Angela Adibet, Head of Legal and Tax Department, Deloitte Gabon, on the Finance Act of 2016 and the fiscal framework: Viewpoint

Viewpoint: Angela Adibet

Effective since February 1, 2016, new fiscal provisions were established by the Finance Act of 2016. Subject to the provisions of applicable tax treaties, the withholding tax rate on fees paid by Gabonese debtors to non-residents has increased from 10% to 20%. This withholding tax applies to royalties and other payments made for services rendered of any nature utilised in Gabon, whilst paid to natural or legal persons that do not have permanent offices in the country.

However, the existence of a tax convention may neutralise the charges realised by the withholding tax on some or all revenues, or cap the withholding tax rate. For suppliers headquartered in CEMAC or OCAM member countries, the withholding tax is not applicable. For those located in France, only those services delivered for the use of, or the right to use, copyrights, patents, trade names and trade secrets are subjected to the withholding tax. The concerned services for providers headquartered in Belgium or Canada includes leasing industrial equipment, as well as its operating programme, the use of licences, patents, brands, property rights, engineering services, provision of information related to protected information and technical, and scientific studies.

The fiscal legislation also imposes a tax on distribution on net cash proceeds after the branches, located in Gabon and belonging to foreign firms, are subjected to the corporate tax. Imposition of such charges is made by way of the withholding tax by the Gabonese branch before its profits are apprehended by its foreign-based mother company.

The withholding tax rate increased from 15% to 20%. However, the rate will remain at 10% for branches of foreign firms residing in countries that have signed a tax convention with Gabon.

Hereafter, value-added tax (VAT) charged on services rendered by non-resident providers is no longer deductible, as long as said services can also be provided by local suppliers. Nevertheless, this disposition raises difficulties regarding its applicability, given the lack of accurate means to judge the availability of services locally. The fiscal administration may now engender control operations on a company’s premises, even past the previous 12 month delay, in regards to controls over transfer price, when required by the extent of the research or circumstances.

Within the context of the fight against fiscal evasion and fraud, all persons established in Gabon and having constituted under the rights of foreign law, an entity classified as a trust by a foreign jurisdiction, must make a declaration by providing a certain amount of information, the Exchange of Information for Tax Purposes Unit (Cellule d’échange de renseignements à des fins fiscales, CERF). This obligation also concerns those residing in Gabon and those who benefit from revenues of trusts established abroad.

The CERF may require the competent services of the Directorate-General for Taxation and may exert the right to communicate with taxpayers in an effort to gather the information necessary to fight fiscal evasion and fraud. For constituents this information concerns banking details, civil status, complete Gabonese address, and the address and details of the foreign trust. For the beneficiaries it concerns banking details, civil status and address of attorney, and the owner and beneficiary of last resort of revenues incurred from the trust.

In the last few years we have seen a willingness by the Gabonese state to create a modern and attractive tax framework in an effort to secure tax revenues, which favour private investment and competitiveness. The main measures in this regard were creating an aid procedure for tax regularisation for taxpayers in 2016, encouraging the restructuring of enterprises in 2015 through a scheme to facilitate the grouping of companies subject to corporate tax and lowering the corporate tax rate from 35% to 30% in 2013 for companies outside the oil and mining sectors.