Guinea’s new Finance Act was promulgated by the President of the Republic on 19 December 2016 and a Circular Letter (N°0132 / MB / DNI / 2017 issued by the tax authorities on 3 January 2017 expressly provided that its tax provisions entered into force as of 1 January 2017.
This Finance Act 2017 has introduced innovations and significant changes, primarily on Value Added Tax (VAT), minimum corporate income tax (IMF), single real estate tax (CFU), registration duties (DE), withholding tax on non VAT registered entity, tax incentives granted to the Centre de Chartered Management (Centre de Gestion Agrée) and on the obligation to certify the financial statements.
This Alert summarizes the key tax provisions.
Reduction of the VAT normal rate
The VAT rates applicable to all taxable operations including flour and food oils but excluding exports and international transport has been reduced from 20% (initially set up by the 2016 Finance Act) to 18%.
For exports and international transport, the zero rate has been maintained.
New exemption for flour and edible oil
In accordance with article 9, flour and additives used in its production as well as edible oils are once again exempt from VAT. Indeed, the Finance Act 2017 has removed the amendment that had been introduced by the Finance Act 2016 which had inserted the said products into the scope of the VAT during 2016.
During 2016, in order to secure the VAT recovery for the revenue authorities, it was provided that government-owned companies, mining and oil & gas companies as well as mobile phone companies were mandated to withhold 50% of the VAT invoiced by their suppliers. However, article 10 of the new finance act expanded its scope to companies whose shares are held by the Government (at least at 50%).
Moreover, the law also stipulates that the VAT in question is the one invoiced by the suppliers of goods and also by the service providers.
Withholding tax (WHT) on non VAT registered local entities
Initially applied on all local purchases of goods and services made by State and local governments, public institutions and mining companies, the scope of this WHT has been expanded to several other companies (telecommunication companies, bank, and insurance companies, establishment of microfinance and oil companies) through several finance acts (FY 2000 article 16 and FY 2012 article 5).
The article 16 of the new finance act completed section 254 of CGI by broadening the scope of this WHT to the companies whose shares are held by the Government (at least at 50%).
Minimum corporate income tax (IMF)
Increase of the minimum tax
Article 11 of the new finance act has amended article 244 of the General Tax Code and therefore increased the amounts of this tax.
From now own, this tax (which is equal to 3% of the turn owner with a minimum and a maximum amount to pay) will be paid as follow:
- For large companies, the IMF cannot be less than GNF45 million or exceed GNF60 million (versus previous amounts which were GNF15 million for the minimum and GNF60 million for the maximum).
- For medium-sized businesses, the IMF cannot be less than GNF15 million, nor greater than GNF45 million (versus previous amounts which were GNF4.5 million for the minimum and GNF15 million for the maximum).
The fraction of the IMF greater than GNF6 million for large companies and GNF3 million for other companies, can now be offset against the payable corporate income tax.
Single real estate tax (CFU)
Article 265 of the General Tax Code had fixed two rates regarding the CFU and did not make any distinction based on the use or purpose of the building. For the buildings occupied by the owners, the applicable rate was 10% of the annual rental value and for the rented building, it was 15% of the annual rental value.
However, the CFU rates have been modified by article 14 of the new finance act which now distinguishes between residential use and professional use.
In this respect the new rates are fixed as followed:
- For building of housing occupied by the owners: 5% of the annual rental value
- For professional buildings occupied by the owners: 10% of the annual rental value
- For rented buildings: 15% of the annual rental value
Previously, business transactions (sale of goods or supply of services) not specifically provided for in the General Tax Code were not mandatorily subject to registration. If voluntarily submitted by the parties, only a fixed fee of GNF100,000 was due.
As of 1 January, such transactions are subject to the following rates.
- Contract for the supply of goods and services (excluding public procurement) are registered by applying the following rates to the value of the contract:
- From GNF1 to GNF100 million: 1%
- From GNF100 million plus 1 to GNF1 billion GNF: 0.50%
- From GNF1 billion plus 1 GNF10 billion: 0.25%
- More than GNF10 billion: 0.10%
- Public market: the registration fees have been reduced to 2% of the amount of the market (instead of the initial 5% rate)
Chartered Reporting Centre incentives (Centre de Gestion Agrées)
The Chartered Reporting Centre was initiated by the finance act for year 2008 with a mission to:
- Develop the use of accounting in the various sectors of the national economy
- Provide member companies with management and financing assistance
- Provide assistance for the monitoring of the tax and social obligations of members
Article 12 of the 2008 finance act provided that tax incentives will be granted to its members which consist in reductions and deductions of taxes, the level of which was to be determined subsequently by decree of the Minister of Finance. But to date we are not aware of any such decree being issued.
However, it is with this in mind that Finance Act 2017 in order to promote the CGA and to encourage small and medium enterprises and industries (SME/SMI) to join it, provided that the following tax benefits were to be granted to its members:
- For the benefit of the Centre:
- Registration of the articles of association with the fixed right set at GNF100,000
- Exemption from tax on profits during the first three years
- Exemption from the lump sum payment on salary and the training (or apprenticeship) for the first three years
- For the benefit of its members:
(Members subjected to the real simplified tax regime and the regime of the synthetic tax)
- A reduction of the profits tax, 50% for three years and 25% from the fourth year
- An Exemption from professional tax during the year of membership and the two following years
- An exemption from the IMF for the first three years
The obligation to certify the financial statements
Article 17 of the new finance act, stipulates that all individual or entities which operates an industrial, commercial, non-commercial activities or an economic interest group are required now to maintain their accounting in accordance with the OHADA accounting system (SYSCOHADA) and also are under an obligation to certify its financial statements for each financial year end by an auditor approved in Guinea and communicate them at each year-end to the tax authorities (no later than 30 April).
However, for taxpayers with an annual turnover below GNF500 million and subjected to synthetic tax, these obligations are not applicable.
EYG no. 00739-171Gbl