Corporate Income Tax (CIT)

Corporate Income Tax (CIT)

Who and what is liable?

Taxation principle is territoriality, place of registration, and residence

• Equatorial Guinea (EG) companies are taxed on the territorial principle.
• As a result, in principle, EG companies carrying on business outside EG are not subject to corporate income tax in EG on the related profits.
• EG companies are those registered in EG, regardless of the nationality of the shareholders or where the companies are managed and controlled.
• Foreign companies engaged in business in EG are subject to corporate income tax on EG-source profits.
• A legal entity present in EG for more than three months within a calendar year, or more than six months within two consecutive calendar years, and performing an economic activity or providing paid services in the country is considered as a resident for taxation purposes.

CIT tax highlights

Withholding Tax (WHT)

WHT exist for services performed by subcontractors of oil and gas companies. The Following rates are applicable:

• 25% for Dividends and interests paid to non-residents
• 15% applies on royalties for non-CEMAC residents
• 15% rate applies to non-residents companies, and physical persons in oil and Gaz sector and behond, ans constitute final tax.
• 6.25% applies to payments made to a resident entity within the oil and gas sector, and considered as deductible charge.
• 5% applies to mobilization, demobilization, and transportation in oil sector.

 Common regime

Rates: 35% for residents

Minimum Tax: 1.5% of annual turnover for the preceding year, and cannot be less than XAF 0.8 million

Taxation Regimes

The CIT a tax regimes are as follows :

Taxation requirements

• Minimum tax paid in advance is payable by 31 March for preceding year activities
• Final Tax being Maximum between Minimum tax and CIT rate is payable 15 days from the day following the date of receipt of the tax liquidation by tax office
• Tax return Tax returns must be filed by 30 April
• Taxable income is based on financial statements prepared according to OHADA (organization for the harmonization of business law in French-speaking Africa) standard
• Fiscal year starts from January 1^st to December 31^st
• Branch CIT rate is as per rate above.
• WHT of 25% is applicable on dividends paid to individuals or companies not having their usual domicile or headquarters in EG. Some restrictions exist for dividend earned from subsidiaries companies
• Double Tax Treaty with CEMAC countries reduces or exonerates Branch dividend tax
• Capital Gain is under CIT taxation, but can be deferred or eliminated in case of reinvestment.
• Losses are carried forward for 3 years
•  Losses attributable to depreciation may be carried forward indefinitely.
• Losses may not be carried back.
• The statute of limitations period for CIT is 5 years following the year in which the tax was due.

Business expenses deductibility

Business expenses are generally deductible unless specifically excluded by law.

Here are some major restrictions and/or limitations:

• Head office overhead and remuneration for certain services (studies and technical, financial or administrative assistance) paid to nonresidents, if they are normal and substantiated are deductible
• The deductibility of the technical assistance made by the parent company to its subsidiary is limited to 50% of the intermediary tax result (accounting result plus potential fiscal reintegration).
• Commissions and brokerage fees exceeding 5% of purchased imports are not deductible
• Most liberalities, gifts and subsidies are not deductible.
• Fixed assets may be depreciated using the straight-line method at rates specified by the tax law(minimum, 5% to 100% Maximum)

Last update : November 27th, 2023