Republic of Chad
Corporate Income tax (CIT)
Who is liable?
Taxation principle is territoriality, place of registration
- Chadian companies are taxed on the territoriality principle.
- As a result, Chadian companies carrying on a trade or business outside Chad are not taxed in Chad on their foreign-source profits.
- Chadian companies are those registered in Chad, regardless of the nationalities of their shareholders or where they are managed and controlled.
- Foreign companies with activities in Chad are subject to Chadian corporate tax on Chadian-source profits.
Non-resident service providers are liable to 25% withholding tax on the amount of revenue generated in Chad.
The common regime
35% applies for all others companies types with some exceptions.
- 5% of revenue as Minimum tax with a plank of 1 or 2 million, depending on tax regime (Actual or simplified)
- Minimum tax of the previous month revenue is paid latest on 15th of the next month, as CIT installment.
- Final Tax being, Maximum between aggregation of monthly minimum rate with a plank of 1 or 2 million with CIT rate.
- CIT Balance is due on April 30th When filing the return of the previous year.
- However, for the payment of the plank of 1 or 2 million, payment should be made at 1/12 rate each month, 15 days after the end of the month.
- If this instalment payment exceeds the annual corporate tax, the remainder is at public treasury benefit.
- Option for quarterly installment exist under some conditions
- Taxable income is based on financial statements prepared according to generally accepted accounting principles and the OHADA (organization for the harmonization of business law in French-speaking Africa) standard.
- Fiscal year starts from January 1st to December 31st
- It’s possible for Taxpayers of filing a corrective statement within 02 months of the initial declaration.
- Les contribuables assujettis au régime réel ou au simplifié doivent faire valider ou certifier leurs livres comptables par un Expert-comptable agréé avant leur dépôt au bureau des impôts.
- Branch CIT rate is as per rate above.
- There is a presumption of distribution of profits realized by branches.
- These profits are deemed distributed to their headquarters and are therefore subject to dividend tax at the rate of 20% for nonresident.
- Dividends received by resident companies are included in their taxable income and are subject to corporate income tax at the regular rate of 40%
- Double Tax Treaty with CEMAC countries exonerates Branch dividend tax
- Capital Gain is under CIT taxation, but can be deferred or eliminated in the event of a merger under certain conditions
- Companies 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 3 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 must lead to a reduction of the assets.
Here are some major restrictions and/or limitations:
- Head office and foreign technical assistance costs that are subject to a 10% limitation of deductibility. The scope of the 10% imitation covers study expenses, technical assistance, and other expenses, including commercial and industrial royalties, paid to the head office of an enterprise established outside Chad and outside the CEMAC zone.
- Head office and foreign technical assistance costs duly justified; these costs are only deductible within 10% of the intermediary fiscal profit (accounting profits plus non-allowable charges/costs) prior to their deduction.
- Limitation above does not apply to technical assistance fees related to the assembly of a factory, which are deductible in their entire amount.
- Rent expense for movable equipment paid to a shareholder having more than 10% of the capital are not deductibles
- Restaurants, hotels, receptions, and related costs are deductible within a 0.5% limit of the turnover, net of tax.
- Interest paid to shareholders in excess of the central bank annual rate plus two points are not deductible.
- Commissions and brokerage fees for services on behalf of companies located in Chad that exceed 5% of purchased imports and sales of exports
- Expenses paid to local suppliers without reference to a Chadian tax identification number within the limit of 2.000.0000, are not deductible.
- Expenses paid in cash above 500.000 are not deductible
- All payments greater than 1,000,000 FCFA between professionals must be made by bank cheque
- Are liable to a tax fine of 5% maximum, all the sums wrongly paid in cash
- For companies under the control, of companies or groups situated outside the Republic of Chad, payments made by whatever means are considered as transfer of profits and subject to tax on income
- Some insurance related costs deductible with restrictions
- Donations and liberalities are deductible within a 0.5% limit of the annual turnover, net of tax, when they are duly justified. However, a decision from the Minister of Finances is required.
- Fixed assets may be depreciated using the straight-line method at rates specified by the tax law(minimum, 5% to 33.33% Maximum)