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Chad

Country Name: Republic of Chad
Currency: Central African CFA Franc (XAF)
Primary Tax Authority: Directorate General of Taxes (Direction Générale des Impôts, DGI)
Key Legislation:

  • General Tax Code
  • Value Added Tax (VAT) Law
  • Customs Code
  • Investment Code
  • Tax Procedures Law

Fiscal Authority Allocation

Centralized Fiscal System:
Chad operates a centralized tax system, with the Directorate General of Taxes (DGI) responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties.

Corporate Income Tax (CIT)

Standard Rate: 35%
Chad imposes a corporate income tax rate of 35% on resident companies and non-resident companies with a permanent establishment in the country. Special rates may apply to companies in the oil and gas sector.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on Chad-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Chad’s Investment Code offers tax holidays, customs duty reductions, and VAT relief for companies investing in priority sectors such as agriculture, mining, and infrastructure.
  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from CIT reductions, customs duty exemptions, and VAT relief for up to 10 years.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 18%
Chad imposes VAT at a standard rate of 18% on most goods and services. VAT applies to both domestic production and imports.

Exemptions:
Certain essential goods and services, such as healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, allowing businesses to claim VAT refunds on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Chad applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Chad-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to XAF 1,500,000: 0%
  • XAF 1,500,001 to XAF 3,000,000: 10%
  • XAF 3,000,001 to XAF 5,000,000: 20%
  • Above XAF 5,000,000: 30%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 25% on Chad-sourced income.

Deductions and Allowances:
Taxpayers may deduct social security contributions, pension contributions, and certain personal expenses such as healthcare costs and charitable donations from their taxable income.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Chad’s social security system, which provides pensions, healthcare, and other social benefits.

  • Employer Contribution: 16.5% of gross salary.
  • Employee Contribution: 1.5% of gross salary.

Withholding Taxes

  • Dividends: 20% for residents, 20% for non-residents
  • Interest: 20% for residents, 20% for non-residents
  • Royalties: 20% for residents, 20% for non-residents
    Chad imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under Chad’s double taxation agreements (DTAs).

Transfer Pricing Rules

Chad follows the arm’s-length principle for related-party transactions. Companies must ensure that cross-border transactions between related entities are conducted at market value. Transfer pricing documentation is required for companies engaging in significant related-party transactions.

Special Tax Regimes

  • Special Economic Zones (SEZs): Companies operating in Chad’s SEZs benefit from CIT reductions, VAT exemptions, and customs duty relief for up to 10 years. These zones aim to attract foreign direct investment in sectors such as manufacturing, agriculture, and logistics.
  • Investment Incentives: The Investment Code provides tax holidays, reduced CIT rates, and customs duty exemptions for companies in sectors such as agriculture, energy, and infrastructure.

Other Taxes

  • Customs Duties: Chad, as a member of the Central African Economic and Monetary Community (CEMAC), applies customs duties based on the CEMAC Common External Tariff. Rates vary from 5% to 30%, depending on the type of goods. Essential goods and raw materials may qualify for reduced or zero customs duties.
  • Excise Taxes: Excise taxes are levied on alcohol, tobacco, petroleum products, and luxury goods.
  • Property Tax: Chad imposes property taxes on land and buildings, based on their market value.

Double Taxation Agreements (DTAs)

Chad has signed several double taxation agreements (DTAs) with countries such as France, Morocco, and members of CEMAC. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Chad and other jurisdictions.

Local Taxes

Local governments in Chad may impose property taxes, business license fees, and local service levies. However, most major taxes, including CIT, PIT, and VAT, are centrally administered by the Directorate General of Taxes (DGI).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within three months following the end of the financial year. Personal income tax returns are generally due by March 31st. VAT returns are filed monthly or quarterly, depending on the size of the business.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The DGI charges interest at 1.5% per month on overdue taxes, with additional penalties for tax evasion or underreporting.

Recent Developments

Oil and Gas Sector Investment:
Chad’s oil and gas sector continues to attract significant foreign investment. The government provides tax incentives, including CIT reductions, VAT exemptions, and customs duty reductions on equipment imported for oil exploration and production.

Infrastructure and Renewable Energy Projects:
Chad is promoting investment in infrastructure and renewable energy, particularly solar and wind energy projects. Companies investing in these sectors benefit from CIT reductions, VAT exemptions, and customs duty relief.

Digital Economy and E-Government:
Chad is enhancing its tax administration by introducing electronic tax filing systems and improving digital tax platforms. These efforts aim to increase tax compliance and make tax reporting more efficient for businesses.

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