Gabon Individual Tax Guide

Gabon

Libreville GMT +1

EY

Immeuble PREMIUM

Avenue, Colonel Parant

P.O. Box 2278

Libreville

Gabon

Executive contact

Nicolas Chevrinais

+241 011-74-21-68

Fax: +241 011-72-64-94

Email: nicolas.chevrinais@ga.ey.com

As of 18 October 2021, the exchange rate between the CFA franc BEAC and the euro is XAF655,957 = EUR1.

A. Income tax

Who is liable

Territoriality. Subject to double tax treaties entered into by Gabon with foreign countries, residents are subject to personal income tax on their worldwide income. Nonresidents are subject to tax only on their income derived from Gabon.

Definition of resident. The Gabonese General Tax Code provides that an individual is deemed to be resident in Gabon if he or she stays at least six months on average in the calendar year in Gabon or if he or she maintains his or her main residence in Gabon.

An individual is deemed to have his or her main residence in Gabon if he or she satisfies either of the following conditions:

• He or she has a home available to him or her as an owner, usu fructuary or lessee.

• He or she has his or her center of economic or vital interests or his or her habitual abode in the country.

Income subject to tax

Employment income. Taxable income includes all remuneration or compensation paid for services provided, including but not limited to, base salary, overtime, fringe benefits, allowances, and benefits in kind. Under the Gabonese General Tax Code, a deemed value for benefits in kind is included in the tax base. The deemed value equals a percentage of gross salary.

The Amending Finance Law for 2020 has modified the rate of the benefit in kind for housing from 6% to 15%. Similarly, the Amending Finance Law for 2021 introduces the total taxation of the representative indemnity of benefit-in-kind housing. These changes will be applicable from 1 January 2022.

Individuals may claim a deduction for professional expenses equal to 20% of gross salary after deduction of social contributions, capped at XAF10 million per year.

Self-employment and business income. Self-employment income is divided into the following categories:

• Commercial (including trades)

• Professional

• Agricultural

The net income from each of the above categories is combined, and the total is subject to the progressive rates set forth in Rates A withholding tax of 20% applies to remuneration paid to for eigners without a permanent establishment in Gabon for activi ties performed or services rendered in Gabon. Self-employed individuals engaged in commercial activities calculate taxable income in the same manner as companies. Taxable income equals the difference between income received, including capital gains, and expenses paid during the calendar year. The accrual method of accounting is used.

At the option of the individual, instead of calculating taxable income from commercial activities as described above, such income may be subject to simplified taxation if the gross turn over ranges from XAF30 million to XAF60 million. Individuals performing certain activities and having annual gross turnover under XAF30 million are exempt from personal income tax and must pay a fixed tax amount determined according to their activ ity.

Individuals performing certain activities and having an annual gross turnover equal to or above XAF30 million are subject to taxation on gross turnover, less a deduction equal to the follow ing:

• 70% for activities related to the purchase or resale or the pro duction of goods for sale

• 50% for the provision of services

• 40% for liberal professions and similar professions

Investment income. Dividends and interest are subject to the tax on investment income (Impôt sur les Revenus de Capitaux Mobiliers, or IRCM). The IRCM on such income is withheld at a rate of 20% for both individuals and resident and nonresident corporate bodies. The IRCM is a final tax.

The 2021 Finance Law introduces an exception to the abovementioned 20% rate for income from bonds with a maturity of at least five years issued in Gabon as well as for dividends and financial investment income received by private equity compa nies during the period of the carry trade. The exception provides for a rate of 10%, which is a final tax.

A 20% withholding tax is imposed on royalties paid to nonresi dents.

Capital gains. Gains on the transfer of assets or rights held by individuals are taxed at a rate of 20%. This tax is a final tax.

The capital gain tax on the sale of a building and on all other sales is paid directly by the notary at the same time as the pay ment of registration duties.

The Gabonese Tax Code provides for exemption or rollover relief with respect to tax on capital gains under certain specified conditions.

Deductions

Deductible expenses. The following items are deductible:

• Voluntary pension fund premiums not exceeding 10% of tax able income before deduction of deductible charges

• Interest on loans and debts contracted by taxpayers for the con struction and acquisition of, or for major repairs to, buildings located in Gabon and used by taxpayers as their principal place of residence, up to a maximum amount of XAF6 million per year

• Life insurance premiums not exceeding 5% of taxable income before deduction of deductible charges

• Alimonies paid under a court order

• Social security contributions paid for domestic servants

Personal allowances. The family coefficient system is used to reduce the personal income tax calculated for families (see Rates).

Business deductions. For individuals engaged in commercial, professional or agricultural activities, the following expenses are deductible under specific conditions:

• General expenses incurred for business purposes, mandatory and non-mandatory social contributions up to certain limits, certain taxes, insurance premiums, gifts and subsidies, rental expenses and financial charges

Rates. Income tax is levied at progressive rates, up to a maximum of 35%.

Income is taxed under a family coefficient system, which adjusts the amount of income subject to the progressive tax rate table according to the number of family members. Taxable income is divided by the applicable number of family allowances, and the final tax liability is calculated by multiplying the tax computed for one allowance by the number of allowances claimed. The fol lowing allowances are available.

Number

Family status of allowances

Single, divorced or widowed individuals with no children 1

Married individuals with no children, and single or divorced individuals with one child 2

Married individuals with one child, and single or divorced individuals with two children 2.5

Married individuals with two children, and single or divorced individuals with three children 3

Married individuals with three children, and single or divorced individuals with four children 3.5 Each additional child (up to six children) 0.5

The following table provides the annual personal income tax rates for taxpayers with one allowance.

Taxable income

Exceeding Not exceeding Tax rate XAF XAF

1,500,000

1,500,000 1,920,000

1,920,000 2,700,000

2,700,000 3,600,000

3,600,000 5,160,000

5,160,000 7,500,000

7,500,000 11,000,000

11,000,000

In addition to the personal income tax, a supplementary tax at a rate of 5% is levied on net employment income (after deduction of social charges and pension plan contributions). The portion of monthly income under XAF150,000 is exempt. The family coef ficient system does not apply to this tax. Employers withhold the supplementary tax.

Progressive income tax and supplementary tax are levied on monthly income using a prorated tax schedule. These are the final taxes for individuals who have no other income subject to income tax.

Taxable income realized from the various self-employment cate gories is aggregated, and the total is subject to the progressive tax rates applicable to employment income.

The minimum tax payable by taxpayers engaged in commercial, professional and agricultural activities equals 1% of annual tax able turnover or XAF500,000, whichever is greater.

Relief for losses. In general, losses from one category may be offset against profits in other categories. However, losses from commercial, professional or agricultural activities may not offset income in other categories. Such losses may be carried forward for five years to offset income from the same category.

B. Inheritance and gift taxes

Inheritances and gifts are taxable if the transferred goods are located in Gabon. Inheritance and gift tax rates range from 0% to 35%, depending on the net value of the property and the relation ship between the beneficiary and the donor or deceased.

C. Social security

Social security contributions are computed on monthly gross remuneration paid, including fringe benefits and bonuses, up to XAF1,500,000.

The rate of the employee contribution is 2.5%. This contribution, which is withheld by the employer, is for the pension allowances.

The rate of the social security contribution for employers is 16%. The following table shows the components of such rate.

Benefits Rate (%)

Family allowances

Industrial accident insurance

allowances

The National Health Insurance and Social Welfare Fund (Caisse Nationale d’Assurance Maladie et de Garantie Sociale, or CNAMGS) is a new fund established with the aim of providing access to medical facilities for public and private sector employ ees. The CNAMGS contributions are computed on monthly gross remuneration paid, including fringe benefits and bonuses, up to XAF2,500,000. The employer rate for this contribution is 4.1%, which consists of the following components.

Benefits Rate (%)

Distribution of medicine by hospital 2 Hospital expenses and miscellaneous

Fund for health evacuation

Employees are required to contribute 1% of their monthly pay for the CNAMGS.

Parliament recently adopted the Law No. 028/2016, dated 6 February 2017, implementing the new Social Security Code in Gabon. Under the law, the limits regarding the computation of social security contributions and social welfare as well as the respective rates will be determined by Ministry Order and Decree.

The new ceilings and applicable rates for social security contri butions and social welfare have not yet been implemented. Therefore, in practice, the previous provisions described above still apply.

D. Tax filing and payment procedures

Employees are required to file an income tax return by 1 March of the year following the tax year. Employers must withhold tax from employees’ salaries monthly.

Self-employed individuals are required to file the following tax returns:

• Individuals subject to the simplified tax regime must file a tax return by 30 April of the year.

• Individuals subject to the real tax regime must file a return by 30 April of the year, in the same format as the corporate income tax return.

Individuals subject to the above regimes must file a personal income tax return by 30 April of the year following the tax year of the realization of income, in addition to the above returns.

They are also required to file a declaration on salary and amounts remitted abroad by 30 April of each year.

Individuals required to pay a fixed tax amount must make the tax payment by 28 February of the tax year. Others must pay the tax due by 30 April.

E. Double tax relief and tax treaties

Gabon has entered into double tax treaties with Belgium, Canada, France and Morocco. In addition, Gabon is a member state of the Central African Customs and Economic Union (Communauté Economique et Monétaire en Afrique Centrale, or CEMAC). The CEMAC is an organization of states of Central Africa (Cameroon, the Central African Republic, Chad, Congo [Republic of], Equatorial Guinea and Gabon) established to promote economic integration among countries that share a common currency, the CFA franc BEAC. Gabon is also a former member of the Common African and Mauritian Organization (Organisation Commune Africaine et Mauricienne, or OCAM). The OCAM no longer exists. However, Gabon and another former member state (Senegal) still apply the provisions of the OCAM tax treaty.

The CEMAC and OCAM treaties provide the following reliefs:

• Under the treaties, commercial profits are taxable in the treaty country where a foreign firm performs its activities through a permanent establishment. In addition, employment income is taxed in the treaty country where the activity is performed, except in the case of a short assignment.

• Dividends are taxable in the country where the beneficiary is resident.

• Under the OCAM treaty, interest is taxable in the country of residence of the beneficiary, but the country of source may apply a withholding tax if such a tax is contained in its domes tic law. Royalties are taxable in the country of residence of the beneficiary.

In the absence of tax treaty relief, foreign taxes paid are deduct ible as expenses by individuals taxable on worldwide income.

F. Temporary visas

A visa is required for entry into Gabon.

Gabonese authorities issue two types of visas, which vary accord ing to the duration of the permissible stay in Gabon. The follow ing are the types of visas:

• Tourist visa (visa touriste)

• Business visa (visa d’affaires)

Tourist visa. A tourist visa is granted to non-professional visitors. It has a duration of one month. This initial period can be extend ed to a maximum of three months.

Business visa. A business visa is granted to foreign workers or businesspersons coming into Gabon for a period that does not exceed three months. They are exempt from the entry authoriza tion requirement. However, they must state in writing their quali fications and describe the contacts they will meet during their stay in Gabon.

G. Work permits and authorizations

For individuals who will stay in Gabon for a period longer than three months for the performance of a remunerated activity, the following actions must be taken:

• Their employer must apply to the Ministry of Labor for an employment authorization (if the employee is less than 60 years of age) and a foreign worker card.

• They must apply and submit appropriate documentation to the immigration authorities for an entry authorization for the long term.

• They must apply to the immigration authorities for a residency card and an exit visa if applicable.

H. Residency cards

Residency cards are issued by the immigration authorities. They are required for all foreign nationals over the age of 16 who are staying longer than three months in Gabon.

The 2021 Finance Law makes the issuance of residence permits to individuals subject to the flat-rate synthetic tax and to the income tax on individuals in the categories of salaries and wages, industrial and commercial profits, noncommercial profits and agricultural profits. A lump-sum payment to the tax authorities is required.

I. Family and personal considerations

Family members. If the head of a family is allowed to enter Gabon, the family members accompanying this individual are admitted at the same time. However, to enter Gabon, all of the family members must present entry authorization (entry visa for long-term stay), passports and documentation proving their civil status.

Driver’s permits. Foreign nationals may drive legally in Gabon using their home-country driver’s licenses for a period of three months if they have a receipt for the payment for the registration of their license with the Ministry of Transport in Gabon.

Gabon has driver’s license reciprocity with France and states affiliated with the International Treaty of Geneva (international driver’s license). To obtain a Gabonese driver’s license, a French or international driver’s license must be registered with the Ministry of Transport in Gabon.