Equatorial GuineaTax Obligations Detailed

In Equatorial Guinea, employers face various tax obligations and legal responsibilities regarding payroll, social security, and corporate income tax.

Employer Payroll Taxes and Social Security

• Personal Income Tax (PIT): A progressive tax system applies to employee salaries, with rates ranging from 0% to 35% based on income brackets. The first XAF 1,000,000 is tax-exempt. Employers are responsible for withholding PIT and remitting it to the treasury within 15 days of the following month after salary payments. Late payment penalties include 25% of the due amount plus 10% per month of arrears.

• Social Security: Employers contribute 21.5% of the employee's gross salary to the National Institute of Social Security (INSESO) and 1% to the Work Protection Fund (WPF).

• Employee Social Security Contributions: Employees contribute 4.5% of their gross salary to INSESO and 0.5% of their net salary to the WPF.

Corporate Income Tax (CIT)

• Corporate Income Tax Rate: The standard CIT rate is 25%.

• Tax Year: The tax year runs from January 1st to December 31st.

• Minimum Income Tax (MIT): A minimum income tax of 1.5% is payable twice a year, by July 15th (for January 1st to June 30th transactions) and January 15th of the following year (for July 1st to December 31st transactions).

• Tax Return Filing: CIT returns must be filed within the first four months of the year following the taxable year.

• CIT Payment: CIT payment is due within 15 days of receiving the tax liquidation from the Ministry of Finance and Budget.

Withholding Tax (WHT)

• Non-Resident Entities: A 10% WHT applies to the gross income of non-resident entities derived from commercial, industrial activities, or services within Equatorial Guinea. This rate is reduced to 6.25% for resident entities.

• Non-Resident Individuals: A 20% WHT applies to the gross income of non-resident individuals from sources within Equatorial Guinea.

• Mobilization, Demobilization, and Transportation Services: A reduced 5% WHT applies to these services for both resident and non-resident entities.

Value Added Tax (VAT)

• Standard Rate: A standard VAT rate of 15% applies.

• Reduced Rate: A reduced rate of 6% is applicable to basic consumables and books.

• Zero Rate: A 0% rate applies to specific products and equipment listed in the Tax Code, including certain medical products and construction equipment.

Other Considerations

• Tax Residency: Individuals residing in Equatorial Guinea for more than three months in a calendar year or a total of six months within two calendar years are considered tax residents.

• Minimum Wage: The minimum wage is XAF 129,035.

It's crucial for employers to stay informed about the latest tax regulations and ensure compliance to avoid penalties. The information provided here is current as of today, February 5, 2025, and may be subject to change. Consulting with a tax advisor or legal expert is recommended for specific guidance.

In Equatorial Guinea, employee tax deductions and contributions are based on a progressive tax system and include social security and specific expense allowances.

Employee Income Tax

• Tax Residency: Tax residents are taxed on worldwide income, while non-residents are taxed only on Equatorial Guinea-sourced income. Residency is determined by physical presence—more than three months in a calendar year or six months within two calendar years.
• Taxable Income: All employment-related income is taxable, including salary, bonuses, allowances, and benefits in kind.
• Benefits in Kind Taxation:
  • Housing: 15% of salary
  • Household expenses (water, electricity, housekeeping, company car): 5% of salary
  • Food: 20% of salary (capped at XAF 150,000 annually)
• Deductions:
  • Professional Expenses: Up to XAF 1,000,000 or the real cost of professional expenses, whichever is lower. This deduction is limited to 20% of total remuneration.
  • Social Security Contributions: Contributions to the National Institute of Social Security (INSESO) and the Work Protection Fund (WPF) are deductible.
• Tax Rates (updated as of January 2025): Information about updated rates for 2025 were not found in the provided sources. 2024 information is displayed below.
  • Up to XAF 1,000,000: Exempt
  • XAF 1,000,001 to 3,000,000: 10%
  • XAF 3,000,001 to 5,000,000: 15%
  • XAF 5,000,001 to 10,000,000: 20%
  • XAF 10,000,001 to 15,000,000: 25%
  • XAF 15,000,001 to 20,000,000: 30%
  • Above XAF 20,000,000: 35%

Social Security Contributions

• INSESO:
  • Employee: 4.5% of salary
  • Employer: 21.5% of salary
• WPF:
  • Employee: 0.5% of salary
  • Employer: 1% of salary

Tax Administration

• Withholding: Employers withhold income tax monthly and remit it to the Public Treasury within the first 15 days of the following month.

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Disclaimer: This information is for general guidance only and is current as of February 5, 2025. Always consult with a qualified tax advisor for personalized advice. Tax laws and regulations are subject to change.

In Equatorial Guinea, the Value Added Tax (VAT), known as Impuesto sobre Valor Añadidos (IVA), is levied on most goods and services.

VAT Rates

• Standard Rate: 15% (applicable to most transactions).
• Reduced Rate: 6% (applies to basic food items like meat, poultry, bread, rice, milk, prepared baby food, and educational books).
• Zero Rate: 0% (applicable to exports and specific medical products and equipment listed in the Tax Code).

Exempt Transactions

• Raw agricultural, livestock, fishing, and hunting products sold directly by the producer to the final consumer.
• Sales of products from soil and subsoil extraction activities.
• Real estate transfers between individuals not considered real estate developers, subject to asset transfer tax.
• Traveler's imports below XAF 500,000 in value.
• Banking, insurance, and reinsurance operations (subject to specific taxes).
• Medical services, including transportation of accident victims, provided by public hospitals or similar agencies, as well as medical assistance by medical and paramedical personnel.
• Staple commodities and their supplies, along with livestock and fishing product supplies used by producers, if the products are exempt.

VAT Registration

Resident VAT payers must register with the tax authorities. Non-resident VAT payers must appoint a solvent resident representative jointly responsible for VAT payment and other obligations.

Filing and Payment

• Monthly VAT returns are due within 15 days of the end of the month.
• The difference between output and input VAT is declared by the 15th of the following month and paid with the VAT return.
• "Nil" declarations are required for months without VAT taxable activity.
• VAT credit is generally not refundable, although under specific conditions, it may be offset against other taxes.

Other Indirect Taxes

In addition to VAT there are a number of other indirect taxes including:

• Consumption taxes are levied on specific products such as cigarettes, alcoholic and non-alcoholic beverages, and automobiles. Tax amounts vary depending on product and volume.
• Excise Taxes are applied to specific goods such as alcoholic beverages and tobacco at a rate of 30%.
• Customs Duties depend on the product category, with rates varying from 5% to 30%.
• Stamp Duties are payable on numerous instruments and transactions at rates that change depending on the specific legal act.
• Transfer Tax varies based on the nature of goods/real estate and whether parties involved are residents. For transfers of goods and chattels, there is a 3% tax for resident to non-resident and between non-residents transfers. There is a 5% tax on real estate transfers between residents. Resident to non-resident transfers are taxed at a rate of 25%.

Please note that this information is current as of February 5, 2025, and might be subject to change. Always consult with a tax professional for the most up-to-date regulations.

Equatorial Guinea's tax system offers several incentives primarily aimed at promoting investment, diversification, and national development.

Corporate Tax Incentives

• Reduced Corporate Income Tax: The standard corporate income tax rate has been lowered from 35% to 25%.
• Incentives for Hiring Nationals: A 50% reduction in the taxable income base is available for wages paid to Equatoguinean employees for a period of eighteen years.
• Training of National Personnel: Companies can benefit from a reduction in their taxable income equivalent to 200% of the non-wage costs dedicated to training local employees. This incentive also lasts for eighteen years.
• Export Promotion: A tax credit certificate worth 15% of the non-traditional export revenue deposited in local banks is offered. This can be used to offset tax and customs duties.
• Regional Development: Companies operating in designated underdeveloped regions outside major urban centers are granted full amortization of infrastructure costs and total exemption from all taxes except income tax, sales tax, customs assessments, and other levies directly linked to their activities in these areas.
• Local Participation in Company Capital: A reduction in taxable income is offered if Equatoguinean nationals hold more than 50% of a company's capital. The reduction is calculated as 1% of the amount exceeding the 50% national participation threshold.

Oil and Gas Sector

• Hydrocarbons Code Incentives: The recently revised Hydrocarbons Code has introduced undisclosed incentives, including adjustments to corporate income tax and withholding tax, to stimulate investment in the oil and gas sector. The government expressed willingness to tailor incentives to address specific company challenges.

General Tax Incentives

• Tax Debt Relief: Law 1/2020 provides tax relief for outstanding tax debts accumulated between 2015 and 2019, encompassing Corporate Income Tax, Value Added Tax, and Personal Income Tax, as well as property registration fees. Debtors can choose a 20% reduction for immediate full payment within 30 days, or installment payments over a maximum of 10 years with a 10% annual fine.

Personal Income Tax

• Progressive System: Equatorial Guinea employs a progressive personal income tax system with a maximum rate of 25% for annual incomes exceeding 20,000,000 XAF.

Other Relevant Tax Information

• Withholding Tax: Dividends paid to foreign companies are subject to a 25% withholding tax. Non-resident contractors and subcontractors in the oil and mining sectors face a 10% withholding tax. Resident contractors face a 3% withholding tax.
• Minimum Income Tax (MIT): Businesses are required to make two annual MIT payments, with a simplified option available for smaller taxpayers.
• Value Added Tax (VAT): The standard VAT rate is 15%, with a reduced rate of 6% for specific goods. Exports are exempt.

It's important to note that this information is current as of February 5, 2025, and might be subject to change. Consulting with a tax professional is recommended for the most up-to-date details and personalized guidance.