ChadTax Obligations Detailed

Employers in Chad have several tax obligations, primarily concerning social security and income tax withholding.

Social Security Contributions

• Employer Contribution: 16.5% of the employee's gross salary, up to a monthly maximum of XAF 500,000. This means the maximum employer contribution is XAF 82,500 per month.
• Employee Contribution: 3.5% of the employee's gross salary, also capped at a monthly maximum of XAF 500,000. This results in a maximum employee contribution of XAF 17,500 per month.
• Deductibility: The employee's social security contribution is deductible from their taxable income and is withheld monthly by the employer.

Income Tax

• Progressive Rates: Income tax in Chad is progressive, ranging from 0% to 30% based on the employee's annual income. Tax is calculated annually, considering the total income. However, some income categories may have withholding taxes (WHT) applied throughout the year.

Withholding Tax (WHT)

• Retail Commerce: A 4% WHT applies to individuals and legal entities involved in wholesale or retail trade, including imports. Companies with multiple shareholders and consistent tax compliance may apply for a renewable three-month WHT payment suspension.
• Capital Gains and Dividends: A 20% WHT applies to both residents and non-residents on capital gains and dividends.
• Non-Resident Income: A 25% WHT generally applies to income earned by non-residents of the CEMAC area. However, for legal persons (companies) residing in the CEMAC area, the WHT is 7.5%, while for natural persons residing within the CEMAC area, the WHT is 20%.
• Public Procurement Contracts: Income from public procurement contracts financed from outside Chad is subject to a reduced 12.5% WHT. This applies to agents, consulting firms, and corporations but excludes dividends and interest; it only covers royalties paid to non-residents for petroleum projects.
• Monthly Withholding: Employers are responsible for withholding income tax from employee salaries monthly.

Other Taxes and Obligations

• Training Fund Contributions: Employers contribute 1.2% of employee salaries and fringe benefits to the National Professional Training Funds.
• Business Tax: A business tax is imposed based on 0.35% of the company's turnover from two years prior (N-2). However, companies in their first year of operation are exempt.
• Tax Return Filing: Corporate tax returns are due by April 30th each year, with a possible extension to May 15th.

General Information about Taxes in Chad

• Currency: Central African CFA franc (XAF)
• Fiscal Year: January 1st to December 31st.
• Total Tax Rate: It's worth noting that data from 2019 indicated a total tax and contribution rate (as a percentage of profit) in Chad at 63.5%. This includes various taxes and contributions, not only those directly related to employment. This information is subject to change and more up-to-date figures might be available from official sources.

This information is current as of February 5, 2025, and is subject to change. Consult official sources and legal professionals for the latest regulations and personalized advice.

In Chad, employee tax deductions encompass various areas, including income tax, social security contributions, and allowable expenses.

Income Tax

• Progressive Rates: Income tax in Chad follows a progressive system. As of 2024, the rates range from 0% to 30%, depending on the employee's income level.
• Tax Rate Brackets (2024):
  • XAF 0 to XAF 800,000: 0%
  • XAF 800,001 to XAF 2,500,000: 10%
  • XAF 2,500,001 to XAF 7,500,000: 20%
  • Above XAF 7,500,000: 30%

Social Security Contributions

• Employee and Employer Contributions: Both employees and employers contribute to the social security system. As of 2024:
  • The total social security contribution rate is 20%.
  • Employers contribute 16.5%.
  • Employees contribute 3.5%.
• Deductibility: Employee social security contributions are fully deductible from their gross salary for income tax purposes. Employer contributions, capped at 2% of the employee's gross salary, are also deductible.

Allowable Deductions

• Pension/Retirement Contributions: Employer contributions to pension and retirement funds are deductible, up to 2% of the employee's gross salary.
• Business Expenses: Certain business-related expenses can be deducted for employees with industrial, agricultural, or commercial income. These are considered when calculating the annual income tax.
• Other Deductions: Allowable deductions also include interest on loans for real estate investment, certain annuity payments, alimony, and some insurance premiums.
• Transportation Allowance: The deductible transportation allowance is capped at 30% of the employee's basic salary, as per the 2019 Finance Law.

Non-deductible Expenses

• Foreign Social Security: Foreign social security contributions are deductible only up to 15% of the base salary for expatriates when related to a compulsory retirement plan.
• Business Entertainment: Expenses for restaurants, hotels, receptions, and similar are deductible only up to 0.5% of the turnover (net of tax).
• Expatriate Travel: Travel expenses for expatriates and their families for vacation are deductible, limited to one trip per year.

General Information

• Tax Residency: Chad-source income is taxable for both residents and non-residents if earned within Chad, with different rates for those residing within the CEMAC zone. Tax residency is determined by having a primary residence or spending at least 183 days in Chad during the calendar year.
• Withholding Tax: Employers are responsible for withholding income tax from employees' salaries and remitting it to the tax authorities by the 15th of the following month.

It's important to note: This information is current as of February 5, 2025, and might be subject to change. Consulting official government resources or a qualified tax advisor is recommended for the most accurate and up-to-date details.

In Chad, the Value Added Tax (VAT) is a consumption tax applied to most goods and services.

VAT Rates in Chad

• Standard Rate: 18% This rate applies to most goods and services.
• Reduced Rate: 9% This rate applies to specific local products, including cement, sugar, oil, soap, textiles, concrete, and iron.
• Zero Rate: 0% This rate applies to exports and related international transportation, aircraft refueling with Jet A1 for planes to foreign destinations, and certain local food industry products (excluding alcohol).

VAT Registration in Chad

Businesses are required to register for VAT if their annual turnover exceeds XAF 50 million. Registration can be done online via the E-TAX platform or manually at the Directorate of Large Companies (Direction des Grandes Entreprises) within 15 days of the start of business activities. Businesses involved in import or export activities must register for VAT, regardless of their turnover.

VAT Filing and Payment

VAT returns must be submitted online via the E-TAX platform within 15 days of the month following the taxable operations for taxpayers with a turnover exceeding XAF 50 million. Even if there are no taxable operations in a given month, a "nil" return should be filed. When submitting the annual VAT return, taxpayers must include a file detailing deductible input VAT, including supplier information, invoice details, and amounts.

VAT Withholding Tax

Chad operates a withholding VAT system. State entities, public companies, local authorities, and certain private companies are required to withhold VAT when paying suppliers. The withheld VAT amount must be declared online through the E-TAX platform and paid to the Public Treasury by the 15th of the following month. Taxpayers who withhold VAT must attach a list of affected suppliers, their tax identification numbers (TINs), and withheld amounts to their VAT return. Entities authorized to withhold VAT are generally exempt from having VAT withheld from their own invoices.

VAT Exemptions

Several goods and services are exempt from VAT, including sales of unprocessed products directly to consumers by farmers, ranchers, and fishermen; transactions involving postage stamps, tax stamps, and stamped papers issued by the state; imports and sales of newspapers and periodicals (excluding advertising revenues); certain supplies by licensed educational institutions, specific petroleum and mining research materials, certain art sales under a turnover threshold, sales, transfers, or services by the state, local authorities, and public institutions; and essential products exempt from turnover tax, and oil and mining exploration equipment.

International Trade and VAT

• Imports: The VAT base for imports is the customs valuation (cost, insurance, and freight to Chad) plus excise duties and other taxes, excluding the 4% withholding tax. Import VAT is paid concurrently with customs duties.
• Exports: Exports benefit from a 0% VAT rate, contingent upon proper documentation and customs stamping. Exporters must provide proof of export and repatriation of funds.

Electronic Invoicing

Regulations for electronic invoicing are in effect as of January 1, 2024.

It is important to note that this information is current as of today, February 5, 2025, and may be subject to change. Consulting with a tax advisor or referring to the latest official publications is always recommended for the most up-to-date information.

Chad offers various tax incentives to attract investment and stimulate economic growth, particularly in key sectors. As of today, February 5, 2025, the following incentives are available, based on information updated in late 2024:

General Tax Incentives

• New Companies in Specific Sectors: Newly established Chadian companies operating in agriculture, livestock farming, renewable energy, and ICT benefit from a 50% reduction in registration fees and corporate tax base for the first five years of operation. They are also exempt from business tax, minimum income tax, flat-rate tax, and apprenticeship tax during this period.
• Investments over XAF 250 Million: Companies investing at least XAF 250 million in sectors like industry, tourism, research and mining, agriculture, education, sports, hotels, transportation, and ICT can qualify for tax reductions. These investments should involve local sourcing, employing a local workforce, land acquisition for professional use, or acquiring new movable property or equipment. Benefits include a 50% reduction in business tax, minimum income tax, registration fees, flat-rate tax, apprenticeship tax, and tax on rental value of business premises during a setup phase (up to 24 months). Subsequently, during an operational phase (up to three years), there is a 50% reduction in business tax and corporate and minimum income tax bases, and an exemption from specific excise duty on local production.
• Investments in Provinces: Investments exceeding XAF 100 million in provinces outside the capital enjoy a 50% reduction in minimum income tax base, withholding tax on rental income for the investment property, and registration fees on relevant rental contracts.

Sector-Specific Incentives

• Telecommunications and Internet Services: Equipment for telecom and internet services, including network infrastructure, devices, modems, and routers, is exempt from import duties and taxes. This particular incentive is currently slated to last for five years.

Application Procedures

While the specific application procedures for each incentive aren't detailed here, generally, companies need to register with the relevant authorities and may submit applications outlining the investment project and intended benefits.

It's crucial to remember that tax regulations and incentive programs can be subject to change. Staying up-to-date with the latest legislation and seeking professional advice is recommended for businesses planning to invest in Chad.