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Equatorial Guinea

Country Name: Republic of Equatorial Guinea
Currency: Central African CFA Franc (XAF)
Primary Tax Authority: General Directorate of Taxes and Contributions (Dirección General de Impuestos y Contribuciones, DGIC)
Key Legislation:

  • General Tax Code (Código General de Impuestos)
  • Investment Law
  • Value Added Tax (VAT) Law
  • Customs Code

Fiscal Authority Allocation

Centralized Fiscal System:
Equatorial Guinea operates a centralized tax system. The General Directorate of Taxes and Contributions (DGIC) under the Ministry of Finance is 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%
Equatorial Guinea imposes a flat corporate income tax rate of 35% on net taxable income for both resident and non-resident companies operating in the country.

Corporate Forms and Taxation:

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

Exemptions and Incentives:

  • Investment Incentives: Under the Investment Law, Equatorial Guinea offers tax holidays and customs duty exemptions to companies investing in priority sectors such as oil and gas, agriculture, fisheries, and infrastructure. These incentives include CIT exemptions for up to five years and reduced customs duties on imports of machinery and raw materials.
  • Free Zones: Companies operating in designated free zones may benefit from CIT exemptions, VAT exemptions, and customs duty reductions for up to 10 years.

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

Standard Rate: 15%
Equatorial Guinea imposes VAT at a standard rate of 15% on most goods and services. VAT is applied to domestic production and imports.

Exemptions:
Certain goods and services, including healthcare, education, and basic food products, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT paid on inputs used in producing export goods.

Personal Income Tax (PIT)

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

Resident Tax Rates for 2023 (Annual Income):

  • Up to XAF 1,000,000: 0%
  • XAF 1,000,001 to XAF 3,000,000: 10%
  • XAF 3,000,001 to XAF 5,000,000: 20%
  • Above XAF 5,000,000: 35%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 20% on Equatorial Guinea-sourced income.

Deductions and Allowances:
Deductions are available for social security contributions, medical expenses, and certain educational expenses.

Additional Mandatory Contributions

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

  • Employer Contribution: 20% of gross salary.
  • Employee Contribution: 1% of gross salary.

Withholding Taxes

  • Dividends: 25%
  • Interest: 10%
  • Royalties: 15%
    Equatorial Guinea imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under double taxation agreements (DTAs).

Transfer Pricing Rules

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

Special Tax Regimes

  • Free Zones: Companies operating in Equatorial Guinea’s free zones enjoy CIT exemptions for up to 10 years, VAT exemptions, and customs duty reductions on imported goods. These zones are designed to promote investment in manufacturing, logistics, and export-oriented sectors.
  • Oil and Gas Sector: Equatorial Guinea offers significant tax incentives to companies operating in the oil and gas industry. These include reduced withholding taxes, VAT exemptions, and customs duty exemptions on equipment used for exploration and production.

Other Taxes

  • Customs Duties: Equatorial Guinea imposes customs duties on imports, with rates ranging from 5% to 30%, depending on the type of goods. Essential goods and raw materials for production may benefit from lower or zero customs duties.
  • Excise Taxes: Excise taxes are levied on goods such as alcohol, tobacco, and petroleum products.
  • Property Tax: Property tax is levied on commercial and residential properties, based on the rental value or market price of the property.

Double Taxation Agreements (DTAs)

Equatorial Guinea has signed double taxation agreements (DTAs) with countries including Spain, Portugal, and Morocco. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Equatorial Guinea and other jurisdictions.

Local Taxes

Local governments may impose minor municipal taxes, such as property taxes and business registration fees. However, most major taxes, including CIT, PIT, and VAT, are centrally administered by the General Directorate of Taxes and Contributions (DGIC).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by March 31st of the following year. Personal income tax returns are generally due by April 30th. VAT returns are filed monthly or quarterly, depending on the business’s turnover.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. Interest is generally charged at 1% per month on overdue tax amounts, with additional penalties for tax evasion or underreporting income.

Recent Developments

Oil and Gas Sector Investment:
Equatorial Guinea’s economy heavily relies on oil and gas production, and the government continues to promote investment in the sector. Companies involved in exploration and production benefit from tax incentives, including reduced withholding taxes and VAT exemptions on imported equipment.

Economic Diversification Efforts:
In recent years, Equatorial Guinea has been working to diversify its economy beyond oil and gas. The government offers tax incentives for investments in agriculture, fisheries, tourism, and renewable energy. Companies investing in these sectors may benefit from reduced CIT rates, customs duty exemptions, and VAT deferrals.

Focus on Infrastructure Development:
To improve infrastructure, Equatorial Guinea offers tax incentives to companies involved in the construction of roads, ports, and energy facilities. These incentives include CIT holidays and customs duty exemptions on construction equipment and materials.

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