OBG talks to Nicolas Balesme, Partner and General Manager, Deloitte Touche Tohmatsu Gabon

Nicolas Balesme, Partner and General Manager, Deloitte Touche Tohmatsu Gabon

Interview: Nicolas Balesme

What provisions have been introduced in the Public Procurement Code (PPC) that refer to cooperation with foreign partners?

NICOLAS BALESME: The provisions of the PPC are set forth in Decree No. 0254/PR/MEED, which was issued in June 2012. Excepting the principle of local preference, the code does not include any particular restrictions concerning a partnership or collaboration with international partners. Those foreign cooperative partnerships are covered in Articles 114-117, relating to public-private partnerships (PPPs), and in Article 146, relating to subcontracting.

Under the Gabonese framework, PPPs are a partnership between the government and one or more private sector companies to finance, build and manage a public work or service. A PPP is a global contract with three main clauses: financing investments necessary to providing service in the long term; constructing or upgrading infrastructure or equipment; repairing, maintaining, exploiting and managing infrastructure. PPPs are applicable in the areas of finance activities, construction, and transformation, reparation, maintenance, exploitation or management of public infrastructure by a private partner. A project’s duration cannot exceed five years.

However, the current legislative framework is still insufficient. Legislation must be completed by more specific text that assures private partners of the profitability of their investments, as well as allowing the government to achieve its objectives in terms of public work or services. Subcontracting is defined as a consortium of companies committed to a specific project, with the leading company acting as a common legal representative.

What are the current provisions concerning the international transfer of capital and dividends and what impact will they have?

BALESME: The financial transactions between member countries are supervised by the Economic and Monetary Community of Central Africa and are intended to bring about harmonisation of regulations. Thus, the transfer of capital and dividends is done through financial institutions such as banks, after applicable taxes are withheld.

There are also new rules regulating taxation that take into account any ties that might exist in cases of direct or indirect control, legal restrictions or in the case of a company being under the control of another corporation. Regarding dividends, transfers can be made for a 20% tax. This rate was recently increased in 2014 from 15%.

How will the fiscal reforms implemented during the 2013-14 period affect foreign investors?

BALESME: Since 2013 several taxation measures have been implemented. Some of these new measures include: a reduction of the corporate tax rate from 35% to 30%; exemption from corporate income tax in the first two years for newly registered entities, independent of their activity; exemption from value-added tax (VAT) for construction-related works, materials and equipment, as well as for furniture for tourism companies that have invested a minimum of CFA300m (€450,000), excluding taxes.

Measures adopted in 2014 include: reduction from 15% to 10% in the withholding tax for foreign residents from countries with which Gabon has a tax agreement; a 1.5% tax on property transfers involving the sale of commercial establishments, with a 2% additional tax if the property is located in Libreville or Port-Gentil; and a new, compulsory procedure for persons established in Gabon to support transfer pricing policies in connection with any transactions carried out with related foreign companies.

Finally, a newly adopted hydrocarbons code has a tax regime specific to the sector, with the most notable difference being in the areas of VAT, transfer duty, and taxable income on revenues from real estate property and hydrocarbons subcontracting.

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The Report: Gabon 2014

Tax chapter from The Report: Gabon 2014

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