Gabon: Global Tax Guide
Table of Contents
Legislation
General Tax Code (2022)
2023 Finance Law
2024 Finance Law
Residence/Territorial Scope
Article 7 of the General Tax Code provides that subject to the provisions of double tax treaties, profits obtained from operations carried out in Gabon are subject to corporate income tax.
This also applies to capital gains realized on the transfer of the shares of persons whose assets consist mainly of rights held directly or indirectly in a company located in Gabon.
Entities Within Scope
Article 5 of the General Tax Code provides that companies within the scope of corporate income tax include joint-stock companies, limited liability companies, cooperative societies, and public establishments or bodies.
Civil-law partnerships which carry on a business or operations of a commercial, industrial, craft or agricultural nature also liable to corporate income tax.
In addition, the following companies of persons are subject to corporation tax if they opt to be so:
• general partnerships;
• limited partnerships;
• joint ventures;
• financial syndicates.
This option is irrevocable and cannot be exercised by de facto partnerships or partnerships resulting from the previous transformation of capital companies.
Corporate Income Tax Rates
Article 16 of the General Tax Code provides that the rate of corporate income tax is 30%.
For the calculation of the corporate income tax, the profit is rounded down to the nearest 1,000 CFA francs.
The corporate income tax rate is increased to 35% for companies in the oil and mining sector.
Corporate income tax is reduced, where applicable, by the tax credit corresponding to 5% of the amount excluding tax of the investment for a period of three years, for tourism investments of less than CFAF 300,000,000 approved by the Minister for Tourism and the Minister for Finance.
Minimum Tax
Article 24 of the General Tax Code states that the amount of tax due by each company may not be less than the minimum flat-rate tax that would result from the application of a 1% rate to the ‘reference base’ or the sum of 1,000,000 CFA francs.
When the accounting year is less than or greater than twelve months, the sum of 1,000,000 CFA francs is calculated pro rata.
The ‘reference base’ is defined in Article 25 as the gross turnover achieved on all operations falling within the scope of the company’s activities, including miscellaneous income and profits made during the same period, in particular:
• sales of goods;
• sales of manufactured products;
• the works, services sold;
• ancillary products;
• financial income;
• exchange gains;
• other income
The base obtained is rounded down to the nearest 1,000 CFA francs.
New companies are exempt from the minimum flat-rate tax and the minimum collection in certain cases.
Newly registered companies or legal persons, regardless of the sector of activity are exempt from the minimum tax for the first 2 financial years if they are loss-making. This is increased to 3 years for companies that qualify under the Law on the promotion of SMEs/SMIs.
Article 28 of the General Tax Code provides that when the amount of corporation tax is less than the minimum tax there is no refund of the difference.
Tax on the profits of listed companies
Article 64 of the General Tax Code provides that the corporate income tax rates applicable to companies listed on the Central African Stock Exchange are as follows:
a) rate of 20% for 3 years, for capital increases representing at least 20% of the company’s capital;
b) a rate of 25% for 3 years, for the sale of shares representing at least 20% of the capital;
c) below the threshold of 20% of the share capital, the corporate income tax rate is 28% for 3 years from the date of admission;
(d) In the event that the holding rate of 20% of listed securities is not reached at the time of the first IPO, but is reached during the 3-year period, the reductions referred to in (a) and (b) above shall apply for the remaining duration of the said period.
The benefit of these provisions is subject to the obligation to keep the securities concerned listed on the BVMAC for a period of at least four years.
Taxable Income and Allowances
Under Article 8 of the General Tax Code, taxable profit is the net profit determined on the basis of the results of all operations of all kinds carried out by enterprises during the financial year including any capital gains. It also includes income derived from participation in an economic interest grouping and corresponding to the rights held by the company in the capital of the grouping.
Net profit is the difference between the values of the net assets at the end and at the beginning of the accounting period, less any additional contributions and increased by the deductions made during this period by the partners.
Net assets are defined as the excess of asset values over the total liabilities of third-party receivables, depreciation and justified provisions.
Stock is valued at cost price. If the daily price is below the cost price, the company must make a provision for the depreciation of stocks.
The work in progress is valued at cost price.
Revenues from long term contracts are recorded on an advance basis.
As a default rule, and in the absence of financial accounts, the taxable profit is determined by deducting from the amount of the turnover before tax a flat-rate abatement equal to:
• 70% for enterprises engaged in the purchase, resale or production of goods for resale;
• 50% for service providers;
• 40% for liberal professions.
Capital gains
Article 9 of the General Tax Code provides that capital gains arising from the sale of fixed assets during the course of operations are not included in the taxable profit for the financial year in which they were realised, if the taxpayer enters them in a special “capital gains to be reused” account and undertakes to reinvest in new fixed assets in his business, before the expiry of a period of 3 years from the end of this financial year, a sum equal to the amount of these added values added to the cost price of the items sold. However, the re-employment may not be effected by the purchase or subscription of company shares or equity securities.
Deductions
General
Under Article 11 of the General Tax Code, the net taxable profit is established after deduction of all costs and expenses necessary for the exercise of the taxable activity in Gabon and which satisfy the following conditions:
• be incurred in the direct interest of the business or be connected with the normal management of the business;
• be supported by invoices
• result in a decrease in the company’s net assets;
• be included in the expenses of the financial year in which they were incurred;
• not be excluded from deductible charges by law ;
• not be considered as an abnormal act of management.
An abnormal act of management is deemed to be any act which places an expense or loss at the expense of the company or which deprives the latter of revenue without the act being justified by the interests of the commercial operation.
It is an act carried out in the interest of a third party in relation to the undertaking or which brings to this undertaking only a minimal interest out of proportion with the advantage that the third party may derive from it, in particular:
• payments in the form of increases or reductions in purchases or sales;
• the payment of excess or unrequited royalties;
• waivers of revenue (sale at a reduced price, provision of free services, granting of interest-free loans or loans with insufficient interest);
• write-offs of debts or commissions;
• debt forgiveness;
• benefits out of proportion to the service rendered.
The General Tax Code specifically lists expenses that are (and are not) deductible.
Salary/Remuneration
Article 11-I provides for a deduction for general expenses of any nature, the expenses of personnel and labor, social contributions, expenses relating to premises, equipment and furniture, miscellaneous and exceptional expenses, insurance premiums, donations and subsidies.
Article 11-I 1-a.states that the remuneration allocated to an employee is allowed as a deduction only to the extent that it corresponds to actual work and is not exaggerated.
This provision applies to all remunerations including allowances, , maternity benefits and reimbursement of expenses. If the remuneration does meet these requirements it is classed as a distribution of profits.
Social contributions paid to foreign pension funds by enterprises are allowed as a deduction when they are compulsory and up to a limit of 15% of the gross salary allocated to the social insurance.
Contributions paid voluntarily by enterprises in favour of their employees for the constitution of capital or an annuity at the time of their retirement are allowed as deductions up to a limit of 10% of the gross salary allocated to the insured person, provided that these contributions are paid to life insurance companies or commercial banks established in Gabon and approved for this purpose by the Ministry of Finance.
Head Office Expenses
Article 11-I-1-f provides for a deduction for head office expenses incurred on operations carried out in Gabon.
This is limited to 5% of the taxable profit before deduction of the costs in question. This also includes study costs, technical, financial or accounting assistance costs, commissions and fees, interest, arrears and other proceeds from bonds, receivables, deposits and guarantees, rendered to Gabonese companies by foreign natural or legal persons.
This limitation does not apply to the costs of technical assistance and studies relating to the assembly of plants.
Royalties
Royalties for the use of patents, licences, trademarks, designs, manufacturing processes, models and similar rights are deductible up to a limit of 5% of the taxable profit before deduction of the amount of the repayments in question. The 2024 Finance Law extended this to include the use or concession of the use of industrial, commercial or scientific equipment.
Expenses paid to a natural or legal person CEMAC are allowed only if the debtor proves that they correspond to actual transactions, that they are not abnormal and that they are not exaggerated.
Commissions
Commissions or brokerage payments on goods purchased on behalf of enterprises located in Gabon are allowed as a deduction from taxable profits up to a limit of 5 per cent of the amount of the purchases.
Rental Payments
Article 11-I-2 of the General Tax Code provides that rental payments are deductible providing they do not exceed the average of the rents charged for buildings or similar installations.
Insurance Premiums
Article 11-I-4 of the General Tax Code provides that the following insurance premium payments are deductible for the part attributable to operations carried out in Gabon:
• insurance premiums contracted for the benefit of the company to cover risks the realisation of which directly and by itself leads to a reduction in the net assets;
• insurance premiums constituting in themselves an operating expense;
• health insurance premiums paid to local insurance companies for the benefit of staff when reimbursements of expenses of this nature for the benefit of the same persons are not included in the deductible expenses.
Gifts/Donations
Gifts and donations are generally not tax deductible under Article Art.11-I-5 of the General Tax Code. However, payments to organizations of general interest, of a philanthropic, social or family nature, provided that they are located in Gabon, are allowed as a deduction as long as they are justified and within the limit of 1% of the turnover for the financial year.
Deemed Capitalized
Article 11-I-6 of the General Tax Code provides for certain costs to be deductible over a defined period. This includes:
• costs necessary to the acquisition of a plot of land, in particular registration fees, fees, commissions and deed costs, are subject to depreciation over a period of five years.
• real estate expenses excluding prospecting costs and redemption premiums are deductible over a period of five years at a rate of one fifth per financial year.
• costs of prospecting and evaluating mineral resources considered as intangible assets are subject to amortization from the first financial year of entry into production.
Research Costs
Under Article 11-I-6-d of the General Tax Code, applied research costs are allowed as a deduction from taxable income.
However, the costs of basic research are only allowed as a deduction up to 20% per financial year. This is subject to a Ministerial Regulation.
Finance Costs
Article 11-II-1 of the General Tax Code provides that interest, commissions, and other bank charges are deductible, as long as they meet the general conditions for the deductibility of expenses.
However, this deduction is subject to the condition that the capital has been fully paid up.
Interest relating to sums left or made available to a company by a company linked, directly or indirectly is deductible subject to a thin capitalisation rule.
A company is thinly capitalized if the amount of interest paid by it to all the affiliated companies exceeds, simultaneously in respect of the same financial year, the following three limits:
1° the income corresponding to the amount of said interest multiplied by the ratio between one and one time to the amount of equity capital, assessed at the choice of the company at the beginning or end of the financial year and the average amount of the sums left or made available by all the affiliated companies;
2° the amount of interest paid to this company by affiliated companies;
3° 25% of the current profit before taxes previously increased by the interest, the depreciation taken into account for the determination of the same result and the share of leasing rents taken into account for the determination of the sale price of the asset at the end of the contract.
The portion of the interest exceeding the highest of these limits may not be deducted in respect of that financial year.
The fraction of interest that is not immediately deductible may be deducted in respect of the following financial year up to the difference calculated, for that financial year, between the limit mentioned in point 3 and the amount of interest allowed for deduction.
The balance not charged at the end of the financial year concerned is deductible in respect of subsequent financial years in compliance with the same conditions, subject to the deduction of a 10% discount applied at the beginning of each financial year.
Under Article 11-II-2-b of the General Tax Code, interest relating to sums from a related company is not deductible if it is paid to a company established in a non-cooperative State or territory or with preferential taxation.
Interest on loans granted for the production of a fixed asset is included in the acquisition cost of the fixed asset and is not allowed as deductible expenses.
Depreciation
Art.11-V-a of the General Tax Code provides for a deduction for depreciation based on the probable useful life.
The depreciation rates are set as follows:
Buildings:
• Constructions made of sustainable materials: 5%
• Commercial, industrial, garage, workshop, shed, road and traffic areas: 5%
• Processing cabins: 5%
• Waterfall facilities, dam: 5%
• Factories: 5%
• Residential houses: 5%
• Lime kilns, plaster: 10%
• Electric ovens: 10%
• demountable or temporary buildings: 20%
Material and tools:
• Steam boiler: 5%
• cement tank: 5%
• Paper and cardboard machines: 5%
• Hydraulic presses: 5%
• Petroleum refining equipment: 10%
• presses, compressors: 10%
• oil tanks: 10%
• Heavy power transformers: 10%
• turbines and steam engines: 10%
• mechanical mixers, mixers: 10%
• Excavators: 10%
• Brewery, distillation or winemaking vats: 10%
• Purification and sorting equipment: 10%
• Laminating and dewatering equipment: 10%
• Light machine tools, lathes, mortisers, planers, drills: 15%
Electric power transmission lines:
• in final materials: 15%
• Temporary materials: 20%
• wood-cutting appliances: 20%
• Factory equipment including machine tools: 20%
• Pneumatic hammers: 20%
• Hole punches: 20%
• Stationary Factory Equipment: 33.33%
• Small tools (hand tools) and computer software: 100 %
Transportation Equipment:
• Large cranes: 5%
• Freight cars: 5%
• railways: 5%
• Lift vehicles (port equipment): 20%
• Naval and air equipment: 20%
• Transport kegs (beer, wine): 20%
• Metal transport drums: 20%
• containers: 20%
• Automotive equipment used in the city: 20%
• tractors: 20%
• carts: 25%
Tractors used by foresters:
• Offices or other furniture: 10%
• Office equipment: 15%
• Computer equipment: 25%
• Reprography equipment: 33.33%
Hotels, cafes, restaurants:
• stove: 10%
• Silverware: 20%
• Decorative Fittings: 20%
• Carpets, curtains, drapes: 20%
• refrigerators, air conditioners: 20%
• Kitchen stoves: 20%
• lingerie: 33.33%
• glassware, crockery, cooking utensils: 50%
Plastics (molding):
• Compression presses: 10%
• Transfer presses: 10%
• preheaters or ovens: 20%
• lozenges: 20%
• injection molding machines: 20%
• gelling and socking machines: 20%
• vacuum forming machines: 20%
• metallizing machines: 20%
• Welding and cutting machines: 20%
• Mussels: 33.33%
Materials subject to the action of chemicals:
• digesters, diffusers: 20%
• Product recovery devices: 20%
• Laundry appliances: 20%
• Cooking appliances: 20%
Special depreciation:
• fishing equipment: 15%
• fishing vessel: 15%
• Light car rental equipment without driver or driving school: 33.33%
• Heavy automotive equipment or equipment used in the bush: 33.33%
Furniture, fixtures and fittings:
• Layouts, fittings, installations: 10%
Accelerated Depreciation
Article 11-V-b of the General Tax Code provides that new equipment and tools may be subject to accelerated depreciation when they meet the following conditions:
• be normally usable for 3 years or more;
• have a value of at least 20,000,000 FCFA;
• be used exclusively for:
o industrial operations of manufacturing, handling, transport, agricultural and forestry operations;
o building land development operations in urban areas, intended for the construction of socio-economic housing, carried out by public and private developers duly approved for this purpose;
o the construction of housing of a socio-economic nature carried out by public and private developers duly approved for this purpose.
Where these requirements are met, the amount of the first years depreciation is twice that calculated on the basis of the period of use, the depreciation period will consequently be reduced by one year.
Special depreciation rates apply to assets acquired by companies exploiting and processing natural resources.
Depreciation that cannot be utilised as a deduction as a company is loss-making can be carried forward indefinitely under Article Art.11-V-e of the General Tax Code.
Provisions
Art.11-VI of the General Tax Code provides that the following provisions are allowable:
• provisions made to meet losses or depreciation of an asset or expenses which, if they had occurred during the financial year, would normally have been deductible from taxable profits for that financial year;
• losses or expenses that are clearly specified and that current events make probable.
Provisions on irrecoverable debts may normally be deducted from the results of the financial year in which their loss is certain and definitive, or from the financial year at the end of which their compromise is justified by the debtors’ situation.
However, credit institutions are permitted to make provisions on doubtful debts relating to leasing and rent-to-own transactions, up to the full amount.
Provisions made for exchange losses are not allowed as a deduction from taxable income. The same applies to provisions relating to foreign exchange hedging.
Tax Losses
Article 11-IV of the General Tax Code provides that unutilised losses can be carried forward for up to 5 financial years.
Withholding Tax
Article 22 of the General Tax Code that suppliers of logs are subject to a withholding tax of:
• 5% of the gross amount of the invoices for the first operating area, of which 1.5% may be applicable to tenant farming;
• 2.5% of the gross amount of invoices for the other zones, of which 1.5% may be applicable to the closure.
Article 23 of the General Tax Code provides that sums paid as remuneration for their activities to service providers subject to corporation tax but not subject to VAT are subject to a withholding tax of 9.5% from the share of the company that is the beneficiary.
A company located in Gabon whose shares are transferred or sold is subject to a 20% withholding tax on the capital gain.
Article 116 of the General Tax Code provides for a 20% final withholding tax income from moveable capital for a company.
However, a participation regime applies to reduce this to 10% where:
• the shares or interest units held by the parent company represent at least 25% of the capital of the subsidiary company;
• that the parent companies and their subsidiaries have their registered office in the territory of the CEMAC;
• that the shares or interest units allocated at the time of issue have always remained registered in the name of the participating company and that the latter undertakes to hold them for at least two consecutive years in registered form.
Article 116 bis of the General Tax Code provides for a branch profits regime so that the net income, after corporate tax tax, realized by one or more permanent establishments established in Gabon belonging to a joint-stock company or limited liability company having its registered office abroad, is subject to a 20% withholding tax. This is reduced to 10% when the establishment belongs to a company resident in a country that has signed a tax treaty with Gabon.
Transfer Pricing
Article 12 of the General Tax Code states that any form of advantage or benefit granted to third parties without equivalent compensation for the company, comparable to abnormal acts constitutes a transfer of profits liable to corporation tax.
In addition, it provides that for the purpose of establishing the corporation tax payable by enterprises which are dependent on or have control of enterprises situated outside Gabon, the profits indirectly transferred to the latter, either by increasing or decreasing the purchase or selling prices, or by thin capitalization, or by any other means, are be incorporated in the taxable income of the Gabon entity.
The condition of dependency or control is not required when the transfer is made with enterprises established in a foreign State or in a territory outside Gabon whose tax regime is privileged, or in a non-cooperative country.
CFC Rules
None