Equatorial Guinea Personal Income Tax

Territoriality. Individuals are subject to income tax based on residence. Taxpayers are categorized as residents or nonresidents.

In principle, residents are subject to general income tax on world­wide income. However, recent tax audits have shown that the government auditors tax only income derived from Equatorial Guinean sources.

Nonresidents are taxed on income derived from Equatorial Guinea.

Definition of resident. A person may be considered resident in Equatorial Guinea for tax purposes under a facts and circum­stances test or under an arbitrary test, which is based on the number of days of presence in Equatorial Guinea.

Under the fact and circumstances test, an individual is considered to be a tax resident of Equatorial Guinea if he or she satisfies either of the following conditions:

  • He or she has a dwelling in Equatorial Guinea in the capacity of owner, equitable owner or tenant, regardless of whether he or she is part of a family unit.
  • He or she has his or her principal residence in Equatorial Guinea.

Under the arbitrary test, an individual is considered to be a tax resident of Equatorial Guinea, if he or she satisfies both of the following conditions:

  • He or she stays in Equatorial Guinea for more than three months in a calendar year or for more than six months within two consecutive calendar years.
  • He or she carries on operations or provides remunerated ser­vices in Equatorial Guinea.

For individuals in the hydrocarbon sector, an individual needs to stay in Equatorial Guinea for more than three months in a calen­dar year to meet the arbitrary test mentioned above.

Individuals who are not considered to be tax residents under the facts and circumstances or arbitrary tests are classified as tax nonresidents.

Income subject to tax

Employment income. Taxable income includes all remuneration, fringe benefits, allowances, overtime and bonuses.

The amount of income arising from fringe benefits equals speci­fied percentages of gross wages, as shown in the following table.

Type of                                                                         Percentage

fringe benefit                                                       of gross wages

Accommodation                                                                         15%

Domestic services                                                                        5%

Water and electricity                                                                   5%

Service or office vehicle                                                              5%

Food                                        20% of the gross wages, up to a maximum of XAF150,000

Allowances covering professional expenses (limited to 20% of the total remuneration with a cap of XAF1 million per year) are exempted from tax.

Investment income. Dividends received by resident individuals are included in taxable income and subject to income tax at the pro­gressive tax rates.

A final withholding tax at a rate of 25% is imposed on dividends and interest paid to nonresidents.

Self-employment income. Individuals are subject to income tax on their self-employment income from real estate assets, as well as from commercial, non-commercial, agricultural and profes­sional activities.

The taxable income or profit from self-employment activities equals the difference between the total income derived from and the total expenses incurred in such activities.

Capital gains. Capital gains derived from the sale of real estate assets are subject to income tax.

Exempt income. The following types of income are exempt from tax:

  • Special payments intended to cover expenses inherent to the nature of the employment, such as travel allowances, to the extent that the allowance corresponds to the length of the travel and does not exceed the additional expense borne by the employee
  • Family allowances
  • Student scholarships
  • Temporary payments to victims of accidents at work
  • Damages paid under a judicial order to an individual who has suffered permanent damage
  • Seniority payments

Deductions. In addition to the deductions claimed with respect to various categories of income, individuals may deduct certain items, including the following:

  • Interest on loans and debt that are incurred for the construction, purchase or major repairs of real estate located in Equatorial Guinea that the individual maintains as his or her principal residence
  • Alimony and child support paid in compliance with a judicial ruling
  • Payments made for the purpose of setting up retirement funds in accordance with the rules of the Ministry of Labor
  • Payments made to the Institute of Social Security on behalf of domestic employees
  • Payments of allowances or pensions that are delayed

If a loss is recorded in an income category, such loss may be carried forward to offset income in the following three years. In the oil and gas sector, losses may be carried forward to the following five years. How ever, losses arising from recreational real estate or real estate that is used for summer holidays may not be used in such a manner.

Rates

Residents. Residents are subject to individual income tax at the following progressive rates.

Taxable income Tax rate Tax due Cumulative tax due
XAF % XAF XAF
First 1,000,000 0 0 0
Next 2,000,000 10 200,000 200,000
Next 2,000,000 15 300,000 500,000
Next 5,000,000 20 1,000,000 1,500,000
Next 5,000,000 25 1,250,000 2,750,000
Next 5,000,000 30 1,500,000 4,250,000
Above 20,000,000 35 ­

Nonresidents. Nonresidents are subject to tax at a rate of 10% of the gross salary earned in Equatorial Guinea.

Other taxes

Inheritance and gift taxes. Inheritance and gift taxes are imposed on acquisitions by individuals of the following:

  • Goods located in Equatorial Guinea.
  • Rights, shares and obligations that have arisen, can be exercised or fulfilled in Equatorial Guinea.
  • Goods and chattels located outside of Equatorial Guinea if the decedent or successor, or the donor or beneficiary, are citizens of Equatorial Guinea. This category includes benefits from life insurance contracts.

The following items are included in the tax base for inheritance and gift tax purposes:

  • Acquisitions as a result of death (mortis causa): the actual value of the goods and rights acquired by each successor reduced by the burdens and debts that may be deductible
  • Donations and other inter vivos acquisitions as gifts: the value of the goods and rights acquired, reduced by the burdens or debts that are deductible
  • Life insurance: the amounts received by the beneficiary

The following are the inheritance and gift tax rates:

  • All hereditary successions over XAF100,000: 10%
  • Donations: 5%
  • Life insurance: 10%

Tax on Individuals. The Tax on Individuals is imposed annually on all individuals residing or domiciled in Equatorial Guinea that are 18 years or older. The tax is imposed regardless of the indi­vidual’s nationality or origin.

The amount of the Tax on Individuals depends on the area of resi­dence in Equatorial Guinea. The Tax on Individuals is XAF5,000 for Malabo and Bata.

The Tax on Individuals must be paid within the first quarter of each fiscal year. In practice, this tax is paid by employers on behalf of their employees.

Property tax. All owners of and certain other individuals holding rights in urban real estate are subject to urban property tax. The tax base equals 40% of the sum of the value of the land and build­ings. The tax rate is 1%. If the tax base for properties held by a taxpayer totals less than XAF1 million, the taxpayer is exempt from tax. In addition, certain properties are not subject to the tax.

Social contributions

Social security. Employees subject to individual income tax are also subject to social security contributions.

The social security contributions are based on gross salary includ­ing, but not limited to, base salary and other fixed and periodic income derived in Equatorial Guinea.

The rate of the employer contribution is 21.5%, while the rate of the employee contribution is 4.5%.

Social security covers pension, death, temporary incapacity, maternity and medical assistance.

Worker Protection Fund. Employers and employees must make contributions to the Worker Protection Fund (WPF). The employer contribution is based on gross salary, while the employee contri­bution is based on net salary. Gross salary includes base salary, fringe benefits, allowances, overtime pay and bonuses. To calcu­late net salary, social security payments made to local social security systems for the employee and personal income tax are subtracted from gross salary.

The contribution rates for the WPF are 1% for employers and 0.5% for employees. The seniority payment is exempted from the social security and WPF contributions and the individual income tax.

Tax filing and payment procedures

The tax year in Equatorial Guinea for purposes of general income tax is the calendar year.

Employers must withhold individual income tax on behalf of their employees and remit such tax to the tax administration by the 15th day of the following month.

Penalties for late payments of individual income tax are imposed at a rate of 25% of the tax owed. Interest is payable on arrears at a rate of 10% per month.

Double tax relief and tax treaties

Equatorial Guinea has entered into the Economic and Monetary Community of Central Africa (Communauté Économique et Monétaire de l’Afrique Centrale, or CEMAC) tax treaty.

  • Temporary visas

A person who wants to enter Equatorial Guinea must apply for a temporary visa. This visa can be obtained by contacting an Equatorial Guinea Embassy in Belgium, Cameroon, China, Ethiopia, France, Gabon, Morocco, Nigeria, the Russian Feder­ation, Spain or the United States. Foreigners who do not have an Equatorial Guinea Embassy in their countries may obtain a tem­porary visa in any country where an Equatorial Guinea Embassy is located.

US nationals are not required to obtain visas.

Work permits and self-employment

The labor ministry issues the following five types of work permits:

  • Permit A (PA) is granted to an employee who will work in a single work location for less than six months. It is not renewable.
  • Initial Permit B (IPB) is granted to an individual who will engage in an established profession, working place or activity. It is valid for one year.
  • Permit B Renewed (PBR) is granted to individuals holding IPB at the end of the validity period for IPB. It is valid for two years.
  • Permit C (PC) is granted to individuals holding PBR at the end of the validity period for PBR. It is valid for three years.
  • Permanent Permit (PP) is granted to individuals holding PC at the end of the validity period for PC.

A company must apply for a work permit before the foreign employee begins work in Equatorial Guinea. An application must be filed with the employment office of the city where the employ­er resides or where the employment contract will be carried out.

Before applying for a work permit, a person must apply for the authorization of recruitment.

Residence permits

In addition to work permits, foreign workers must obtain resi­dence permits to work in Equatorial Guinea.

The requirement to hold a residence permit depends on the dura­tion of the stay in Equatorial Guinea. For further information, please contact the police department in Malabo.

Family and personal considerations

Family members. Family members of foreign executives are granted no special privileges with respect to the right to work in Equatorial Guinea.

Marital property regime. Couples who are married in Equatorial Guinea may elect the community property or separate property regime to apply to their marital property.

Community property is the default regime. A couple married abroad is subject to the laws of the country where the marriage was solemnized.

Driver’s permits. Foreign workers may not drive legally in Equatorial Guinea with their home country driver’s license or their international driver’s license. Equatorial Guinea does not have driver’s license reciprocity with other countries.

To obtain a driver’s license in Equatorial Guinea, a foreign citizen already possessing a driver’s license from his or her home country may apply for an Equatorial Guinea driver’s license, which requires the temporary surrender of the home country driver’s license.