BurundiTax Obligations Detailed

In Burundi, employers face various tax obligations and social security contributions.

Employer Taxes

• INSS Contributions: Employers contribute 6% of each employee's gross salary to the National Institute of Social Security (INSS) for pension and disability benefits.
• Occupational Risk Insurance: A 3% contribution of the employee's gross wages is mandatory for Occupational Risk Insurance.
• Additional Occupational Risk Insurance: If employees perform arduous work, an additional 8.8% contribution of their gross wages is required for Additional Occupational Risk Insurance.
• Tax on Foreign Workers: For companies employing foreign workers, there's a 3% tax calculated based on the worker's gross annual salary, payable annually from the work permit approval date.

Corporate Income Tax

• Standard Rate: The standard corporate income tax rate in Burundi is 30%.
• Minimum Tax on Turnover: A minimum tax of 1% on turnover applies if the taxable profit is less than the turnover divided by 30.
• Incentives for Registered Investors: Incentives may apply for those who employ a certain number of Burundian nationals or investors in Free Trade Zones, leading to discounted rates.

Value Added Tax (VAT)

• Standard Rate: The standard VAT rate is 18%.
• Reduced Rates: A 10% rate applies to specific imported food products, processed agricultural goods, and agricultural inputs. Exports and international transport are zero-rated (0%).
• Registration Threshold: Businesses with a gross turnover exceeding BIF 100,000,000 (approximately US$ 82,000) must register for VAT.

Other Taxes and Regulations

• Payroll Tax: This tax is levied on both employers and employees. The employer contributes 6% towards social security, while the employee contributes 4%, capped at BIF 450,000 per month. The total tax rate, encompassing various taxes and contributions, was reported as 41.2% of profit in 2019.
• Work Permits: Foreign workers and citizens of East African Community member states require work permits to work in Burundi.
• Employee Leave: Employers must grant employees paid annual leave, maternity leave (12 weeks with full pay), and paternity leave (4 days with full pay).

Please note that this information is based on available data as of February 5, 2025, and might be subject to change due to legislative updates or revisions in regulations.

In Burundi, employers are responsible for deducting various taxes and contributions from employee salaries.

Income Tax (IR)

Individual income tax rates in Burundi are progressive, meaning the rate increases with the income level. As of 2017/2018, the rates were:

• 0% for income up to BIF 1,800,000
• 20% for income between BIF 1,800,001 and 3,600,000
• 30% for income exceeding BIF 3,600,001

Non-resident individuals are generally subject to a flat rate of 15%. It's important to note that these rates may be outdated. It is recommended to seek updated information for the current year.

Social Security Contributions

Both employers and employees contribute to the social security system.

• Employer: The employer contributes 6% of the employee's gross salary to social security. An additional 3%, capped at BIF 80,000 per month is contributed by the employer.
• Employee: The employee contributes 4% of their gross salary to social security. For employees performing arduous work, the contribution is 5.8%.

Other Deductions

Other potential deductions may include:

• Pension contributions: If the employer offers a supplementary pension plan.
• Union dues: If the employee is a member of a trade union.
• Court-ordered deductions: Such as garnishments or child support payments.
• Employee contributions to health insurance: If it is not fully covered by the employer.

Employer Obligations

Employers are responsible for:

• Registering with the tax authorities.
• Calculating and deducting the correct amounts from employee salaries.
• Remitting the deducted taxes and contributions to the appropriate authorities by the 15th of the following month.
• Providing employees with payslips detailing their gross pay, deductions, and net pay.
• Maintaining accurate payroll records.

Additional Information

• The information provided is based on available sources and may not be fully comprehensive or up-to-date. Always consult with a local tax advisor for the latest regulations and specific requirements. This overview is valid as of today, February 5, 2025, and might be subject to change due to potential legal and regulatory updates.

In Burundi, the Value Added Tax (VAT) is a consumption tax applied at each stage of production and distribution.

VAT Rates in Burundi

• Standard Rate: 18% This rate applies to most goods and services.
• Reduced Rate: 10% This lower rate applies to specific goods and services, including imported food products, agricultural products processed in Burundi, and agricultural inputs.
• Zero Rate: 0% Exports and international transport benefit from this rate.

VAT Registration Threshold

Businesses with a gross turnover exceeding FBU 100,000,000 (approximately US$82,000 as of 2025-02-05) are required to register for VAT. Please be aware that exchange rates can fluctuate, so this USD equivalent is approximate.

Filing and Payment Deadlines

VAT returns and payments must be submitted by the 15th day of the month following the taxable supply. For imported goods, VAT is payable when customs duties are due. As of January 2022, certain taxpayers, including digital businesses, are required to comply with mandatory e-invoicing and real-time reporting to the Office Burundais des Recettes (OBR).

Exempt Goods and Services

Certain goods and services are exempt from VAT. These include:

• Financial transactions
• Certain real estate transactions
• Imported and locally produced medicines, pharmaceuticals, and related medical equipment
• Unprocessed agricultural products sold by the producer
• Postage stamps and similar items
• Goods eligible for duty-free allowances
• International travel

VAT Refunds

Burundi has a system for VAT refunds, typically handled through a dedicated fund. Taxpayers can apply for refunds, and if approved, the refund is issued by check after any outstanding tax debts are cleared. The application deadline is the 15th day of the month following the financial year or quarter. Refunds are usually processed within 90 days of the application. A penalty of 1% per month applies to delays beyond this timeframe. Note that input VAT recovery on certain items (like passenger vehicles, related repairs and maintenance, restaurant and hotel accommodations, and entertainment services if not supplied during business operations) may have restrictions.

General Information on VAT

Value Added Tax (VAT), also known as Goods and Services Tax (GST) in some countries, is a common form of consumption tax globally. As of 2025-02-05, over 170 countries worldwide have implemented a form of VAT/GST. The specifics of how VAT is implemented, such as rates, thresholds, and exemptions, vary across countries. Businesses operating internationally or engaging in cross-border trade should pay careful attention to the individual VAT regulations in each relevant jurisdiction.

Burundi offers several tax incentives primarily aimed at attracting investment and boosting employment.

Corporate Tax Incentives

• Standard Rate: The standard corporate tax rate in Burundi is 30%.
• Employment Incentives: This rate can be reduced based on the number of Burundian nationals employed:
  • A 2% reduction is granted to companies employing between 50 and 200 Burundian nationals.
  • A 5% reduction is available to companies employing more than 200 Burundian nationals. These reductions are conditional on maintaining the employment levels for at least six months during a tax period and not applying to employees who are exempt from PAYE (Pay As You Earn) tax.
• Free Trade Zone Incentives: Investors operating within a Free Trade Zone benefit from significantly reduced corporate tax rates:
  • 0% during the first 10 years of operation.
  • 15% from the 11th year onwards. This can be further reduced to 10% if the investor employs more than 100 permanent Burundian employees or reinvests more than 25% of profits realized during the first 10 years.

Other Tax Incentives

• Exemptions: Exemptions from customs duties are granted for raw materials, capital goods, specialized vehicles, and goods manufactured within the East African Community (EAC) or Common Market for Eastern and Southern Africa (COMESA). Property transfer fees (mutation fees) are also exempt. Dividends and interest earned on treasury bills are also generally exempt from tax. Certain agricultural and livestock activities, as well as small-scale fishery activities, may be exempt.
• Repatriation of Profits: Free repatriation of profits after tax payment is permitted.

Investment Incentives

• The Burundian Investment and Promotion Authority (API) plays a central role in promoting and facilitating investment.
• A "one-stop" investment center streamlines business registration processes.
• Additional incentives, such as tax exemptions on real estate purchases related to new investments and tax reductions for goods used to establish new businesses, may also be available.

Eligibility Criteria & Application Procedures

• To qualify for investment incentives, projects generally need to meet specific criteria, such as being listed in priority sectors, exceeding a minimum investment threshold, adhering to Burundian laws and regulations (including environmental and labor protection), and being a new investment or an extension/modernization of an existing project. There may also be other conditions depending on the incentive and the investor.
• The application process typically involves submitting a file to the API containing documents such as company registration details, tax identification number, articles of association, and a comprehensive business plan.

Additional Information (as of February 5, 2025)

While the above information reflects the general framework of tax incentives in Burundi, specific details and regulations are subject to change. It is crucial to consult official sources and seek professional advice for the most current and accurate information concerning eligibility, application procedures, and compliance requirements. This overview is for informational purposes only and should not be considered as tax or legal advice. Always confirm details with official government sources or qualified advisors for specific situations.