Income Tax Rate |
35 |
Minimum tax is 3% of turnover unless exempt. |
Capital Tax Rate |
35 |
This tax can be deferred if proceeds are reinvested. |
Branch Tax Rate |
35 |
Minimum tax is 3% of turnover unless exempt. |
Withholding Tax |
|
|
Dividends |
15 |
|
Interest |
20 |
|
Royalties from Patents, Know-how etc |
10 |
Applicable to payments to non-residents. |
Branch Remittance Tax |
15 |
|
Net Operating Losses (Years)
Carryback |
0 |
|
Carryward |
3 |
|
Top Rate |
45 |
|
VAT |
18 |
Added to all sales of goods and services, imports and exports. |
Import Tax |
33 |
An import tax is levied on all imports. Guinea is not a member of the WEAMU. |
source: Ernst & Young
Tax Environment
Tax is applied on the principle of territory, therefore Guinean companies carrying out operations outside of the
country are not taxed. Compliance rates are low. The administration of the taxation system is poorly run,
making enforcement of tax payments difficult.
Tax and Duty Rates
There are a large number of tax exemptions available to companies operating in Guinea, though the IMF has
identified the incentives as a loophole that needs tightening up. The Investment Code (1987) sets out the
framework of these incentives, which are processed through the National Investment Commission (CNI). There
are five regimes:
- High Priority Investments
These are available to companies establishing in areas such as agricultural development, transport,
tourism or telecommunications. Incentives include exemption from customs duties (for up to two years)
and discounts on income tax on local employees.
- Small and Medium Enterprises (SMEs)
In order to qualify for incentives under this regime, a company must have Guinean majority shareholding,
fall within a 'high priority sector' and possess assets between Gfr15-300m. The regime provides exemption
from minimum income tax for 10 years and a lower rate of tax on profits for five years.
- Exporting Firms
In order to be eligible for exporting firms' incentives, a company must operate within a 'high-priority
sector', invest at least 33% of the investment in cash, export non-traditional Guinean produce (not
including minerals) and export more than 22% of its turnover. The regime provides relief from corporate
income tax on profits that are equal to the export total sales proportion for five years. The ceiling for this
relief is 60%.
- 'Value-Adding' Enterprises
In order to qualify as a 'value-adding' firm, a company must operate within a 'high-priority sector', invest
at least 33% of the investment in cash and at least 70% of the components (or goods) must be of
Guinean origin. The main tax incentive is a 20% deduction from the taxable income on Guinean materials
used for the first five years.
- Enterprises in Less Developed Areas
This incentive is designed to decentralise economic activity from the capital. For its purposes, Guinea is
divided into two zones: Conakry and suburbs, and the rest of the country. Firms that establish outside
Conakry are entitled to a five-year exemption from income tax and a reduction of one-third of turnover
taxes, again for a five-year period.
Assessment
The Guinean tax system has been identified for upgrading and overhauling under the direction of the IMF. There
are currently thought to be too many loopholes, which, rather than attracting investment to Guinea, is cutting
the state off from a potential source of revenue. Measures are in the pipeline to broaden the tax base and
strengthen the administration of the tax system, which is being computerised. Public companies are among
those being investigated for non-payment of substantial tax payments and have even been found to have
forged tax payments. In early 2001, authorities uncovered a conspiracy involving the employees of the tax
directorate, the Central Bank and some commercial banks, who had colluded to defraud the government of
taxes paid by businesses. Tax funds were diverted to the private bank accounts of those involved, with losses
estimated to be in the region of US$1.5m. Those involved were hauled up before the authorities and a full
investigation was launched to ensure that any similar fraud would not happen again.
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