Guinea: Global Tax Guide

Legislation

General Tax Code (2022)

2024 Finance Law

2023 Finance Law

Residence/Territorial Scope

Article 223 of the General Tax Code provides that corporate income tax applies to profits made in Guinea by companies that are tax resident in Guinea or by their permanent establishments in Guinea.

Where an enterprise which is resident overseas has a permanent establishment in Guinea, the profits attributed to that permanent establishment are those which the permanent establishment could have realized if it had set up a separate enterprise carrying on the same or similar activities under the same or similar conditions and dealing independently with the enterprise of which it constitutes a permanent establishment.

Permanent Establishment

Article 15 Ter – I of the General Tax Code provides that a permanent establishment is:

• a place of business through which the company carries out all or part of its activity;
• a dependent agent.
A dependent agent is an agent who acts on behalf of a foreign company and who:
• has powers in Guinea that he usually exercises there, allowing him to conclude contracts on behalf of this company; or
• habitually operates a stock of goods or merchandise in Guinea on behalf of that enterprise.

A place of business in Guinea is defined as:

• a place of management;
• a branch office;
• an office;
• a factory;
• a workshop;
• a mine, oil or gas well, quarry, or other natural resource extraction site;
• a construction project, an assembly or installation project or supervision activities related to the project, where the construction project, project or activities last for more than 6 months;
• the provision by an enterprise of services, including consulting services, through employees or personnel engaged by the enterprise for that purpose, where the activities continue (for the same or a related project) in Guinea for a period or periods totalling more than 183 days of a 12 month period beginning or ending in the relevant year.

However, the following do not constitute a permanent establishment:

• the use of facilities for the storage or display of goods or goods belonging to the company;

• the exploitation of a stock of goods or merchandise belonging to the company for the sole purpose of storage or display;

• the exploitation of a stock of goods or merchandise belonging to the company for the sole purpose of processing by another company;

• the operation of a fixed place of business for the sole purpose of purchasing goods or gathering information for the company;

• the operation of a fixed place of business for the sole purpose of carrying out any other activity of a preparatory or ancillary nature for the undertaking.

An insurance company (except in the case of reinsurance), is considered to have a permanent establishment in Guinea if it collects premiums there or if it insures against risks there through a person other than an agent enjoying an independent status.

An enterprise is not considered to have a permanent establishment in Guinea merely because it carries on its activity there through a broker, a general commission agent or any other agent enjoying an independent status, provided that the persons are acting in the ordinary course of their activity. However, where that agent acts wholly or almost entirely on behalf of that undertaking and that agent and that agent conditions are established or imposed, in their commercial and financial relations, which differ from those which would have been established between independent undertakings, that agent is not be regarded as an agent enjoying an independent status.

Entities Within Scope

Article 220 of the General Tax Code provides that the following are liable to corporate income tax:

• public limited companies, including single-member companies;
• limited liability companies, including single-member companies;
• simplified joint-stock companies, including single-member companies;
• investment companies with fixed capital or variable capital;
• cooperative societies and their unions;
• civil partnerships that engage in commercial, industrial, artisanal or agricultural operations or operations;
• public establishments, State or local authority bodies, which enjoy financial autonomy and engage in a profit-making activity;
• all other legal persons engaged in profit-making operations or operations, or which would not be subject to any other tax on profits, including non-resident entities with a permanent establishment in Guinea.

The following can make an option to be subject to corporate income tax:

• general partnerships;
• limited partnerships;
• economic interest groupings (EIGs);
• joint ventures;

Corporate Income Tax Rates

Under Article 229 of the General Tax Code, the rates of corporate income tax are:

• 35% for telephone companies, banks and insurance companies and companies importing, storing, storing and distributing petroleum products;
• 30% for companies holding a mining exploration permit or a mining title;
• 25% for other legal entities.

Note that when calculating the corporate income tax, any fraction of the taxable profit less than 1,000 Guinean francs is disregarded.

Taxable Income and Allowances

Under Article 92 of the General Tax Code, taxable profit is the net profit, determined on the basis of the overall results of operations of all kinds carried out by the company, including in particular the disposal of any element of the assets, whether in progress or at the end of their operation.

The net profit is made up of the difference between the values of the net assets at the end and at the beginning of the period the results of which are to be used as the basis for the tax, less any additional contributions and increased by the deductions made during this period by the operator or by the partners. Net assets are defined as the excess of asset values over the total liabilities of third-party receivables, depreciation and provisions.

Stock is valued at cost price or at the rate on the closing day of the financial year, if this price is lower than the cost price. Work in progress is valued at cost price.

Foreign currency translation differences and foreign currency-denominated receivables and payables relative to the amounts originally recognized are determined at the end of each financial year according to the last exchange rate and taken into account for the determination of the taxable result for the financial year.

Note that under Article 92 Bis of the General Tax Code, income corresponding to sales of quoted goods may not be less than an amount equal to:

• the weight or quantity of these goods;
• multiplied by the official price of these goods on the day of their sale;
• adjusted, if necessary, according to the quality of these goods.

However, where the goods are exported directly after production, the date of the price to be used is the day of export as determined by the customs authorities.

Exemptions

Under Article 221 of the General Tax Code, the following are permanently exempt from corporate income tax:

• cooperative societies and their unions,:
• cooperative supply and purchasing companies;
• consumer cooperative societies;
• companies, bodies, cooperatives and associations recognised as being of public utility responsible for rural development or agricultural promotion;
• cooperative construction societies;
• local authorities, their groupings, as well as their public service boards
• the chambers of commerce, industry, crafts and agriculture;
• certain non-profit organisations;
• private clubs and clubs for their activities other than bar, catering and gaming.

Article 222 Bis provides that approved management centres benefit from an exemption from corporate income tax during their first 3 years of activity.

Parent and subsidiary regime

Under Article 225 of the General Tax Code, the net income from the shareholdings of a parent company in the capital of a subsidiary company is deducted from the total net profit after deduction of a representative share of costs and charges.

The share is fixed at 5% of the total income from the holdings but may not exceed, for each tax period, the total amount of costs and charges of any kind incurred by the participating company during that period.

This applies providing the following conditions are met:

• the parent company and the subsidiary company must be incorporated in the form of joint stock or limited liability companies;
• the parent company must have its registered office in Guinea and be liable to corporate income tax;
• the equity securities held by the parent company must be in registered form or, in the case of bearer securities, be deposited in an establishment approved by the Tax Authorities;
• the equity securities held by the parent company must represent at least 10% of the capital of the subsidiary company;
• the equity securities held by the parent company must have been subscribed to at the time of issue or the participating company must have made a written commitment to keep them for a period of 2 years.

Mergers of companies and similar operations

Under Article 226 of the General Tax Code, capital gains realized by the absorbed company on the assets contributed during a merger are exempt from Corporate Tax, with the exception of capital gains resulting from the contribution of goods.

Capital gains, other than those realised on goods, resulting from the free allocation of shares following a merger of joint stock or limited liability companies are exempt from Corporate Tax.

The same applies when a joint-stock or limited liability company provides:

• all of its assets to two or more companies constituted for this purpose in one of these forms, provided that the beneficiary companies are tax resident in Guinea;
• part of its assets to another company formed in one of these forms, provided that the company receiving the contribution is resident for tax purposes in Guinea.

Capital Gains Reinvested

Under Article 105 of the General Tax Code, capital gains arising from the sale during the course of operations of fixed assets are not included in the taxable profit of the financial year in which they were realised if the taxpayer undertakes to reinvest in fixed assets in his operations in Guinea, before the expiry of a period of 3 years from the end of that financial year, a sum equal to the amount of these capital gains increased by the cost price of the items sold.

Deductions

Article 93 of the General Tax Code provides that taxable profit is determined after deduction of any costs or charges that satisfy the following conditions:

• be incurred for the purposes of the trade or activity;
• not be excessive;
• correspond to an actual charge and be supported by invoices;
• be properly recorded in the expenses of the year in which they were incurred;
• result in a decrease in the company’s net assets.

Article 94 of the General Tax Code provides that, in particular, the following are deductible: general expenses of any kind, personnel and labour expenses, the rent of buildings of which the company is a tenant, expenses for the repair and maintenance of business premises and equipment, excluding expenses for extension or transformation that must be capitalized.

However, direct or indirect remuneration, including allowances, allowances, benefits in kind and reimbursement of expenses allocated by companies, is allowed as a deduction only to the extent that it corresponds to actual work and is not excessive in view of the importance of the service rendered.

Insurance Premiums

Under Article 96 of the General Tax Code, insurance premiums covering occupational risks or constituting an operating expense are deductible. However, companies that set up their own insurer cannot deduct the provisions they make in this respect for the tax base. In addition, life insurance premiums contracted for the benefit of company directors and salaried staff of the company are not deductible for the tax base.

Finance Expenses

Article 97 of the General Tax Code provides that financial expenses are deductible as long as they meet the general deductibility conditions and provided that withholding taxes have actually been applied.

However, interest on capital employed by the operator and sums of any kind paid as remuneration for the company’s own funds, whether capitalised or set aside, are not allowed as a deduction from the profit subject to tax.

In addition, the interest awarded to the members of companies in respect of the sums they leave or make available to the company in addition to their share of the capital, regardless of the form of the company, is deductible only up to the limit of that calculated at the central bank’s key rate. This deduction is subject to the condition that the company’s capital has been fully paid up, whether it is a question of company incorporation or capital increase.

Interest paid to the partners or shareholders who have the management of the company in law or in fact is deductible only when the sums left or made available to the company do not exceed, for all the said partners or shareholders, the amount of the paid-up share capital.

Art. 97 A of the General Tax Code includes an interest limitation rules so that when an entity borrows from a related entity, the loan interest is deductible up to 15% of the borrowing entity’s restated profit or loss.

For this purpose, the the entity’s restated profit or loss is the entity’s net income from ordinary activities to which are added:

• deductible interest expenses deductible pursuant to Article 97;
• the Tax on Industrial or Commercial Profits, the Corporate Income Tax and the Flat-Rate Minimum Tax;
• deductible depreciation provisions;
• deductible depreciation charges.

Entities are related, under Article 87B of the General Tax Code, when an entity:

• directly or indirectly holds a relative majority of the share capital of the other; or in fact exercises decision-making power (de facto dependence);
• or when both entities are placed, both under the conditions defined above, under the control of a common entity.

Provisions

Article 98 of the General Tax Code provides that provisions made in order to meet clearly specified losses or charges and which current events make probable, are deductible, provided that they have actually been recorded in the accounting entries for the financial year and are included in the statement of provisions.

Donations and Gifts

Tips, donations and gifts are not deductible, unless they benefit works or organizations of general interest of a philanthropic, sporting, scientific, social or family nature, established or domiciled in Guinea and are within the limit of 1.5 % of turnover.

Royalties

Under Article 100 of the General Tax Code, amounts paid for the use of patents, licenses, trademarks, designs, formulas, manufacturing processes and other similar rights, or as remuneration for actual services such as general headquarters expenses for the share of operations carried out in Guinea, study, technical, financial or accounting assistance expenses are allowed as deductible expenses. Where they are paid to persons who are not tax residents in Guinea, they must have been subject to withholding tax.

However, the amount allowed as a deduction is subject to a limitation, as follows:

• when the sums paid are royalties for the use of a trademark, trade name or similar right: 2% of the turnover before tax of the debtor company established in Guinea;
• when the sums paid are technical assistance and management costs, such as accounting, financial or legal assistance services or study costs and similar: 10% of the other deductible operating expenses excluding tax of the debtor company established in Guinea, incurred in respect of the same financial year;
• when the amount paid by the debtor company consists of a commission paid to an intermediary who has put it in touch with a seller or service provider: 5% of the cumulative amount excluding tax of the purchases made by the debtor company from this seller or service provider;
• where the sums paid correspond to purchases made from a central purchasing body or an entity exercising a similar function of purchasing goods or equipment with a view to reselling them to the enterprise: the cost of the purchase of these goods before tax by the central or entity plus 5%.

The general expenses of the head office of a permanent establishment in Guinea of an enterprise that is not resident in Guinea are deductible up to a maximum limit equal to 10% of the turnover attributed to this permanent establishment in Guinea.

Depreciation

Depreciation rates are provided in Article 101 of the General Tax Code, as follows:

The depreciation of vehicles registered by the National Directorate of Land Transport in the category of private vehicles is excluded from the deductible expenses for the determination of the taxable result on the basis of the fraction of their purchase price that exceeds 100,000,000 Guinean francs.

The purchase price to be used is the purchase price including all taxes increased, where applicable, by the cost including all taxes of the equipment and accessories, whether these are supplied with the vehicle or are the subject of a separate delivery.

At the end of each financial year, the sum of the depreciation and amortization expenses actually applied since the acquisition or creation of a given item may not be less than the cumulative amount of depreciation calculated on a straight-line basis and spread over the normal useful life.

Where the amount of depreciation applied exceeds the amount of depreciation that may be allowed as a deduction for the tax base, the difference must be reintegrated into the taxable profit.

Leased assets are depreciated over their normal period of use, regardless of the duration of the lease.

Leasing companies benefit from a special depreciation regime for movable property rented out. The depreciation period of these assets is deemed to coincide with the duration of the leasing contract.

The purchase price of office equipment, tools and furniture with a unit value excluding tax of less than or equal to 5,000,000 Guinean francs is immediately deductible in full.

Under Article 102 of the General Tax Code, the depreciation of new capital goods other than buildings and passenger vehicles, acquired or manufactured, may be calculated on a reducing balance basis, provided that the goods are:

• used exclusively for industrial manufacturing, handling, transport, fishing and agricultural operations; or
• intended for use for at least three years in Guinea.

The rate applicable for the calculation of reducing balance depreciation is obtained by multiplying the straight-line depreciation rate corresponding to the normal useful life of the asset by a coefficient set at 1.5 when the normal useful life of the asset is three or four years, 2 when that period is five or six years, and 2.5 when the useful life of the asset is more than six years.

Tax Losses

Under Article 107 of the General Tax Code, unutilised tax losses can be carried forward indefinitely for offset up to 70% of the taxable profit for following years.

Withholding Tax

Article 198 of the General Tax Code applies a withholding tax on payments made by a person established in Guinea to a natural or legal person who does not have tax residence in Guinea that are paid as remuneration for the provision of services.

A person established in Guinea established in Guinea means:

• any person who is tax resident in Guinea;
• any company that has its place of effective management in Guinea;
• any company that has a permanent establishment in Guinea;
• the Guinean State;
• a local government in Guinea.

The rate of the withholding tax is 15% of the gross amount of the sums paid.

Article 187 of the General Tax Code provides that (subject to the terms of an applicable double tax treaty), income from movable capital of Guinean source paid in Guinea and received by persons who their tax residence or place of effective management outside Guinea are subject to a withholding tax equal to 15% of the gross amount of the income distributed.

This also applies to income distributed by companies liable to corporation tax in Guinea and which is in the nature of income from shares or similar income.

Under Article 188 of the General Tax Code, subject to the provisions of a double tax treaty, the profits made in Guinea by foreign companies with a permanent establishment in Guinea are deemed to be distributed, in respect of each financial year, to the main entity owner who does not have their tax residence or their place of effective management in Guinea.

The profits deemed to be distributed are subject to withholding tax at the rate of 15%.

Under Articles 189 and 190 of the Tax Code, a 15% withholding tax also applies to income from variable-income or fixed -income investments when paid:

• to natural persons having their tax residence in Guinea;
• to legal persons not subject to corporate income tax having their place of effective management in Guinea.

However, withholding tax for fixed-income investments does not apply to interest from savings accounts or term deposit accounts of more than 3 months from banking institutions.

Transfer Pricing

Articles 117-117 Ter of the General Tax Code include transfer pricing provisions.
Article 117 of the General Tax Code provides that for the purposes of establishing the corporate income tax liability , the following must be included in taxable income:

• profits indirectly transferred by way of increase or decrease in purchase or sale prices, or by any other means, to related entities, established in Guinea or outside Guinea;
• profits indirectly transferred by way of an increase or decrease in purchase or sale prices, or by any other means, to entities established in a privileged tax regime in a foreign State.

There is deemed to be an indirect transfer of profits where there is an increase or decrease in the purchase or sale prices or by any other means where the price of the transactions concerned differs from the arm’s length price. This includes:

• payments in the form of an increase or reduction in purchases or sales;
• excessive royalty payments;
• loans without interest or at reduced or increased rates;
• debt forgiveness;
• benefits out of proportion to the service rendered.

An entity is deemed to be established in a foreign State with a privileged tax regime under Article 117 Bis of the General Tax Code if it is subject to taxes on profits or income more than half of the amount of the tax on profits or income for which it would have been liable in Guinea.

CFC Rules

None