Personal Income Tax (PIT)

Personal Income Tax (PIT)

 Who is subjected?

Same principle applies for individuals regarding residence.

  • Residents, for their worldwide incomes are subjected to PIT, while nonresidents are taxed on income derived from Equatorial Guinea.
  • If one remains in the country and his stay exceeds a total of three (3) months within a calendar year or a total of six-months within two calendar years the person is considered as resident.
  • On the contrary, a non-resident is someone, who spends less than three (3) months in Equatorial Guinea for the performing of its activities.
  • On the other hand, a person is considered a resident if one of the following conditions is met:
    • The Person has housing in Equatorial Guinea as owner, usufructuary or tenant.
    • Her primary residence is in Equatorial Guinea.

What type of activity is subjected to PIT?

  • Salaried activity including benefit in kind (Tax Withheld at source)
  • Self-employed individuals (handicrafts, commercial, professional and agricultural)
  • Professional ministerial officers and liberal professions
  • Investment incomes (dividend, interest on loan savings accounts, etc….)
  • Capital Gain

What income is subject to tax?

  • The taxable income or profit from self-employment activities equals the difference between the total income derived from and the total expenses incurred in such activities.
  • Special payments intended to cover expenses inherent to the nature of the employment, such as travel allowances, to the extent that the allowance corresponds to the length of the travel and does not exceed the additional expense borne by the employee , are exempted.
  • Allowances covering professional expenses (limited to 20% of the total remuneration with a cap of XAF1 million per year) are exempted from tax.
  • INSESO contribution is deductible

    Type of

    Percentage of gross wages

    fringe benefit

    Accommodation

    15%

    Domestic services

    5%

    Water and electricity

    5%

    Service or office vehicle

    5%

    Food

    20% of the gross wages, up to a maximum amount of XAF150,000

 Some PIT highlights

  •  Individuals are subject to income tax on their self-employment income from real estate assets, as well as from commercial, non-commercial, agricultural and professional activities.
  • Dividends received by resident individuals are included in taxable income and subject to income tax at the progressive tax rates.
  • Capital gains derived from the sale of real estate assets are subject to income tax.

 What are the taxation regimes?

  • The CIT and PIT tax regimes are as follows :

    Revenue

    Activities

    Regime

    Do not Exceed 12 millions

    Works on behalf of third parties

    Lump Sum

    Do not Exceed 15 millions

    Commercial and Professional

    Lump Sum

    Do not Exceed 30 millions

    Non-Commercial, Agricultural, Craft, and Construction

    Lump Sum

    Exceed 12 millions

    Works on behalf of third parties

    Real profit

    Exceed 15 millions

    Commercial and Professional

    Real profit

    Exceed 30 millions

    Non-Commercial, Agricultural, Craft, and Construction

    Real profit

  • Individuals who are not considered to be tax residents under the facts and circumstances or arbitrary tests are classified as tax nonresidents.
  • Non-residents are subject to tax at a rate of 20% for physical persons and 15% for companies of gross remuneration
  • Dividends received by resident individuals are included in taxable income and subject to income tax at the progressive tax rates.
  • A final withholding tax at a rate of 25% is imposed on dividends paid to nonresidents.

What are the deductions?

  • Alimony and child support paid in compliance with a judicial ruling
  • Interest on loans and debt that are incurred for the construction, purchase or major repairs of real estate
  • Payments made for the purpose of setting up retirement funds in accordance with the rules of the Ministry of Labor
  • Payments made to the Institute of Social Security on behalf of domestic employees

PIT general Rates

Taxable income

Tax rate

Tax due

Cumulative tax due

XAF

%

XAF

XAF

First 1 000 000

0

0

0

Next 2 000 000

10

200 000

200 000

Next 2 000 000

15

300 000

500 000

Next 5 000 000

20

1 000 000

1 500 000

Next 5 000 000

25

1 250 000

2 750 000

Next 5 000 000

30

1 500 000

4 250 000

Above 20 000 000

35

Others PIT Related

Tax

Basis

Rate

Contributor

Periodicity

Work Protection Fund

Gross salary

0.5%

Employee

Monthly

Work Protection Fund

Gross salary

1%

Employer

Monthly

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