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Equatorial Guinea - Indirect Tax Guide

Equatorial Guinea - Indirect Tax Guide

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

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

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General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

15 percent.

Are there any reduced rates, zero rates or exemptions?

The reduced rate of 6 percent applies to basic consumables and books.

Zero-rated supplies include exports and certain medical products and equipment. 

Exempt supplies include:

  • raw farming goods
  • medical services
  • listed staple goods
  • education and school and university books
  • newspapers and periodicals
  • rental of unfurnished houses
  • social, educational, sports, cultural, philanthropic or religious services or operations
  • payments by the Treasury to the Central Bank and proceeds in connection with the issue of banknotes
  • the following, provided it is subject to specific taxes:
    • products from soil and subsoil extraction
    • real estate, real estate rights and goodwill subject to asset transfer tax
    • interest 
    • travelers importing goods not exceeding 500,000 Central African franc (XAF)
    • banking, insurance and reinsurance
  • international traffic operations including commercial ships or vessels on the high seas and salvage or rescue ships.

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

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

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

VAT/GST registration

Who is required to register for VAT/GST?

Individuals and legal entities engaged in economic activity, regardless of the nature or output, which are classified as taxpayers (or their representatives) pursuant to the tax code, must register with the tax administration and obtain a tax identification number.

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

No.

Does an overseas company need to appoint a fiscal representative?

Yes (a solvent and accredited representative).

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

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

Monthly returns are due before the 15th of the next month.

Can returns be filed and payments be made electronically?

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?

Yes.

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

Input VAT cannot be deducted on the following:

  • private vehicles (including parts and repairs)
  • if the invoice does not reflect client’s name
  • after 2 years
  • where it relates to exempt supplies.

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?

VAT credits are generally deductible from what is due. Where there is a remainder after the deductions, it is refunded after a 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.

The accuracy of declarations is verified and audits may then be conducted at any time.
Verification audits are conducted examining documents, books, invoices, electronic files, bank accounts and all other documents require by the tax authority or necessary to fix taxes d up to the end of 5 years following that under which the tax fell due.

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?

Penalties (and interest) ranges depend on the administrative correction procedure:

  • contradictory procedure: penalty is between 50 and 100 percent, interest is 10 percent
  • unilateral procedure: 100 percent penalty and 10 percent interest.

Both correction procedures can be followed if there is any shortfall, inaccuracy, omission or concealment in the tax calculation.

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 for withholding and paying 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)?

There are no tax incentives provided in the tax legislation.

However, depending on the nature of activities of investors, the state can authorize reduced rates or total exemption from the payment of taxes.

Rulings

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

There is no legal disposition providing advance rulings. However, in practice, like stated in gene 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:

  • special duty tax
  • import duties ranging from 5 to 30 percent.

For further information please contact

Jacques Bounang
Senior Partner
KPMG in Central Africa
T: +237 33 42 73 68
E: jpbounang@c2a-cm.com

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 Equatorial, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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