Corporate Income Tax (CIT)

Corporate Income Tax (CIT)

Tax liability

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

Rate

Several rates:

  • 25% for some very limited business sectors
  • 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.

Taxation requirements

  • 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: 29 of July 2021

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