TaxNewsFlash-Africa

August 3, 2009
No. 2009-07

Gabon: Changes to the Simplified Tax System That Applies for Petroleum Subcontractors

In Gabon, provisions contained in Order no. 00670/MEFBPIP/CAB/SG/DGI (April 20, 2009) amend Order no.00001/MINECOFIN (January 3, 1983) relating to the conditions for the application of the simplified tax system that is reserved for use by certain petroleum subcontractors.

Background

Provisions under Article 47 et seq. of Gabon’s general tax code (Code Générale des Impôts Gabonais) provide for a simplified tax system for oil company subcontractors.

This optional tax system allows for a notional determination of both the corporate income tax (impôt sur les sociétés—IS) and the individual income tax (impôts sur le revenu des personnes physiques—IRPP) of the oil company’s employees, with the income tax liability of the company and employees being determined based on the amount of sales.

Corporate Income Tax

Under the simplified tax system, the corporate income tax (IS) liability of an oil company subcontractor is calculated based on an amount of profit which is determined to be 15% of the pretax sales turnover made in Gabon. Under the 2009 order, that notional rate is increased from 15% to 16%, and the increased rate applies for a period of three years beginning January 1, 2009, for the fiscal years ending in 2009, 2010 and 2011.

Under the simplified tax regime, sales turnover includes total gross, tax-exclusive remuneration, with the exception of:

Any sums received for the mobilization / demobilization of equipment and crews on condition that they correspond to an actual transfer into or out of Gabon, and that the sums are reasonable and invoiced separately

Any reimbursements of expenses and for accessory supplies invoiced separately, with the amount of the expense or the cost of the supply, as well as related handling and similar expenses, being clearly invoiced

The corporate income tax (IS) rate, itself, remains unchanged at 35%.

Individual Income Tax of the Employees of the Petroleum Subcontractor Under the Simplified Regime

The individual income tax (IRPP) liability of the subcontracting company’s employees is also determined with reference to a notional basis.

Under the simplified tax system, the company’s payroll is determined to be equal to 14% of the pretax sales turnover made during each calendar-year quarter.

The rate of the IRPP (which is withheld by the employer) is set at 22% of the payroll determined on a notional basis (as unchanged under currently effective law).

To qualify for the simplified tax system, companies must satisfy the following conditions:

Be a foreign nationality
Have signed their subcontracting agreements with either an oil company or a direct contractor of a temporary company engaging workmen
Pursuant to contractual obligations, use professional equipment directly linked to the activity defined in the agreement, and not available on the local market and necessitating significant investments
Have obtained the Ministry of Commerce’s approval to perform temporary activities
Be registered with the Registre de Commerce et du Crédit Mobilier

Simplified Tax System Procedures

To select the simplified tax system, the petroleum subcontractor must make a request in a letter to the Directeur Général des Impôts. The election for the simplified tax system is irrevocable for three years and may be renewed twice, but the total term of the simplified regime may not exceed nine years.

The simplified tax system is not available for companies that have been engaged in activities in Gabon for more than nine years.

For more information, contact a tax professional with Fidal Direction Internationale* in Paris:

Yves Robert, Tax Partner : +33.1.55.68.15.76, yrobert@fidalinternational.com

Mohamed Mahjoubi, Tax Manager: +33.1.55.68.16.53, mmahjoubi@fidalinternational.com

*Fidal is a French law firm that is independent from KPMG and its member firms.

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