Corporate Income Tax (CIT)
Taxation principle is territoriality, place of registration, and residency.
- Gabonese companies carrying on a trade or business outside Gabon are not taxed in Gabon on their foreign-source profits.
- Gabonese companies are those registered in Gabon, regardless of the nationalities of their shareholders or where they are managed and controlled.
- Foreign companies with activities in Gabon are subject to Gabon corporate tax on Gabonese-source profits.
CIT tax highlights
The simplified regime
- This regime is a derogation of the common regime contained in the General Tax Code
- It concerns only the Petroleum sector, and particularly subcontracting
- This option is valid for 02 years, renewable once, subject to conditions and approval.
- This option applies the CIT common law rate, on a flat rate benefit of 17% of revenue (REV)
- Or a single rate of 35% x 17%(REV) = 5.95% of REV
- The basis for determining personal income taxes (PIT) is also fixed at 14% of revenue, to which applies 20% non-resident tax
- Or single rate of 14% of REV x 20% = 2.80% of REV
- Mobilization, demobilization, and disbursements are to be excluded from the REV used to determine the taxable REV
- Or a Total of 8.75% of REV for CIT, and PIT.
- At the end of the renewal, only the common law regime remains applicable.
According to Decree No. 2005-17 of May 5th, 2015, in Article 5, “The Simplified tax regime of subcontractors of oil companies is exempt from all taxation on profits”.
The common regime
- 35% for oil and mining companies
- 30% for other businesses.
The Minimum Tax:
- 1% of annual revenue,
- Flat-rate minimum collection of XAF 1 million, unless the company is exempt.
CIT Tax regime are:
Less than or equal to 30 million
More than 30 million and less than 60 million
Over 60 million
- Minimum tax is paid in two installments of the preceding year’s corporate tax. 25% due on 30 November and 33.33% due on 30 January.
- Final Tax being Maximum between two installments, 1 million lump sum minimum, and CIT rate payable latest 30th of April when filing the tax return
- Penalty of 10% for the first month and 3% for subsequent months is applicable if paid out of deadline
- 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 1st to December 31st
- Branch CIT rate is as per rate above.
- Dividend of branches is fully considered as distributed. Tax rate is 15%. Could be 10% under some conditions.
- Meanwhile dividend paid to individuals is subjected to 20% dividend tax
- Double Tax Treaty(with France, Canada, Belgium, Benin, Ivory-coast, Morocco, Sénégal, Togo, and CEMAC) reduces or exonerates Branch dividend tax
- Companies created / registered during the six-month of the second half of the year can extend their fiscal year up to December N+1
- 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 four years following the year in which the tax was due.
Business expenses deductibility
- Business expenses are generally deductible unless specifically excluded by law.
- They must be real and justified, related to fiscal year, not excluded from deductible expenses by the law, and not considered as an abnormal transaction.
- They must be included in the expenses for the year in which they were incurred. Expenses from previous years are not deductible.
Here are some major restrictions and/or limitations:
- Head office and remuneration of studies, technical, financial or administrative assistance paid to non-residents deduction is limited at 5% of chargeable income before taking into account such expenses
- Rent expense for movable equipment paid to a shareholder holding, directly or indirectly, more than 10% of the capital is not deductible
- Interests paid to shareholders more than the central bank annual rate plus two points, are not deductible
- Commissions and brokerage fees exceeding 5% of purchased imports are not deductible
- Non-arm’s length expenses and payments between a company that is under the control of a company or group located outside the CEMAC zone, or a company controlling a company located outside the CEMAC zone, are considered abnormal management act, and cost might not be deductible
- Most liberalities, gifts and subsidies are not deductible. Some of them are limited to 1% of turnover.
- Expenses must be registered in the company books as an expense of the related fiscal year
- Fixed assets may be depreciated using the straight-line method at rates specified by the tax law (minimum, 8% to 33.33% Maximum)
- An accelerated depreciation method may be used for certain fixed assets, subject to the approval of the tax authorities.
Last Update: 20 of July 2022