Corporate tax in Gabon

Summary

Corporate Income Tax Rate (%) 25 / 30 / 35 (a) (b)
Capital Gains Tax Rate (%) 25 / 30 / 35 (c)
Withholding Tax (%)
Dividends 10 / 20 (d)
Interest 10 (e)
Royalties from Patents, Know-how, etc. 10 (f)
Payments for Services 10 (g)
Branch Remittance Tax 10 / 15 (h)
Net Operating Losses (years)
Carryback 0
Carryforward 5

a) The minimum tax is 1% of turnover (unless exempt). See Section B for details.

b) Oil companies’ subcontractors with a permanent establishment in Gabon are subject to tax on taxable turnover. The tax rate for these subcontractors is currently 8.75% (see Section D).

c) In certain circumstances, the tax is deferred (see Section B).

d) The rate is 10% if the parent-subsidiary regime applies. The 20% rate applies to payments made to resident and nonresident individuals and legal entities.

e) This 10% rate applies to interest paid to resident and nonresident individuals and nonresident legal entities, excluding interest on bonds.

f) This withholding tax applies to payments to nonresidents.

g) This withholding tax applies to payments made by resident companies to nonresidents for services, including professional services, rendered or used in Gabon.

h) This tax applies if the profits are remitted to the head office. The 10% rate applies to payments to head offices located in tax treaty countries. The rate of 15% applies to payments to head offices located in non-treaty countries.

Taxes on corporate income and gains

Corporate income tax. Gabonese companies are taxed on the ter­ritoriality principle. As a result, Gabonese companies carrying on a trade or business outside Gabon are not taxed in Gabon on the related profits. Gabonese companies are those registered in Gabon, regardless of the nationality of the shareholders or where the companies are managed and controlled. Foreign companies with activities in Gabon are subject to Gabonese corporate tax on Gabonese-source profits.

Tax rates. The standard corporate income tax rate is 30%. How­ever, oil and mining companies are subject to tax at a rate of 35%. A reduced corporate tax rate of 25% applies to a limited number of companies. The minimum corporate tax payable is 1% of an­nual turnover, but not less than XAF1 million. The base for the calculation of the minimum corporate tax is the global turnover realized during the tax year. An exemption from the minimum corporate tax applies to the following companies:

  • Companies exempt from corporate income tax, as provided in the general tax code
  • New businesses
  • Newly incorporated companies or legal entities, for their first two years, regardless of their activities

Capital gains. Capital gains are taxed at the regular corporate rate. The tax, however, can be deferred if all of the proceeds are used to acquire new fixed assets in Gabon within three years.

Administration. The tax year is the calendar year. Tax returns must be filed by 30 April.

Companies must pay the corporate tax (or the minimum tax) in two installments, which are due on 30 November and 30 January. The first installment equals 25% of the preceding year’s corporate tax. The second installment equals 33.33% of such tax. Com­panies must pay any balance of tax due by the due date for the tax return, which is 30 April.

Late payments are subject to a penalty of 10% for the first month and 3% for subsequent months.

Late filing of the corporate tax return is subject to a penalty of XAF50,000 per month (before summons to pay), increased to XAF200,000 per month (after summons to pay). The maximum penalty is XAF5 million.

Dividends. Dividends paid to resident and nonresident individuals and legal entities are subject to a 20% withholding tax.

If the parent-subsidiary regime applies, dividends received by parent companies are subject to a 10% tax. The parent-subsidiary regime applies if the following conditions are satisfied:

  • The shares owned by the parent company represent at least 25% of the capital of the subsidiary.
  • Both the parent and subsidiary have their seat in a Central African Economic and Monetary Community (CEMAC) mem­ber country (Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea and Gabon).
  • The holding company retains the shares registered in its own name for at least two years from the date of issuance of the shares.

Foreign tax relief. In general, foreign tax credits are not allowed; income subject to foreign tax that is not exempt from Gabonese tax under the territoriality principle is taxable net of the foreign tax. However, Gabon’s tax treaties with Belgium, Canada and France provide a tax credit that corresponds to the withholding tax on dividends.

Determination of trading income

General. Taxable income is based on financial statements prepar­ed according to generally accepted accounting principles and the rules contained in the general accounting chart of the Organization for the Harmonization of Business Law in Africa.

Business expenses are generally deductible unless specifically excluded by law. To be deductible, an expense must satisfy the following general conditions:

  • It must be made in the direct interest of the company or linked to the normal management of the company.
  • It must be real and justified.
  • It must result in the diminution of the net assets of the company.
  • It must be registered in the company books as an expense of the related fiscal year.
  • It must not be expressly excluded from deductible expenses by law.
  • It must not be considered as an abnormal transaction.

The following expenses are deductible, subject to the conditions mentioned above:

  • Head office overhead and remuneration for certain services (studies and technical, financial or administrative assistance) paid to nonresidents. The deduction is limited to 10% of charge­able income before taking into account such expenses.
  • Royalties from patents, brands, models or designs paid to a non-CEMAC corporation participating in the management of, or owning shares in, the Gabonese corporation.

The following expenses are not deductible:

  • Rent expense for movable equipment paid to a shareholder holding, directly or indirectly, more than 10% of the capital
  • A portion of interest paid to a shareholder in excess of the cen­tral bank annual rate plus two points and, if the shareholder is in charge of management, on the portion of the loan exceeding one-half of the capital stock
  • Commissions and brokerage fees exceeding 5% of purchased imports
  • Certain specific charges, penalties and corporate tax
  • Most liberalities (payments that do not produce a compensatory benefit, such as excessive remuneration paid to a director), gifts and subsidies

Inventories. Inventories are normally valued at cost or market value. Cost must be determined on a weighted-average cost price method. A first-in, first-out (FIFO) basis is also generally accept­able.

Provisions. In determining accounting profit, companies must establish certain provisions, such as a provision for a risk of loss or for certain expenses. These provisions are normally deductible for tax purposes if they provide for clearly specified losses or expenses that are probably going to occur and if they appear in the financial statements and in a specific statement in the tax return.

Capital allowances. Land and intangible assets, such as goodwill, are not depreciable for tax purposes. Other fixed assets may be depreciated using the straight-line method at rates specified by the tax law. The following are some of the applicable straight-line rates.

Asset Rate (%)
Constructions 5 to 20
Plant and machinery and transport equipment 5 to 33.3
Office equipment To 33.33

An accelerated depreciation method may be used for certain fixed assets, subject to the approval of the tax authorities.

Relief for tax losses. Losses may be carried forward five years; losses attributable to depreciation may be carried forward indefi­nitely. Losses may not be carried back.

Groups of companies. Gabonese law does not allow the filing of consolidated tax returns. Tax rules applicable to groups of com­panies are discussed below.

Corporate income tax. Costs incurred within a group are deduct­ible for tax purposes. These costs include assistance fees, interest on partner current accounts and rentals of goods within the group.

Capital gains derived from intragroup operations are taxable at a reduced rate of 20% instead of a rate of 30%, unless they are subject to other favorable exemption regimes.

Tax on investment income. Tax on Gabonese-source investment income (for example, dividends) paid to companies of the same group are subject to the Tax on Income from Movable Capital (Impôt sur le Revenu des Capitaux Mobiliers, or IRCM) at a rate of 5%. This income is normally taxable at a rate of 20% (or 10% if the company is located in the CEMAC area).

A 10% rate applies if the income is paid by the ultimate holding company to a partner who is an individual or legal entity.

Subject to conditions, a tax credit in Gabon may be granted even for tax paid to countries that have not entered into a tax treaty with Gabon.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)
Business activity tax (license); calculated
based on the nature of the business, the
value of equipment and the number of
Employees
Various
Special tax on subcontractors of petroleum
companies; a global tax including a
contractual payment amount, income tax
and payroll tax; on taxable turnover
8.75
Registration duties, on transfers of real
property or businesses
4 to 8
Social security contributions, on an
employee’s gross salary limited to
XAF1,500,000 a month
Employer 16
Employee 2.5
Medical health contributions, on an
employee’s gross salary limited to
XAF1,500,000 a month
Employer 4.1
Employee 1
Value-added tax (VAT); imposed on
corporations realizing annual turnover
in excess of XAF60 million from
general business activities and on
corporations realizing annual turnover
in excess of XAF500 million from
forestry development activities
Standard rate 18
Reduced rate, on certain items such as sugar 10
Reduced rate on sales of cement and the
rendering of services related to cement
5
Exports and international transport 0
Withholding tax on local service providers
that are not subject to VAT; tax based on
the total amount of the invoice
9.5

Miscellaneous matters

Foreign exchange controls. The CEMAC Act, dated 29 April 2000, provides exchange-control regulations, which apply to financial transfers outside the franc zone, which is a monetary zone includ­ing France and its former overseas colonies.

Specific tax regime on mergers and similar operations. A specific tax regime for mergers and similar operations exists. To benefit from this regime, all of the following conditions must be satisfied:

  • The transferee (beneficiary company in the transfer) must have its registered office in Gabon.
  • An agreement must be obtained from the Minister of Finance, after approval of the Director General of Taxes if foreign com­panies are involved in the operation.
  • The operation must be justified by economic reasons instead of fiscal reasons.
  • The new shares must be held for a period of five years after the transfer.

If all of the above conditions are satisfied and if the transfer is done at net book value, the transfer of the shares is tax-free.

Treaty withholding tax rates

Gabon has signed a multilateral tax treaty with the CEMAC members, which were formerly members of the Central African Economic and Customs Union (UDEAC). Gabon has also entered into the African and Mauritian Common Organization (OCAM) multilateral tax treaty, as well as tax treaties with Belgium, Canada and France. The withholding rates under these multilateral trea­ties and the treaties with Belgium, Canada and France are listed in the following table.

Dividends Interest Royalties
% % %
Belgium 15 15 10
Benin 15 15 – (a)
Cameroon 15 15 – (a)
Canada 15 10 10 (a)
Central African Republic 15 15 – (a)
Chad 15 15 – (a)
Congo (b) 15 15 – (a)
Côte d’Ivoire 15 15 – (a)
Equatorial Guinea 15 15 – (a)
France 15 10 10
Senegal 15 15 – (a)
Togo 15 15 – (a)
Non-treaty countries 20 10 (c) 10
    a) Withholding tax is not imposed, but the income is subject to tax in the state of the recipient.
    b) Congo and Gabon have signed both the CEMAC (UDEAC) and OCAM trea­ties. The withholding rates are the same under each treaty.
    c) See footnote (e) to Section A.