the exploitation period, according to certain guidelines, some of which have to be negotiated and provided within the mining convention signed with the state;
• Specific VAT regime providing for exemption from VAT payment or reimbursement of VAT paid;
• 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 INDUSTRY: 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 a firm (Alex Stewart International) to audit the oil sector. While this PSC model changes from time to time, usual tax terms are as follows:
• Declaration and payment of notional corporate income tax 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 (€30,400) 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.
TAX INCENTIVES FOR THE WOOD INDUSTRY: 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 tax incentives include the following measures: exemptions from corporate income tax 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 old one provided in Article 204 and following the General Tax Code. This logging tax is set at a 3% rate on the mercurial value for logs and 1.5% on the freight on board value for transformed products.
TAX INCENTIVES FOR THE CEMENT INDUSTRY: undefined 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: corporate income tax as of the commencement of production for a seven-year period; corporate income tax 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 lower 10% rate on income from movable capital;
• Fixed duty of CFA 20,000 (€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 the forestry sector, as well as the free zone of Mandji Island, which is dedicated to port activities and the oil sector. The actual regime applicable in of each of these specific areas will be implemented by decree. The privileged framework of these areas provides for exemption from: corporate income tax 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; and tax on services. Additional incentives include:
• VAT exemption for 25 years from the date of obtaining the admission accreditation. Furthermore, for VAT paid, the company will be reimbursed by the state within a month; and
• Sales made to companies outside the economic zone will be deemed export. 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 under the law to be group holding companies. However, resident and non-resident legal entities may qualify for the status of subsidiary company in a group. With regard to participation requirements, the control percentage of the holding company in the subsidiaries should be at least 15% of the voting rights. The holding company must hold the participation for at least two years from their date of issue. The minimum participation between the subsidiaries is 10% of the share capital. The group holding company must supply certain services to its subsidiaries which include, among other things, financial, technical, accounting, legal, management, IT, human resources, marketing, and research and development. A holding company whose sole purpose is to hold shares in its subsidiaries is 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 corporate income tax 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;
• An 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 the company tax under the 2012 Finance Law. The remaining 10% of net income, however, 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, an exemption is granted from the withholding tax on income from movable capital paid by a member company to another resident or non-resident group member company. However, a 10% withholding tax is due on dividend payments made by the company to its shareholders.
OBG would like to thank Deloitte for their contribution to THE REPORT Gabon 2012
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