Conakry GMT
EY
Immeuble d’Archevêché Corniche Sud Conakry — BP 1762 Guinea
Indirect tax contacts
Mariama ciré Traore +224 628 93 04 15 mariama-cire.traore@gn.ey.com
Rouguiata Diallo +224 624 01 64 02 +224 628 93 04 20 rouguiata.diallo@gn.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Taxe sur la valeur ajoutée (TVA)
Date introduced 28 December 1995
Trading bloc membership Economic Community of West African States - ECOWAS (Communauté Economique des Etats d’Afrique de l’Ouest – CEDEAO)
Administered by National Tax Office (Direction Nationale des Impôts)
VAT rates
Standard 18% Other Zero-rated (0%) and exempt
VAT number format 987654321-4V
VAT return periods
Monthly Thresholds
Registration Annual turnover reaching GNF1 billion
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the following transactions:
• Deliveries or sales of goods
• Supplies of services or assimilated operations carried out or used in Guinea, even if the taxable person is not located in Guinea
• Importations of goods in Guinea
C. Who is liable
Individuals or legal entities that usually or occasionally realize taxable operations with an annual turnover equal or superior to Guinean franc (GNF) 1 billion (approximatively USD105,000) for the sales of goods and supplies of services are subject to VAT. A taxable person that reaches this threshold must register itself for VAT purposes.
Exemption from registration. In Guinea, according to the new tax code (due to enter into force from 1 January 2022), the following are exempted from VAT registration:
• Entity or person with a turnover of less than GNF1 billion during the previous year
• Entity or person who, having realized a turnover equal to or greater than GNF1 billion, has recorded a decrease in their GNF1 billion and has recorded a decline in their turnover below this threshold for two consecutive years.
Voluntary registration and small businesses. When companies’ turnover does not reach the mandatory registration threshold, companies may, with the authorization of the Head of the Tax Office, place themselves in the scope of VAT if their annual turnover, or that their investments made or estimated for the current fiscal year reach a turnover of GNF500 million.
Group registration. Group VAT registration is not allowed in Guinea.
Non-established businesses. A “non-established business” is a business that has no permanent establishment in the territory of Guinea. All the transactions performed in Guinea are subject to VAT, even if the taxable person is not domiciled in Guinea. In this respect, transactions are deemed performed in Guinea as regard to services when it is carried out (performed) or used in Guinea even if the supplier does not have a permanent establishment in Guinea.
As such, a non-established business must register for VAT through a tax representative when it exceeds the registration threshold (see above). The exemption from registration rules also apply for non-established businesses.
Tax representatives. Non-established businesses must appoint a Guinean tax representative. Failing that (meaning if no tax representative is appointed), it is the Guinean or local client that shall be considered as tax representative and shall be liable for the VAT and corresponding pen alties.
Reverse charge. For services provided by non-established businesses, VAT is paid through the reverse-charge mechanism. The reverse-charge mechanism is only used if the supplier has no permanent establishment in Guinea.
The nonresident service provider will establish its invoices, VAT excluded, and it will be up to the tax representative or local client to then calculate the corresponding VAT amount, declare and pay it on behalf of the service provider.
Domestic reverse charge. There are no domestic reverse charges in Guinea.
Digital economy. Nonresident providers of electronically supplied services in Guinea for busi ness-to-consumer (B2C) supplies are required to register and account for VAT on the supplies in Guinea.
Nonresident providers of electronically supplied services in Guinea for business-to-business (B2B) supplies are not required to register and account for VAT on the supplies in Guinea. Instead, the customer is required to self-account for the VAT due by way of the reverse-charge mechanism (see the Reverse-charge subsection above).
There are no other specific e-commerce rules for imported goods in Guinea.
Online marketplaces and platforms. The new tax code (due to enter into force from 1 January 2022), outlines new provisions regarding a regime for services performed via e-commerce platforms.
The regime outlines that, when a service is provided via an e-commerce platform, whether or not the provider is established in Guinea, where the service provider is in contact with the customer, whether or not they are a taxable person (i.e., for both B2B and B2C supplies), and the customer is established in Guinea, the platform is deemed to act as both purchaser and seller of the service provided, even if it acts as a transparent intermediary.
This means that the platform and service providers are jointly and severally liable for the VAT due on the supply made. The platform is therefore required to register and account for VAT in Guinea. However, where the supplier is not established in Guinea and the platform is established in Guinea, the latter is liable for the VAT on this transaction through the reverse-charge mecha nism (see the Reverse-charge subsection above).
Registration procedures. The application for the VAT registration should be made by a written request accompanied by a copy of the following documents: The opening balance sheet or copy of its financial statements, company’s articles of association, the last three monthly tax returns and corresponding receipts of payment, the tax registration certificate, the registration certificate with the Trade Register and the proof of the company’s location or address. Moreover, it must prove to have realized during the previous or current year a turnover of at least GNF500 million.
Deregistration. Taxable persons must notify to the tax administration the termination of their activities and proceed with the cancellation of their tax registration number in the register of the tax office after compliance of the legal formalities.
Changes to VAT registration details. The taxable person that modifies its registration details (name, address, business activity, etc.) must report it in writing (paper) to the tax administration.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a VAT rate, including the zero-rate.
The VAT rates are:
• Standard rate: 18%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• Exports
• International transport of goods and persons from or to foreign countries
• Certain operations involving commercial vessels
• Operations on aircraft used by airlines whose services to or from foreign countries represent at least 80% of the services they operate (i.e., deliveries, repairs, alterations, maintenance, charters and rentals of such aircraft, etc.).
The term “exempt” refers to supplies of goods and services that are not liable to tax and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Sales and imports of stamps
• Operations within the scope of the tax on financial activities
• Operations within the scope of the tax on insurance: Operations relating to the transmission of real properties and tangible personal properties subject to registration fees, except from the operations of the same nature conducted by the real estate merchants of goods or those of leasing
• Sale of used goods
• Transfers of shares, stocks and bonds
• Rental of buildings for residential use excluding, among others, accommodation operations carried out within the hotel sector.
• Sales, imports, prints and compositions of periodical publications printed whatever their names (newspaper or magazine) mainly composed of text relating to news and information of general interest excluding the advertising incomes
• Services or operations of a social, educational, sporting, cultural, philanthropic or religious character delivered by non-lucrative organizations of which the management is voluntary and selfless. However, the operations conducted by these organizations are taxable when they are in a competitive sector
• Certain foodstuffs: Rice Wheat Flour and additives used in its production Bread Nutritious oils Palm oil
Non-frozen fish
Heavy fuel oil used in boilers for the production of electricity
Inputs for the production of fertilizers and the packaging used for their conditioning
The social slice of water and electricity consumption charged to households
Sales by their authors of original works of art
• Pharmaceutical products
• Fertilizers and pesticides
• Books and school supplies
• Sales of used goods made by the people who have used them for the needs of their exploitation
• Care services provided to persons by members of the medical and paramedical professions approved by the Minister of Health
• Hospitalization and medical care provided by public or private hospitals or similar organizations, provided that such establishments or organizations are approved by the Minister of Health
• Transportation of sick or injured persons, by means of specially equipped vehicles, by profes sions licensed by the Minister of Health of Health
• Delivery of human organs, blood and milk
• Sale of specialized equipment for medical activities
• School or university teaching services provided by public or private establishments or similar bodies, provided that these establishments or bodies are approved by the Minister of Education
• Agricultural materials and equipment, the list of which is established by joint order of the Ministers of Finance and Agriculture, with the exception of vehicles for transporting people or for mixed use
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Guinea.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” As a general rule in Guinea, VAT tax point occurs for:
• Goods – at the delivery time for sales and deliveries
• Services and business carried out with the state or local authorities – at the time of payment of the price or installments
• Discount of a negotiable instrument/commercial bill — on the expiry date of the bill
The new general tax code provided details on the liability for VAT for certain categories of trans actions, such as the discounting of commercial bills (the tax point is the due date), transfer of receivables (the tax point is the payment of the receivable) and services provided against payment in kind (the tax point is at the time of the chargeable event), etc.
Deposits and prepayments. For advance payments and deposits, the tax point is the date on which the advance payment is received for services.
Continuous supplies of services. There are no special time of supply rules in Guinea for continu ous supplies of services. As such, the general time of supply rules apply (as outlined above).
Goods sent on approval for sale or return. There are no special time of supply rules in Guinea for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. The time of supply for reverse-charge services is at the time of payment.
Leased assets. There are no special time of supply rules in Guinea for supplies of leased assets. As such, the general time of supply rules apply (as outlined above).
Imported goods. The time of supply for imported goods is at the time of release for consumption in Guinea.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax incurred in relation to the acquisition of goods and ser vices necessary for the business. In this respect, VAT amounts paid to suppliers (including under the reverse-charge mechanism) are deductible the month following their occurrence and are offset against output tax. So, a taxable person recovers input tax by deducting it from output tax charged on the supplies of goods or services carried out, as well as tax paid on the import of goods. The right to deduct arises when the tax becomes chargeable to the taxable person.
The time limit for a taxable person to reclaim input tax in Guinea is no later than 31 December of the year following the date of the omission. The new tax code states that the taxable person who has forgotten to report the VAT invoiced to it on its return, can regularize the situation on subsequent returns no later than 31 December of the year following that of the omission, pro vided it provides proof of payment of the invoices in support of its claim.
Nondeductible input tax. The Guinea tax code outlines the detail for what input tax is nondeduct ible in Guinea. Any of the VAT related to the expenses listed below cannot be recovered for VAT purposes.
Examples of items for which input tax is nondeductible
• Expenditure on housing, accommodation, catering, reception, entertainment, car rentals, pas senger transport (except for the expenses incurred in respect of their taxable activity by the professionals in hotels, catering and entertainment)
• Goods transferred without compensation or for fees that are lower than the normal price
• Services relating to goods excluded from the deduction right
• The services of renting vehicles for the transport of people or for mixed use
• The services of transport of persons
• Purchases of petroleum products. However, the VAT borne on petroleum products is deductible up to 90% when the latter are used for the needs of the transactions entitling the taxable person to deduction as fuel by fixed appliances or as manufacturing agents in an industrial process. Also, VAT on petroleum products imported by authorized distributors and intended for resale in the same state is fully deductible
• The delivery to oneself under certain conditions
• Telephone and internet expenses, with the exception of businesses and companies whose purpose is directly related to telephone and internet services
• The tax charged on vehicles or machine whatever their nature, designed or adapted for the car riage of persons or for mixed uses, as well as the spare parts and accessories of such vehicles and equipment with the exception of:
Road vehicles, including also the driver’s seat, more than eight seats used by companies exclusively for the carriage of their staff
Fixed assets of companies performing vehicle rental or public transport of persons
Examples of items for which input tax is deductible (if related to a taxable business use)
• Cars intended for business use only (i.e., company cars)
• Office supplies or equipment
• Petroleum products used by fixed appliances such as fuels or processing agents in industrial enterprises (up to 90%)
• Fixed assets of companies performing vehicle rental or public transport of persons
• Imported goods
Partial exemption. Input tax directly related to supplies of goods or services not subject to VAT is not generally recoverable. If a Guinean taxable person makes both exempt and taxable sup plies, it may not recover input tax in full. This situation is referred to as “partial exemption.” This fraction is determined via a pro rata method according to which VAT is only deductible in the same ratio as the total transactions subject to VAT (whether they are actually taxed or exported) vs. the total turnover realized by the company (composed by taxable and exempt operations).
The deduction percentage is as follows:
• 100% if the ratio is greater than 0.90
• 80% if the ratio is greater than 0.70 or equal to 0.90
• 60% if the ratio is greater than 0.50 or equal to 0.70
• 40% if the ratio is greater than 0.30 or equal to 0.50
• 0% if the ratio is less than 0.30
Approval from the tax authorities is not required to use the partial exemption standard method in Guinea. Special methods are not allowed in Guinea.
Capital goods. Capital goods for VAT purposes are defined under Guinean tax code as follows:
• The goods must be necessary for the exploitation and used exclusively for its needs
• The goods acquired must be allocated to operations subject to VAT (effectively taxed or exempt ed)
Failing this (if the goods are also used for operations that are outside the scope of VAT), the tax will not be recoverable or deductible. There is no specific time limit provided by the law for input tax recovery.
To monitor input tax recovery claims on capital goods, taxable persons are required to submit at the same time as the single monthly tax return, a VAT deduction summary table, which includes the following items:
• The date and reference of the capital goods and services invoices
• The identification of the suppliers
• The nature of the goods or services provided
• The following amounts: VAT excluded, VAT and VAT included
• And the payment date of the invoices
Refunds. When, for a given tax period, the input tax exceeds the output tax, it results in a VAT credit repayable by the tax authorities. Only certain companies are entitled to a refund of their VAT credit (mining companies, oil companies, exporting companies and all companies subject to the 0% rate)
Pre-registration costs. Input tax incurred on pre-registration costs in Guinea is not recoverable.
Bad debts. There is no specific provision of the Guinean tax code that relates to the write off of bad debts. However, in practice, in the case of deliveries of goods (which the tax point is the time of delivery), some taxable persons regularize the VAT amount declared and keep all the supporting documents justifying that the debt has not been recovered and the corresponding VAT amount has been already paid.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Guinea.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Guinea is not recoverable.
H. Invoicing
VAT invoices. It is a legal requirement for a taxable person to issue a VAT invoice for each sale or supply that they make to a customer. The VAT invoice should be issued in duplicate. The original must be given to the recipient and a copy of the invoice retained by the supplier.
In addition, the invoice must clearly state, among other information, which items are taxed, the tax rate and the amount of tax being charged.
Credit notes. A credit note is sent by the supplier to notify the customer that he has been credited a certain amount due to an error in the original invoice; or decrease the agreed amount of the supply previously agreed. The information given on the credit note is the basis for establishing the adjusted VAT amount on the invoice. It also enables to adjust the figures for VAT that has been billed.
Electronic invoicing. Electronic invoicing is allowed in Guinea, but not mandatory. There is no formal prohibition of electronic invoicing in Guinea, however, the Guinean tax law does not make any specific reference to the implementation rules of electronic invoicing. As such, gener ally only paper invoices are allowed in Guinea. However, in the event of a tax audit, Guinean tax authorities may exceptionally use electronic invoices (i.e., scanned copies in this instance) when the company carries out a very large number of transactions.
Simplified VAT invoices. Simplified VAT invoicing is not allowed in Guinea. As such, full VAT invoices are required.
Self-billing. Self-billing is not allowed in Guinea.
Proof of exports. VAT is not chargeable on exports of goods or services. To qualify as VAT-free, exports must be supported by evidence that the goods have left Guinea. However, the Guinean Tax Code does not describe the required document information.
Based on the provisions of the customs code, the documents required for exports are copies of contracts, invoices, goods registration books and dispatch slips.
Foreign currency supplies. For the provision of services and the supply of goods on Guinean ter ritory, a currency conversion requirement is in place in accordance with the local exchange regulations under which payments must be only made in the domestic currency, which is the Guinean franc (GNF), at the daily rate of the Guinean Central Bank.
When invoices are linked to transactions with foreign countries, payments in a foreign currency are allowed, subject to bringing proof of such transactions.
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons in Guinea. As such, full VAT invoices are required.
Records. There are no specific record keeping requirements for VAT in Guinea. There are no specific provisions provided by the law for where the records should be held. However, it is advisable to keep them local in Guinea to address any requests from the local tax authorities.
Record retention period. The accounting documents, as well as the supporting documents (notably, purchase invoices and customs documents), of the operations carried out by the taxable
person must be kept for a period of 10 years after the year in which the transactions were recorded in the books.
Electronic archiving. The law does not refer to specific record keeping requirements for VAT for Guinea. However, the law mentions that the data can be archived digitally on the condition of ensuring the tax authorities, for audit purposes, have online access to download and use the stored data.
I. Returns and payment
Periodic returns. VAT is reported on a monthly basis (by the 15th of the month following the transaction) via the single unified tax return (Déclaration Unique des Impôts et Taxes).
Periodic payments. VAT amount due should be paid in local currency (Guinean franc) via bank transfer and the payment proof lodged together with the monthly tax return, i.e., by the 15th of the month following the transaction.
Electronic filing. Electronic filing is allowed in Guinea, but not mandatory. The VAT return can be submitted via the e-tax platform. It can also still be submitted in paper through the form “Single unified tax return.” For electronic filing, the taxable person must complete the requested information related to the following sections: output tax, input tax, VAT credit of the previous month, thirdparty VAT (output and input) and the net VAT amount payable. Also, the recapitula tive statement of the input tax must be joined to the tax return.
Payments on account. In principle, payments on account are not required in Guinea. However, an advance payment is only required for the supply of goods to the State, local authorities and public institutions. This means that the VAT is due for these supplies at the time of the partial or total collection of the price or the down payments, even if this collection occurs before the realization of the generating event.
Special schemes. The new tax code outlines details on new special regimes relating to traders in secondhand goods, the regime for distance selling of goods imported into Guinea and the regime for the provision of services rendered via electronic commerce platforms. These special schemes are subject to VAT on a case-by-case basis.
Annual returns. Annual returns are not required in Guinea.
Supplementary filings. No supplementary filings are required in Guinea.
Correcting errors in previous returns. In practice, errors or omissions in declarations from prior periodic filings can be spontaneously corrected on the tax returns of the following months. Corrections should be submitted via the e-tax platform .
Digital tax administration. There are no transactional reporting requirements in Guinea.
J. Penalties
Penalties for late registration. The taxable person must start accounting for VAT the first day of the month following the issuance date of tax registration number. Also, the VAT declaration must be filled within the 15 days of the following month. However, there are no penalties for late fill ing registration provided by the tax legislation in force.
Penalties for late payment and filings. VAT returns not submitted in time nor VAT payments made on time trigger penalties for late filings and late payment.
Penalties for errors. Inaccuracies or omissions in a VAT return shall result in the application of the following:
• 40% in the case of deliberate failure to comply, where the taxable person could not normally have been unaware of the inaccuracies or omissions of which it is accused
• 80% in case of abuse of rights, but this penalty is reduced to 40% when it is not established that the taxable person was as follows:
Had the principal initiative of the act or acts constituting the abuse of law Or
Was the principal beneficiary of the act or acts constituting the abuse of the law
• 80% in the case of fraudulent maneuvers, where the taxable person intentionally resorts to procedures or actions likely to mislead the tax authorities in order to evade taxes or to obtain unjustified refunds from the State
• 80% in the case of concealment of a portion of the price stipulated in a contract
Penalties for fraud. Notwithstanding the tax penalties and interest on arrears, the offense of tax fraud is punishable by a fine of GNF1 billion and imprisonment for one to three years, to be imposed by the competent court.
The amount of the fine is increased to GNF3 billion and five years’ imprisonment when:
• The fraud has been committed in an organized gang
• The fraud was carried out or facilitated by means of:
— Accounts opened or contracts taken out with organizations established abroad
— A false identity or false documents
— Purchases or sales without an invoice or invoices that do not relate to real transactions
— A fictitious tax domicile abroad
— A fictitious act
— The interposition of a fictitious entity
— The interposition of a natural or legal person abroad
Personal liability for company officers. Company officers cannot be held personally liable for errors and omissions in VAT declarations and reporting in Guinea.
Statute of limitations. The statute of limitations in Guinea is three years. The tax administration has three years to go back and review the returns to identify the errors. Taxable persons have 15 days to voluntarily correct errors in VAT returns.