As it was passed in May 2009, the new general tax code was regularly modified through fund bills to deliver a modernised framework, especially complemented by taxation and Customs incentives for strategic sectors of activity.
Among other new tax provisions, the Finance Bill 2011 has created an incentive tax regime that’s exclusively pertinent to groups of companies with a Gabonese holding firm. Moreover, the Finance Bill 2015 has produced a tax regime specific to restructuring operations (mergers and acquisitions, partial transfers of resources and conversion of branches into subsidiaries).
These steps show the will to promote the establishment and growth of affiliated businesses on a regional and local scale, by favouring foreign and national investments in Gabon within dynamic groups structured and structured according to international best practices.
Modern & Secure Tax Legislation
Until 2009 Gabon had a different set of tax rules in many different frameworks. The 2009 Tax Code had many goals, including simplifying and consolidating overall taxation rules, and modernising Gabon’s taxation and taxation procedures.
The modernised and bonded framework are seen in the principles applying to, particularly, corporate income tax (CIT), personal income tax (PIT) and taxation on wages, withholding tax on non-residents, value-added tax (VAT), other land taxes, registration and stamp duties, and taxation procedures.
Gabon is a CEMAC member, and the majority of the general tax rules which apply in the six Central African countries (Cameroon, Chad, Central African Republic, Equatorial Guinea, Gabon and Republic of Congo) derive from CEMAC regulations.
CIT
The primary CIT fundamentals are as follows. The normal rate is 30 percent (as reduced by the Finance Bill 2013). Particular CIT rates apply: 35 percent for companies operating in mining and oil (mining and production activities), and 25 percent for employers holding intellectual property rights, companies licensed to execute tourism organization, companies operating in property development and construction of social housing, public undertakings, non-profit institutions and the Gabonese Bank of Development.
A minimum company tax is payable annually, equivalent to 1 percent of their gross turnover, payable if business operations result in a taxable loss, or when the minimum tax is over 30 percent of taxable profits.
Company tax is a levy on profits made by companies and other corporate bodies, including branches.Additionally, it applies to partnerships and financial syndicates that elect for their gains to be evaluated on the basis of the tax.
Taxable gains are determined after deducting allowable expenses and fees from several revenues. All revenues earned by a business during the financial year in question are taxable, whether they derive from the provider’s normal course of actions or in the sale of assets or earnings derived from interests in other companies or regions. In this, there are certain rules concerning a number of these sources of revenue.
Dividends & Capital Gains
Dividend income isn’t taxable at the business level as dividends confront closing taxation on distribution by the distributing firm. If the beneficiary company holds at least 25% of the share capital of the paying company, the two companies have their corporate chairs in CEMAC and the shares belong to the holding company out of subscription, or when the latter must maintain the stocks in its title for at least two decades, the tax rate on income from securities is decreased to 10%.
Capital gains are treated as ordinary business income and taxed at normal company tax prices. They include capital gains made on the transfer of shares owned by individuals whose assets are primarily constituted with such stocks or with stocks directly or indirectly held in a business located in Gabon.
Capital gains may be changed or suspended in certain conditions. The Finance Bill 2015 has introduced a new regime exempting capital gains that occurred during a merger, split or partial transfer of resources from taxation under certain conditions.
Deductions
Deductions are allowed for reasonable expenditure incurred in doing tasks that produce assessable income. Expenditure not supported by documentation or considered unnecessary for the reasonable requirements of the company won’t be considered deductible. Specific additional conditions of deductibility are supplied especially concerning depreciation, royalties, interest, management fees, bad debts, losses and rents.
Royalties
Royalties paid to entities in CEMAC member countries are allowable if their amount is deemed fair. Royalties paid to an entity outside the CEMAC zone which participates in the capital or management of a Gabon thing are non-deductible and deemed distributed earnings.
Interest
Interest on funds borrowed for business purposes is generally deductible. However, interest paid to the shareholders of a company on funds provided by them is deductible up to a limit of 2 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, another limitation applies for the deductibility of interest amounts given by all its shareholders, which shouldn’t exceed half of its paid-up capital.
Bad & Doubtful Debts
Bad debts are allowable if certain provisions for doubtful debts are warranted and posted at the business’s accounts. If the debt provided for is then recovered, the supply is added back to the outcome of the year where recovery was created and is subject to taxation.
Taxes
Taxes like company license tax and stamp duties are usually deductible. Business tax and workers’ PIT paid or withheld from the company aren’t tax-deductible expenses.
Fees like settlement agreement obligations, fines, confiscations or penalties levied because of a breach of any legal, tax or economic provision aren’t deductible.
Salaries, Wages, Pensions & Annuities
Income from salaries, wages, pensions and annuities is usually confined to that earned from employment activities exercised in Gabon. Benefits in kind and other non-cash allowances are usually assessed notionally, such as home (6% of basic salary) and utilities (5%). Certain specific allowances are partly or wholly exempted.
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