Gabon’s 2011 Finance Act introduced a special tax regime for group companies. The benefit of this regime is subject firstly to compliance with certain conditions relating to the legal and tax status of the company and secondly to the performance of certain activities defined by law. A group of companies is taken to mean a group of companies subject to equivalent foreign tax in whatever form, linked together by direct or indirect capital links of at least 50% and which enable one or more of them, jointly, to control the others. Companies which are members of a group of companies and which have a Gabonese entity at the head of the group may benefit from the tax advantages introduced by the Gabonese legislator in this area. There are many taxes linked to this special tax regime, but in the course of this analysis we will focus on the tax on income from movable capital.
First of all, as mentioned above, certain conditions relating to the legal and tax status of the company and the performance of certain activities must be met in order to benefit from this special tax regime. Specifically speaking, these are, on the one hand, the holding of at least 50% of the capital of other companies; the possibility of directly or indirectly controlling the other companies that fall within the scope of the group and, on the other hand, that the company at the head of the group carries out exclusively the following activities for the benefit of the other companies in the group: the provision of services[1], research and development for the sole benefit of the group, intra-group cash management.
Secondly, with regard to the tax advantages granted to companies by the establishment of a corporate group, income from movable capital of Gabonese origin is subject, in respect of income tax on movable capital, to a deduction at a rate of 5% in full discharge of any corporation tax liability. However, when payments are made by the head company of the group to its associates, whether individuals or legal entities, they are subject to IRCM at a uniform rate of 10%, in full discharge of any corporation tax liability.
In addition, foreign source income from transferable securities that has been taxed in the country of origin in the same way entitles the taxpayer to a Gabonese tax credit of the same amount, which can be offset against corporation tax for the year in which the income is received and the two following years. This Gabonese tax credit applies whether or not the country of origin of the income from transferable securities has signed an agreement with the Gabonese Republic to eliminate double taxation on income tax.
However, it should be noted that the conditions relating to capital links and the nature of the business are cumulative conditions and failure to satisfy one of them will result in exclusion from the tax regime for groups of companies.
[1] Technical, accounting, administrative, legal, IT, etc