Guinea-Bissau

Employers in Guinea-Bissau have various tax obligations, including corporate income tax, VAT, and social security contributions.

Corporate Income Tax

• Rate: A flat rate of 25% is applied to corporate income.
• Registration: Companies must register with the Directorate-General of Taxes and Duties (DGCI) at the Enterprise Drawing Centre (CFE) and obtain a tax identification number.
• Filing: Annual returns are due by April 30th of the following fiscal year.

Value Added Tax (VAT)

• Implementation: Effective January 1, 2025, Guinea-Bissau implemented a new VAT regime, replacing the previous sales tax.
• Registration: Businesses with taxable supplies exceeding XOF 10 million over a 12-month period are required to register for VAT.
• Simplified Regime: Businesses with taxable supplies between XOF 10 million and XOF 40 million can opt for a simplified VAT regime.
• Rates: The standard VAT rate is 19%. A reduced rate of 10% applies to basic goods and services, including imports. Businesses under the simplified regime are subject to a 5% rate. Exports are zero-rated.
• Filing: Monthly VAT returns are due by the 15th of the following month.

Social Security Contributions

• Both employers and employees contribute to the National Institute of Social Security (INSS).
• Employer Contribution: 14% of the employee's monthly salary.
• Employee Contribution: 8% of the employee's monthly salary.
• Filing: Monthly contributions are required.

Other Taxes

• Payroll Tax: There is no separate payroll tax in Guinea-Bissau.
• Stamp Duty: Levied on specific transactions and contracts at varying rates. For instance, real estate transfers are subject to a 5% transfer tax and a 0.5% stamp duty.
• Dividend Tax: Dividends are taxed at 30%.
• Interest Tax: Both resident and non-resident companies pay a 15% tax on interest received.

Personal Income Tax

• Progressive rates apply to personal income, with the top bracket at 20%. The tax rates for resident individuals are:

| Monthly Chargeable Income (XOF) | Tax Rate | |-----------------------|----------| | Up to 41,667 | 1% | | 41,668 – 83,333 | 6% | | 83,334 – 208,333 | 8% | | 208,334 – 300,000 | 10% | | 300,001 – 400,500 | 12% | | 400,501 – 750,000 | 14% | | 750,001 – 1,100,000 | 16% | | 1,100,001 – 1,500,000 | 18% | | Over 1,500,000 | 20% |

This information is current as of February 5, 2025, and is subject to change. It is essential to consult with local tax authorities or tax advisors for the most up-to-date information and specific guidance regarding your company's obligations.

In Guinea-Bissau, employee tax deductions primarily consist of social security contributions, industrial contribution tax, and stamp tax.

Social Security

• Employee Contribution: 8% of the employee's salary.
• Employer Contribution: 14% of the employee's salary.
• Work Accident Contribution: 2% of the employee's salary (paid by the employer).

Industrial Contribution Tax (Imposto Industrial)

• This tax is levied on income derived from commercial, industrial, or service-providing activities within Guinea-Bissau.
• The current rate is 25% of the taxable income.
• Tax incentives, such as exemptions and reductions, may apply to certain investments and sectors.

Stamp Tax (Imposto de Selo)

• A stamp tax of 0.3% is levied on salaries. This tax applies to various documents and transactions.

Value Added Tax (VAT)

As of January 1, 2025, Guinea-Bissau introduced a Value Added Tax (VAT) system which replaced the previous General Sales Tax. While not a direct deduction from employee salaries, the VAT impacts the cost of goods and services in the country. Details on the VAT rate(s) are not available in the current information.

General Sales and Services Tax (Replaced by VAT)

Prior to 2025, a general sales and services tax existed with rates of 10% and 19%. This has now been superseded by the VAT.

Other Considerations

• Tax Incentives: Guinea-Bissau offers various tax incentives to attract foreign investment, including exemptions and reductions for certain investments and training expenses. These incentives can impact the overall tax burden for both employers and employees.
• Tax Reform: The country is undergoing tax reform and harmonization efforts, which may introduce changes to the tax system.

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

Guinea-Bissau implemented a Value Added Tax (VAT) system on January 1, 2025, replacing the previous General Sales Tax.

VAT Rates

• Standard Rate: 19% (most goods and services)
• Reduced Rate: 10% (basic goods and services, some imports)
• Zero Rate: 0% (exports)
• Simplified Regime: 5% (businesses with turnover up to XOF 40 million)

Registration Thresholds

• Mandatory Registration: Businesses with taxable supplies exceeding XOF 10 million over 12 months.
• Simplified Regime Option: Businesses with turnover between XOF 10 million and XOF 40 million.
• Exempt: Businesses below the XOF 10 million threshold.

Filing Requirements

• Monthly VAT returns: Due by the 15th of the following month.
• Supporting Records: Must be kept for at least 5 years.

Exempt Goods and Services

• Financial services
• Real estate
• Domestic gas heating
• Education
• Medicines

General Information on VAT in Guinea-Bissau

The VAT system in Guinea-Bissau is a consumption tax levied on the value added at each stage of production and distribution. It is designed to be a more efficient and transparent system than the previous General Sales Tax. The implementation of the VAT system is part of Guinea-Bissau's efforts to modernize its tax system and align with international standards. The multi-tiered rate structure is intended to address the needs of different sectors of the economy and provide relief for essential goods and services. The simplified regime for small businesses is aimed at reducing the administrative burden and promoting compliance. The government has been working to prepare businesses for the transition to the VAT system through training and outreach programs. It is important for businesses operating in Guinea-Bissau to understand their obligations under the new VAT system and ensure compliance.

As of today, February 5, 2025, this information is current but might change in the future.

Guinea-Bissau offers various tax incentives to attract investment and stimulate economic growth.

Tax System Overview

Guinea-Bissau's tax system is currently undergoing reforms to modernize and harmonize its tax and customs procedures. The primary taxes include income tax, value-added tax (VAT), which replaced the general sales tax (GST) on January 1, 2025, industrial contribution tax, business tax, property tax, surcharge, stamp duty, transaction tax, and fuel tax.

Investment Incentives

Several tax incentives are available to attract foreign investment:

• Exemptions from customs duties on capital goods for investment projects.
• Exemptions from the General Tax on Sales and Services (now VAT) for capital goods related to investment projects. These exemptions are typically granted for a maximum period of three years.
• A degressive reduction of the industrial contribution for up to seven years.
• Incentives for professional training of workers. Companies can deduct double the training expenses for specialized courses (domestic or international) from their business tax.

Specific Tax Rates and Regulations

• Industrial Contribution: 25%
• Value Added Tax (VAT): The standard VAT rate is yet to be defined, succeeding the previous General Sales and Services Tax rates of 10% and 19%.
• Social Security: Employee contribution is 8%, employer contribution is 14%, and there is a 2% contribution for accidents at work.
• Stamp Tax: 0.3% on salaries

Additional incentives may be available for large-scale investment projects exceeding USD 80 million, subject to approval by the Council of Ministers. These incentives can be negotiated through Investment Contract Agreements and may include further tax breaks or other benefits. More specific details about the application procedures, required documentation, and eligibility criteria for each incentive can be found on the websites of Guinea-Bissau's tax authorities (DGCI), the Investment Promotion Agency, or by consulting with a local tax advisor. This information is current as of February 5, 2025, and may be subject to change given ongoing tax reforms.