Employers in Guinea-Bissau have a responsibility to contribute to the National Social Security Institute (Instituto Nacional da Segurança Social - INSS) on behalf of their employees. The standard employer contribution rate to INSS is 7% of the employee's gross salary. These social security contributions fund various benefits like pensions, healthcare, and disability benefits.

Withholding and Payment

Employers are responsible for withholding the employee's share of social security contributions, which is a rate of 3% and remitting both their own contributions and the employee contributions to the INSS. Contributions are usually due on a monthly basis.

Other Employer Obligations

Employers must register with the INSS and obtain an employer registration number. They are also required to maintain accurate payroll records for tax and audit purposes.

In Guinea-Bissau, the income tax system is progressive, meaning that higher income earners are taxed at higher rates. The specific tax rates and brackets are periodically updated by the government. Income tax applies to both residents and non-residents on income sourced from within Guinea-Bissau.

Social Security Contributions

Employees in Guinea-Bissau are required to make mandatory contributions to the National Institute of Social Providence (INSS). The contribution rate for employees is 8% of their gross monthly salary.

Other Deductions

Fringe benefits provided by employers may be subject to income tax unless they qualify as non-taxable benefits.

Calculating and Filing Tax Deductions

The process of calculating and filing tax deductions in Guinea-Bissau involves two main steps:

1. Withholding: Calculating and withholding income tax and social security contributions from each employee's paycheck on a regular basis, usually monthly.
2. Reporting and remitting: Filing tax returns and social security contributions with the relevant authorities, typically on a monthly basis.

In January 2023, Guinea-Bissau implemented a Value-Added Tax (VAT) system, replacing the previous sales tax (Imposto Geral Sobre Vendas e Serviços).

VAT Registration

Businesses with an annual turnover exceeding FCA 10 million are required to register for VAT. There is also a simplified regime available for businesses with an annual turnover up to FCA 40 million, which allows them to opt for a simplified 5% VAT regime.

Standard VAT Rate

The standard VAT rate in Guinea-Bissau is 18%.

VAT on Services

Most services provided within Guinea-Bissau are subject to VAT at the standard rate unless specifically exempted. Some key services are exempt from VAT, including financial services, real estate, domestic gas heating, education, and medicines.

VAT Invoicing

VAT-registered businesses are required to issue tax invoices that include specific details such as the supplier's name, address, and VAT registration number, the customer's name and address (if a business), the invoice date and number, a description of goods/services supplied, the taxable amount, and the VAT rate and amount charged.

Filing and Payment of VAT

VAT returns must be filed monthly by the 15th of the following month. VAT payments due must be made along with the return filing.

Record Keeping

Businesses are required to maintain records of all taxable transactions for at least 5 years to support VAT returns and potential audits.

Guinea-Bissau's primary legislation governing investment incentives is the Investment Code. This legislation provides a range of tax incentives to businesses investing in the country.

Key Incentives

Businesses investing in priority sectors may be granted an exemption from customs duties on the import of capital goods needed for their projects. Eligible businesses may receive a Corporate Income Tax (CIT) reduction or exemption for a certain period, depending on the size of the investment and sector. Companies making significant investments may benefit from a tax holiday on profits for a specific duration. Some investments may qualify for accelerated depreciation allowances, reducing tax burdens in the initial years. Businesses investing in infrastructure for public use may be permitted to deduct those expenses from taxes. Companies can also deduct double their expenses for worker training programs from their taxable income.

Specific Sectors and Zones

Incentives are available for investments promoting agricultural production and processing. The government offers incentives to encourage new tourism-related investments. Businesses located in designated Free Trade Zones (FTZs) may enjoy additional benefits, such as lower tax rates and streamlined customs procedures.

How to Apply for Incentives

Businesses interested in obtaining tax incentives need to apply to the Guinea-Bissau Investment Promotion Agency (GBI – Guinea Investment Promotion Agency).

Important Considerations

Eligibility criteria for specific incentives may vary, and businesses need to ensure they meet the requirements. The application and approval process for incentives can be time-consuming. It's recommended to seek professional advice from tax specialists or consultants in Guinea-Bissau for guidance on the specific incentives applicable to your business.