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Chad - Indirect Tax Guide

Chad - Indirect Tax Guide

Explore the requirements and rules that apply to indirect taxes in Chad.

Explore the requirements and rules that apply to indirect taxes in Chad.

Tree and old building desert

General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

  • 18 percent.

Are there any reduced rates, zero rates or exemptions?

Zero-rate applies to exports and related international transportation.

Exempt supplies include:

  • products made by farmers or fishermen
  • newspapers and periodicals 
  • social, medical, educational, sports philanthropic or religious services by non-profit organizations
  • rental operations on non-building land and bare premises
  • medical or paramedical services
  • education
  • fueling of a foreign-going aircraft
  • non-industrial and non-commercial sales, transfers or services by government
  • essentials such as bread, milk and corrective eyeglasses
  • equipment and goods for oil and mining research and imports thereof
  • interest
  • health care
  • certain supplies subject to specific taxes including insurance
  • real estate and corporate goods subject to transfer duties except if carried out by property or leasing agents
  • payments to the Central Bank
  • equipment to produce and distribute water and electricity
  • drinking water and electricity provided by the Chadian Water and Electricity Company (Société Tchadienne d’Eau et d’Electricité (STEE)) or a state-owned company
  • games of chance and entertainment.

What are the general and specific place of supply rules, if applicable?

A transaction shall be deemed to have been carried out in Chad:

  • where, in the case of sale of goods, the goods are delivered in Chad
  • where, in the case of other transactions, the service provided, the rights transferred or the object hired is used or operated in Chad.

VAT/GST registration

Who is required to register for VAT/GST?

Enterprises registered under the actual earnings and the simplified tax regimes are liable to register for VAT.

Is voluntary VAT/GST registration possible for an overseas company?

No.

Does an overseas company need to appoint a fiscal representative?

Yes (accredited solvent representative). No bank account required.

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Monthly VAT returns:

  • must be submitted within 10 days of the month following the carrying out of the taxable operations if VAT-exclusive turnover is more than 500 million Central African franc (XAF)
  • must be submitted within 15 days if VAT exclusive turnover is less than XAF500 million.

Can returns be filed and payments be made electronically?

No, returns must be filed in hard copy at the Tax Center.

Payments are made through bank transfer.

What are the exchange rate rules?

Exchange rates are determined by national financial institutions. The exchange rate for the euro (EUR) and XAF is fixed: XAF655.957=EUR1.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Is it a prerequisite that output tax be charged before input tax can be claimed?

No.

Are there any exemptions with the right to recover or deduct input VAT?

Input VAT cannot be deducted on:

  • housing, lodging, accommodation, reception, corrective eyeglasses, hiring of vehicles and transport of people, except for tourism, accommodation and spectacle-manufacturing professionals
  • services linked to goods for which a VAT deduction is denied
  • petroleum products, except fuels that are bought for resale or for the production of electricity that will be resold
  • goods yielded without remuneration or at excessive remuneration 
  • vehicles designed for the transport of people or for mixed use, which constitute fixed assets.

For what period of time may input tax not previously claimed be claimed (i.e. prescription)?

The right to deduction may be exercised until the end of the second financial year following the one in which the VAT fell due.

Where a VAT return reflects a refund due to the taxpayer, is the refund paid to the taxpayer or is the taxpayer required to utilize the refund as a credit against future payments?

Refunds are paid after quarterly accumulation.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Yes, it is possible.

Is it possible to issue recipient-created tax invoices?

No.

Audits

Do tax audits take place on a regular basis?

Yes.

At any time after monthly submissions, especially when the taxpayer requests that a payment be offset against VAT credits from liable operations.

The tax authorities have 3 years to audit and to make adjustments on omissions, inadequacies and inaccuracies or errors in tax declarations and accounting documents.

Are audits done electronically in your country/territory (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

Penalty is 5 percent. Interest on late payment is 5 percent per month or part thereof up to a maximum of 50 percent.

Special indirect tax rules

Are there unique country/territory-specific indirect tax rules that differ from 'standard' indirect tax rules in other jurisdictions?

No.

Does a reverse charge mechanism apply?

Yes.

The recipient is responsible to withhold and pay the VAT.

Can VAT on reverse charges be claimed as input tax, to the extent that the expense on which the reverse charge VAT is accounted for, is used for taxable purposes?

Yes.

Can non-residents appoint local agents in order to avoid reverse charge VAT by virtue of charging standard rate VAT and accounting for such VAT through the agent?

Yes, however, such agent must be accredited by the Tax Administration and the banks.

Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?

Yes. Investors have the opportunity to enter into an agreement with the state in order to obtain tax incentives and, depending on the nature of investments, reduced rates or exemptions can be granted.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

There is no legal disposition that organizes the application for advance rulings. However, in practice, as stated in general principles of fiscal law, an investor can seek the opinion of the tax authority on the tax system applicable on a specific operation.

Are rulings and decisions issued by the tax authorities publically available?

No.

Other indirect taxes

Are there other indirect taxes not commented on above?

Yes, other indirect taxes include:

  • customs duty — rates 5–30 percent
  • excise duty— rates 5–30 percent
  • transfer duty
  • stamp duty.

For further information please contact

Jacques Bounang
Senior Partner
KPMG in Afrique Centrale
T: +237 33 42 73 68
E: jbounang@kpmg.cm

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

Disclaimer

All information contained in this document is summarized by KPMG in Chad, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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