Since it was passed in May 2009, the new general tax code has been regularly modified through finance bills to provide a modernised framework, notably complemented by tax and Customs incentives for strategic sectors of activity.
Among other new tax provisions, the Finance Bill 2011 has created an incentive tax regime that is exclusively relevant to groups of companies with a Gabonese holding company. Furthermore, the Finance Bill 2015 has created a tax regime specific to restructuring operations (mergers and acquisitions, partial transfers of assets and conversion of branches into subsidiaries).
These measures show the will to encourage the establishment and development of affiliated corporations on a local and regional scale, by favouring national and foreign investments in Gabon within dynamic groups structured and organised according to international best practices.
Modern & Secure
Until 2009 Gabon had a different set of tax rules in a variety of frameworks. The 2009 Tax Code had several objectives, including consolidating and simplifying general taxation rules, and modernising Gabon’s taxation and tax procedures. The code also secures the tax environment, as certain former tax decisions and instructions (usually advantageous for the taxpayer) had never been endorsed through an act of parliament as required by the constitution, and were no longer in conformity with the regulations of CEMAC.
The modernised and secured framework can be found in the rules applying to, in particular, corporate income tax (CIT), personal income tax (PIT) and tax on wages, withholding tax on non-residents, value-added tax (VAT), other property taxes, registration and stamp duties, and tax procedures.
Gabon is a CEMAC member, and most of the general tax rules that apply in the six Central African states (Cameroon, Chad, Central African Republic, Equatorial Guinea, Gabon and Republic of Congo) are derived from CEMAC regulations.
The main CIT principles are as follows. The standard rate is 30% (as reduced by the Finance Bill 2013). Special CIT rates apply: 35% for companies operating in oil and mining (exploration and production activities), and 25% for companies holding intellectual property rights, companies licensed to perform tourism business, companies operating in land development and building of social housing, public undertakings, non-profit associations and the Gabonese Bank of Development.
A minimum company tax is payable annually, equal to 1% of the gross turnover, payable when business operations result in a taxable loss, or when the minimum tax is more than 30% of taxable profits.
Company tax is a levy on profits made by companies and other corporate bodies, including branches. It also applies to partnerships and financial syndicates that elect for their profits to be assessed on the basis of this tax.
Taxable profits are determined after deducting allowable expenses and charges from various revenues. All revenues earned by a company during the fiscal year in question are taxable, whether they are derived from the company’s normal course of activities or from the sale of assets or revenues derived from interests in other businesses or areas. Within this, there are specific rules concerning some of these sources of income.
Dividends & Capital Gains
Dividend income is not taxable at the company level as dividends face final taxation on distribution by the distributing firm. The rate is 20%. If the beneficiary company holds at least 25% of the share capital of the paying company, both companies have their corporate seats in CEMAC and the shares belong to the holding company from subscription, or if the latter undertakes to keep the shares in its name for at least two years, the tax rate on income from securities is reduced to 10%.
Capital gains are treated as ordinary business income and taxed at normal company tax rates. They include capital gains made on the transfer of shares owned by persons whose assets are mainly constituted with such shares or with shares directly or indirectly held in a company located in Gabon.
Capital gains may be altered or suspended in certain situations. The Finance Bill 2015 has introduced a new regime exempting capital gains that occurred during a merger, split or partial transfer of assets from taxation under specific conditions.
Gabon introduced rules governing transfer pricing in April 2009. As a consequence, non-arm’s length expenses and payments between companies that are under the control of, or that are controlling a company located outside the CEMAC zone, are considered abnormal management acts and income may be adjusted by the tax authorities. These rules have been reinforced by the Finance Bill 2014. If sums corresponding to industrial property rights, interest or services are paid to a resident in a tax haven or of a country that has a low tax rate, those sums can be considered taxable revenues in Gabon if it is not demonstrated to the Gabonese Tax Administration that said payments are fair and correspond to true services provided. Transfer pricing documentation is required by the General Tax Code.
Deductions are allowed for reasonable expenditure incurred in performing activities that produce assessable income. Expenditure not supported by documentation or considered unnecessary for the reasonable needs of the business will not be considered deductible. Specific additional conditions of deductibility are provided notably concerning depreciation, royalties, interest, management fees, bad debts, rents and losses.
Depreciation is calculated using the straight-line method, but accelerated depreciation may be applicable to certain assets.
Rates depend on the useful life of the asset, but may not exceed those allowed by the General Tax Code. Intangible assets are depreciated at rates ranging from 5% to 20%. Goodwill is not depreciable. The rates for tangible fixed assets range from 5% to 100%. Depreciation must be recorded in the books to be deductible. Depreciation deferred during earlier periods of trading at a loss may be carried forward indefinitely.
Accelerated depreciation is applicable by authorisation of the CEO of the tax office in the three months following the acquisition of the assets if the following conditions are satisfied:
- Materials and equipment are used for at least three years, and the value of these materials and equipment is at least CFA20m (€30,000);
- Materials and equipment have been used in industrial activities of manufacture, handling and transport of agricultural and lumber production;
- Activities are being carried out to set up development sites to construct social housing built by authorised public or private real estate companies; and
- Activities are for the purpose of building social housing by authorised public or private real estate companies.
If accelerated depreciation is granted, the depreciation allowance for the first year will be double.
Royalties paid to entities in CEMAC member states are deductible if their amount is considered fair. Royalties paid to an entity outside the CEMAC zone that participates in the management or capital of a Gabon entity are non-deductible and deemed distributed profits.
Interest on capital borrowed for business purposes is usually deductible. However, interest paid to the shareholders of a firm on funds provided by them is deductible up to a limit of two points above the central bank’s lending rate at the time the interest payments were due.
If the borrowing company is a company by shares, an additional limit applies for the deductibility of interest sums lent by all its shareholders, which should not exceed half its paid-up capital.
These are deductible from gross profit payments to non-resident persons in respect of (i) head office expenses related to transactions carried out in Gabon, expenses related to studies, technical, financial or accounting assistance, commission, interest on bonds, debts, deposits and guarantees up to 10% of taxable profits before deduction of these fees (Finance Law 2013), and (ii) use of patents, licences, trademarks, designs and models.
When paid to a person outside CEMAC, payments will only be deductible if it can be proved that they correspond to real transactions and are not abnormal or exaggerated.
Payments for the use of patents and similar rights, to an enterprise outside CEMAC which participates in the management or capital of an enterprise in a CEMAC state will be regarded as profit distributions, subject to the application of a double tax agreement.
The 10% cap does not apply to technical assistance and study fees connected with the assembly of factories in Gabon. Purchasing commissions of up to 5% of purchases are deductible.
Bad & Doubtful Debts
Bad debts are deductible if specific provisions for doubtful debts are justified and posted in the company’s accounts. If the debt provided for is subsequently recovered, the provision is added back to the results of the year in which recovery was made and is subject to tax.
Taxes such as business licence tax and stamp duties are generally deductible. Corporate tax and employees’ PIT paid or withheld by the firm are not tax-deductible expenses.
Fees such as settlement agreement payments, fines, confiscations or penalties imposed as a result of a breach of any legal, economic or tax provision are not deductible.
Rental payments are deductible within the limit of the average rental amount applicable to similar buildings or installations. However, as an exception, the rental payments may constitute a deductible expense within the limit of the depreciation annuity applicable to the rented building or installation (Finance Bill 2015).
Where a shareholder of the company owns at least 10% of the shares, the rental amounts paid by such company to its shareholder may be deducted only for real estate property (shares held by a shareholder’s family member, including spouse, children or parents, are deemed held by such shareholder).
Gifts, Grants & Insurance
Gifts and grants are not tax deductible, unless they correspond to true payment to Gabonese charities of up to a maximum of 0.1% of the turnover. Insurance premiums paid for the interests of the company or its personnel are normally tax deductible.
Losses may be carried forward for up to five years for tax but may not be carried back.
The profits of a branch or subsidiary of a non-resident company are subject to corporate tax in the same way as those of a resident firm. However, oil subcontractors operating in Gabon as a branch may elect for a simplified tax regime granted by the Tax Administration under specific conditions, which includes a tax of 30% applicable to 17% of the gross turnover (i.e. a 5.95% tax deemed to be CIT) and a tax of 20% applicable to 14% of the gross turnover ( a 2.8% tax deemed to be PIT of their non-resident employees). Oil subcontractors taxed in this way must keep their local accounts under the Organisation for the Harmonisation of Business Law in Africa’s simplified accounting system.
The state has established tax advantages for the recruitment of Gabonese citizens under unlimited-term labour contracts. Company tax is reduced to 20% of the total of new workers’ wages, constituting a tax credit in the case of:
- The creation of two positions in companies with fewer than 20 employees;
- The creation of three positions in companies with between 25 and 50 employees; and
- The creation of five positions in companies with more than 50 employees.
Accredited companies in the tourism sector may benefit from a tax credit corresponding to 5% of the gross investment made (below CFA300m, €450,000).
Corporate Assessments & Payments
The tax year runs from January 1 to December 31. A company’s financial year must correspond to the tax year. A return showing the company’s results for the fiscal year must be filed by April 30, along with any necessary documents. The authorities may adjust the results shown in the return. The taxpayer has the right to respond to the adjustments and may take the matter to court if an agreement cannot be reached. CIT is payable in three instalments.
Tax Regularisation Procedure
The Finance Bill 2014 introduced a special process in order to assist tax payers in regularising their tax status without penalties, in case of lack of filing of a declaration of existence or tax returns or in case of the discovery, in good faith, of inaccuracies and omissions in the filed tax returns. Eligible taxpayers (both legal entities and individuals) must spontaneously make a request to the tax administration by the end of the fiscal year, have a maximum turnover of CFA80m (€120,000) and not be concerned by a tax audit at the time of the request.
Individual residents in Gabon are taxed on their worldwide income; non-residents are taxed only on income of Gabonese origin.
A person is deemed to be resident if they have a principal place of residence or spend at least six months of the year in Gabon.
Anyone earning income in Gabon in any tax year is expected to file a tax return. Individuals are liable for a single tax on all types of personal income. Proportional tax rates represent the new tranches and reduced rates applicable since 2010.
To calculate the tax, taxable income is divided into units, taking into account family circumstances. The tax is based on varying rates:
- Up to CFA1.5m (€2250): 0%;
- CFA1.5m-1.92m (€2250-2880): 5%;
- CFA1.92m-2.7m (€2880-4050): 10%;
- CFA2.7m-3.6m (€4050-5400): 15%;
- CFA3.6m-5.16m (€5400-7740): 20%;
- CFA5.16m-7.5m (€7740-11,300): 25%;
- CFA7.5m-11m (€11,300-16,500): 30%; and
- Above CFA11m (€16,500): 35%.
Tax On Wages
Wages and salaries are subject to a monthly additional tax which amounts to 5% on the salary, allowances, premiums and advantages in cash and in kind. There is no additional tax on the portion of salaries under CFA150,000 (€225).
Industrial & Commercial Profits
Industrial and commercial profits are profits derived from activity in commerce, industry or mining, including craftworks. This includes profits accruing to holders of mining permits and concessions, lessees and sub-lessees of mining concessions, and prospectors of oil and combustible gas.
The partnership profits of members of general partnerships and active partners of limited partnerships who have not elected to be assessed by company tax may be taxable either in the form of income from industrial and commercial profits or as professional earnings, depending on the nature of the profits. Those profits are included in the general income of the taxpayer according to the net profits assessed on rules similar to CIT.
A simplified tax assessment may apply for professional earnings, services, and retail and manufacturing activities, which are taxed at 40%, 50% and 70%, respectively, of annual turnover of CFA30m60m (€45,000-90,000).
Below those amounts, individuals who carry out an activity listed in the Tax Code pay an annual lump sum tax depending on the activities in question. In other cases, the net income is the actual income as computed under corporate tax rules.
Professional earnings are subject to tax on the basis of real income. These include professional service income, profits of a non-commercial nature, income from regular stock exchange transactions and various types of royalty income. Income not included in any other tax category is also taxable as professional earnings. These are taxed on more or less the same basis as industrial and commercial profits.
Real estate income is income from leased land and developed property, including plants and equipment that is a permanent part of such property. An amount equal to 30% of real estate income can be deducted as expenses in order to calculate net taxable income.
Salaries, Wages, Pensions & Annuities
Income from salaries, wages, pensions and annuities is generally limited to that earned from employment activities exercised in Gabon. Benefits in kind and other non-cash allowances are usually assessed notionally, such as housing (6% of basic salary) and utilities (5%). Certain specific allowances are partially or wholly exempted.
Income From Securities
Income from securities includes dividends, interest from bonds or deposits and similar income, and any amounts directly or indirectly available to shareholders of companies. The standard tax rate on such income is 20% within the scope of PIT. Reduced rates of 10% apply for bonds with at least five years maturity and 15% for cash bonds issued by banks. This is a final tax withheld by the paying company.
Net profits of branches remitted to their home office located outside of Gabon are subject to a 20% withholding tax. This is limited to 10% when a tax treaty applies. The Finance Bill 2015 increased the tax rate that was previously fixed at 15%.
Capital gains that fall within the scope of PIT as a result of sale, swap, contributions, liquidation of moveable or immoveable assets or rights of any nature, are subject to a final tax rate of 20% (after a 15% relief).
There are exemptions for the sale of a main residence, furniture and vehicles, insurance allowances and minority stakes in companies.
Deductions & Relief
The extent to which a deduction from income will be allowed depends on the category of income. Allowable total deductions include business expenses, contributions to pension funds and interest on loans taken to build a taxpayer’s first house in Gabon.
Deductions for business expenses amount to 20% of salary income but cannot exceed CFA10m (€15,000). A deduction may also be applicable for life insurance subscriptions and pension schemes.
Individuals may carry business losses forward in the same way as companies. Annual bonuses are exempted from PIT up to CFA4m (€6000). The amount paid beyond that is added to the taxable income. Interest on housing saving accounts (Finance Law 2013) and on saving accounts up to a maximum balance of CFA10m (€15,000) (Finance Law 2013) is exempted from PIT.
Assessments & Payments
Individual taxpayers must file tax returns before March 1 each year for income from the preceding tax year.
However, returns for income from agriculture, commercial and non-commercial sources (under the simplified and actual tax regimes) must be submitted before April 30. The procedures for the payment of PIT vary with the type of income. Payment of tax on income from salaries, wages, pensions and annuities is made by withholding by the employer. Tax on income from securities is withheld by the distributing company. Except in some cases, excess tax withheld can be refunded once the return is filed. Payment by a Gabonese entity to an individual liable to non-commercial profits or to industrial and commercial profits and not registered as a VAT taxpayer leads to a withholding at source by the client at a 9.5% rate on any invoice. In addition, some other PIT withholdings also apply on state payments made in respect of imports and purchase of logs.
The taxpayer is directly responsible for paying PIT on industrial and commercial profits, professional earnings, agricultural profit and income from real estate. Payments of income tax on agriculture, industrial and commercial profits and on professional earnings are made in three instalments: on November 30 (25% of the last year’s income tax), January 30 (25% of the last year’s income tax) and the balance by April 30. If no tax is declared or if there are discrepancies, tax may also be assessed by the tax office according to specific rates detailed in the new tax code.
Withholding Tax On Non-Residents
Apart from final and withholding taxes, a withholding tax is applicable to non-residents. Subject to the existence of a double taxation treaty, payments made by Gabonese entities to non-residents are subject to a 20% tax. Sums covered by the withholding tax include payments for:
- The activities performed in the frame of an independent profession;
- The use of patents, trademarks and similar rights;
- The services of any nature provided or effectively used in Gabon; and
- Interest, arrears and all other earnings deriving from fixed-income investments, included in the beneficiary’s professional incomes.
Double Taxation Treaties
The above principles of taxation may have to be adjusted according to double taxation treaties signed between Gabon and other countries. Gabon has signed income tax treaties with France, Belgium and Canada, limiting double taxation on dividends, interest and royalties.
Gabon has also signed treaties with other CEMAC states to improve tax cooperation between administrations and limit double taxation, as well as with other members of the African and Mauritius Common Organisation. Tax treaties signed with other countries should also enter into force upon ratification by both member states.
Gabon introduced VAT in 1995 and has continuously extended its scope. It is a broadly based tax on consumer spending, levied on all commercial transactions and activities except those specifically exempted. Four rates are applicable: 18%, 10%, 5% and 0%. The general rate of 18% is applied to a number of goods and transactions, such as:
- Delivery of goods;
- Provision of services;
- Importation of goods;
- Transportation services for persons and goods;
- Renting activities;
- Construction and delivery of buildings by real estate professionals;
- Transfers of non-exempt assets;
- Leasing of underdeveloped land and unfurnished premises by real estate professionals; and
- Financial and banking transactions.
A reduced rate of 10% is applicable to specified items, such as mineral water produced in Gabon, imported meat and chicken, sugar, canned vegetables and canned fruit, and several other goods. A reduced rate of 5% applies to sales and services relating to cement. A rate of 0% is applicable to exports, international carriage, refuelling operations and maintenance and repair operations on aircraft, and vessels engaged in international traffic. This rate is only applicable to exports that have been properly declared to Customs.
Other goods and services are exempt from VAT, such as local food, interest on foreign borrowings, gambling activities, certain real estate operations and insurance transactions.
VAT Input & Output
Input VAT paid on goods and the supply of services from vendors used in the production of output goods and services delivered to customers is deductible from output VAT billed on the sale of goods and services. The difference is paid to the Treasury. VAT paid on hotel, restaurant, car hire, entertainment and passenger transport services is not generally deductible as input VAT. Since the Finance Bill 2016, VAT on services rendered by foreign providers is not deductible when such services are available in Gabon.
Exporters, mining and oil operators, and important investors may file claims for the repayment of VAT credit they cannot deduct for a given month. VAT payers must register and file monthly returns. Gabonese clients of non-resident VAT payers are required to declare and pay on behalf of foreign suppliers.
Whereas transfers of real estate property liable to registration duty are normally exempted from VAT, the Finance Bill 2016 introduced an 18% VAT on real estate development operations performed by persons liable to VAT in the frame of their economic activities, and notably the sale of building lots, the sale of new buildings and the self-delivery of certain immovable assets.
As a consequence, the transfer of real estate property liable to VAT on real estate development operations remains liable to registration duties.
When the tax code was revised in 2009, the government cancelled a number of taxes that had a limited impact on the budget and retained the following five categories of tax:
A. Parafiscal Tax
There are certain taxes, royalties and contributions which are levied by state authorities. In order to be valid under the new tax code, however, those taxes need to be provided within the finance act of the year in question. The list of these taxes was provided in the amended Finance Act of 2009 and renewed in the Finance Act of 2010.
B. Business Licence Tax
Enterprises must pay an annual business licence tax, calculated according to a graduated scale, based either on the annual turnover of each business establishment and, depending on the activities in question, on the number of employees, or based on the power of machines used for business operations.
C. Social Insurance & Housing Loan Fund
Employers and employees must contribute monthly to the National Social Security Fund and the National Housing Fund. For the Housing Fund, employers must put in 2% of employees’ total salary and fringe benefits. For the Social Insurance Fund, employees contribute 2.5% of basic pay, plus allowances. Employers contribute 16% of basic pay, allowances and benefits. The basis cannot exceed CFA1.5m (€2250) per month per employee.
Decree No. 2015 of June 11, 2014 introduced a new National Health Insurance and Social Guarantee Fund. Employees contribute 1% of salary plus all allowances and benefits in kind and in cash, while employers contribute 4.1%. The basis cannot exceed CFA2.5m (€3750). These rates, tax bases and ceilings should be modified soon.
D. Property Tax
Property tax is payable annually on real estate for which an ownership certificate or an administrative or judicial order has been issued.
Tax payable is based on the property’s surface area, value and whether or not it is developed. This tax is payable by the owner of the property and not by the occupant or the dealer.
E. Registration & Stamp Duties
Generally, all legal documents must be stamped and registered. Acts that record contractual obligations, transfers or leases of property are also subject to ad valorem registration duties of 2-8%. Other documents and transactions may be subject to a fixed duty that ranges from CFA20,000 (€30) to CFA50,000 (€75). To develop tax claims, procedures have been modernised and detailed for greater transparency and clarity. Abuse of rights, abnormal management acts and transfer-pricing procedures are now defined and part of tax concepts when dealing with claims. To promote its Emerging Gabon strategy, the government extends its tax and Customs attractiveness by adopting favourable tax and Customs treatment for specific activities and projects.
New businesses may be exempted during a five-year period from the start of their activities, upon the tax office’s approval, from minimum CIT during two fiscal years showing a loss, from CIT during the first profitable year and from 50% tax reduction on CIT during the second profitable year. They may also enjoy accelerated depreciation on certain equipment.
A new business is defined as a newly formed company with no former activity in Gabon or an existing company developing a new and non-existing activity in Gabon related to the industrial, mining, forestry, agriculture or small-scale fishing sectors. In order to be eligible, the company shall make minimum investments within the first three years of activity, which amounts are provided by the Tax Code.
Small & Medium-Sized Enterprises (SMES)
According to the law on SMEs, commercial companies with their head office in Gabon that are mainly held by nationals with an investment of less than CFA1bn (€1.5m) and a turnover of less than CFA2bn (€3m), employing at least 50% Gabonese people, having an activity of goods production, processing, distribution and provision of services, notably benefit from the exemption from corporate tax for five years. The 2012 Finance Law added an exemption from PIT for SMEs’ profits during the first five years following the commencement of activity.
Tax incentives applicable to the tourism sector are provided by the Gabon Tax Code (modified by the Finance Bill 2013) and Order No. 02/2000 of 12 February 2002 regarding the taxation treatment of tourism investments (modified by the Finance Bill 2013). The Gabon Tax Code ( modified by the Finance Bill 2013) provides the following incentives:
- VAT exemption on construction works and related materials and services, as well as on equipment specific to tourism companies making a minimum investment of CFA300m (€450,000), taxes excluded;
- CIT exemption during the first three years of activity for enterprises operating in the tourism industry and investing at least CFA300m (€450,000), taxes excluded;
- Tax credit, for CIT purposes, corresponding to 5% of the investment (excluding taxes) made during a five-year period, for accredited tourism investments below CFA300m (€450,000).
Order No. 02/2000 provides tax incentives to enterprises approved by the Ministry of Tourism and enterprises participating in projects approved by the Ministry, notably:
- A 100% exemption from CIT or PIT during the construction phase and the following five years, and from 50% of CIT or PIT during the next five years;
- Loss carry-forward for three years after the end of the tax holiday period;
- Exemption from CIT or PIT on capital gains made on the transfer of fixed assets;
- Exemption from property taxes for 10 years after construction of the facility and reduced rates following the initial 10-year period;
- A 100% exemption from PIT for non-resident employees during the construction phase of the agreed project and for one year thereafter, and of 50% over the following eight years.
Agricultural enterprises may benefit from the following: temporary or permanent exemption from CIT; exemption from VAT on local products, equipment and other items; temporary or permanent exemption from property tax; and business licence tax exemption.
The holding, allocation, renewal and transfer of a forestry exploitation permit, marketing, processing by chainsaw and the exportation of logs and products other than wood are subject to specific taxes and fees, notably: felling tax, area tax, renewal tax, transfer tax, processing by chainsaw tax, farming tax, exit duties and taxes, fees for forestry expenses, etc. New equipment and tools may also benefit from accelerated depreciation under certain conditions.
Downstream Timber Processing
The 2012 Finance Law provided for numerous tax incentives for companies operating in the downstream timber processing industry subject to the approval of the competent committee, the Commission for the Industrialisation of the Forestry Sector. These incentives include:
- Exemption from CIT and minimum lump-sum tax in the first five years from the start of activity;
- Authorisation to apply the declining balance depreciation method (an increase of 30% may apply to the common rates) for some equipment;
- Authorisation to create a special renewal reserve for certain equipment;
- Exemption from the tax on income from moveable capital for five years following the commencement of business operations;
- Exemption from VAT on certain operating costs, such as oil, gas, electricity, chemicals, equipment and technical assistance fees paid to the parent company for five years following the commencement of business operations; and
- Exemption from real estate taxes on land and buildings utilised for business purposes for five years following their acquisition/allocation.
A logging tax was introduced by the 2012 Finance Law, replacing the one provided in Article 204 and following the General Tax Code. The tax is set at 3% on the mercurial value for logs and 1.5% on the freight-on-board value for transformed products.
A new Mining Code has been introduced by Law No. 17 of 2014 dated January 30, 2014. According to the new Mining Code, holders of exploration and exploitation permits are subject to common taxes and mining taxes as follows. During the exploration period, holders of exploration permits, under the mining regime, and their subcontractors may benefit from the following exemptions in respect of their exploration and development activities:
- VAT exemption during the exploration permit on certain goods and services;
- Exemption from CIT and minimum tax;
- Exemption from business licence tax;
- Exemption from property tax, except regarding housing buildings; and
- Exemption from registration duties on capital increase operations and business lease agreements.
During the first five years of exploitation, holders of exploitation permits, under the mining regime, and their subcontractors are exempted from CIT and the minimum tax. Furthermore, holders of exploitation permits may benefit from the following:
- VAT refund on the acquisition of goods, under certain conditions;
- VAT exemption on importation of certain goods;
- Special deductible provisions for site restoration and equipment renewal; and
- Accelerated depreciation.
Holders of exploration permits under the quarry regime may benefit from the same incentives as the holders of exploration permits under the mining regime, whereas holders of exploitation permits may only benefit from CIT and minimum tax exemptions during two years.
Specific mining taxes consist of: fixed fees, land royalty, proportional mining royalties, royalty for extracting materials from quarries.
The New Hydrocarbon Code, which was introduced by Law No. 11 of 2014 of August 28, 2014 and published in the official journal on September 8, modifies the tax regime in force until 2014 for all new signed contracts, and in particular means that, among other things:
- CIT is no longer included in the state share;
- The VAT tax rate is now 0%, applying to exploration and exploitation activities; and
- Companies are subject to common taxation except for the provisions of the New Hydrocarbon Law.
If a project raises more than CFA20m (€30,000) in tax expenses, it may be considered by the Specific Commission on Customs and Tax Advantages’ ruling on any request for exemptions, reductions or other advantages not provided by law. Once the file is agreed to by the commission, it then must be approved by the minister of finance before finally being submitted to the parliament for approval of the proposed tax incentives in the finance act of the year in question.
To encourage local production, the 2012 Finance Law included incentives for firms investing in the cement industry. These include exemption from CIT as of commencement of production for seven years; CIT on capital gains derived from the primary transfer of shares following commencement of production; VAT on certain operating costs as of the commencement of production for seven years; Customs duties and import taxes on certain raw material, inputs and equipment; and all other taxes, duties and levies payable during the investment period. Other incentives include:
- Full deductibility of interest on debts contracted for the purpose of the project;
- Eligibility to refund of input VAT on equipment used for business purposes;
- A reduced 10% rate on income from moveable capital;
- Fixed duty of CFA20,000 (€30) payable on deeds relating to restructuring;
- 50% reduction of the business licence duty; and
- Authorisation to import certain equipment under the temporary admission regime.
Free Economic Zones
The tax and legal framework of economic zones with special regimes has been in force since early 2013 and was implemented by decree. These provisions are reserved for areas of investment such as Nkok Special Economic Zone and Mandji Island Free Zone.
The framework of these areas provides for exemption from:
- CIT for 10 years from the first sale of the company (beyond the 10th year, the taxation rate will amount to 10% for five years);
- Dividend tax for 25 years;
- Withholding taxes for 25 years from the first sale of the company;
- Land tax on properties, developed and undeveloped, for 25 years from the date of registration with the Trade Registry;
- Customs duties on imports of equipment, mechanical devices and spare parts for 25 years;
- Tax on services; and
- Registration duties on certain operations for 25 years from the first sale.
Other incentives include exemption from VAT for 25 years from the date of obtaining admission accreditation. For VAT paid, the company will be reimbursed by the state within a month. Sales to companies outside the economic zone will be deemed exports. Other advantages are provided regarding employment, with relaxed immigration rules and employment of foreign labour (non-payment of the deposit for repatriation).
Groups Of Companies
Gabon’s tax law provides for a special tax regime for groups of companies. This regime does not allow the option to file a consolidated tax return or to transfer losses between group members. Only companies that are resident in Gabon can qualify as the holding company, but resident and non-resident legal entities may qualify for the status of subsidiary company in a group.
The minimum threshold required to qualify as a group member company is 50% of the share capital of the subsidiary, which may be controlled directly or indirectly, and shall allow one or several of these companies, jointly, to control the others.
The group holding company must supply certain services to its subsidiaries, including financial, technical, accounting, legal, management, IT, human resources, marketing, and research and development. A holding company whose sole purpose is to hold shares in its subsidiaries cannot benefit from the group special tax regime. The following rules apply:
- Capital gains on the transfer of assets between group member companies which are liable to CIT are subject to a final 20% tax rate;
- The expenses of a firm’s head office and technical assistance fees between group firms are deductible subject to an advance pricing agreement;
- Interest on current accounts is fully deductible.
However, the rate must not exceed the central bank rate plus two percentage points.
A mother and subsidiary regime applies when a limited company holds either nominative shares of a public limited company or shares in the capital of a private limited company. In this case, and subject to the following conditions, a final 10% withholding tax applies:
- The shares owned by the parent company represent at least 25% of the capital of the subsidiary;
Both companies have their seat in CEMAC; and
- The holding company retains shares registered in its name for at least two years from the issue date.
Tax Regime For Restructuring Operations
The Finance Bill 2015 created a tax regime for restructuring operations including mergers, splits, partial transfer of assets and conversion of branches into subsidiaries, by gathering and completing the provisions previously scattered in the Tax Code. Companies must fulfil a series of conditions, including that the acquiring company, the newly incorporated company or receiving company must have their head office registered in Gabon.