Chad
Overview
VAT was introduced into Chadian legislation on 1 January 2000 by Law Number 024/PR/99 to replace turnover tax.
Release date: May 2023
Rates and scope |
Since January 2022 there are three rates applicable to transactions subject to VAT:
An operation performed in Chad which constitutes an economic activity and for which payment is made, unless included in the list of exemptions, is liable for VAT even if the residence of the natural person or the registered office of the legal entity is located outside of Chad. From January 1, 2023, electronic services provided in Chad attract VAT. Electronic services include services provided by foreign or local e-commerce platforms as well as commission received by the operators of these platforms. The tax basis corresponds to the amount of money paid for the provision of goods or services, including: - Taxes, duties and levies of any kind except VAT and withholding tax on wholesales. - Incidental expenses related to the delivery of goods and services billed to customers. - Allowances which are damages and interests. - Subsidies which are the sole consideration for a taxable transaction or which constitute an addition to the price of such a transaction or are intended to offset globally the insufficiency of the operating revenue of a company. - Reimbursements of costs incurred by a supplier on behalf of its customer, unless they are re-invoiced for their exact amount (disbursements), and on the express condition that the invoice is accompanied by original documents. In the case of importation, the tax base corresponds to the customs valuation (price of sale of goods plus cost of insurance and transportation, etc. until arrival in Chad), plus any excise duties. |
VAT registration |
Compulsory registration Every person who is liable for paying VAT has to make a declaration of existence and register with the Directorate of Large Companies (Direction des Grandes Entreprises) online via the E-TAX platform or manually within 15 days from the beginning of their activity. |
Group and branch registration A foreign company can establish economic activities in Chad either by setting up a branch or through a Chadian legal company (subsidiary). Branches shall be registered in the trade register. A branch shall have a legal representative who has to perform several administrative formalities (administrative authorisation for pursuing a commercial activity, foreign merchant’s card, etc.). Therefore, a branch shall make a declaration of existence and register with the Directorate of Large Companies online via the E-TAX platform or manually within the15 days from the beginning of its activities. There is no group registration. |
Non-residents Financial operations carried out between Chad and foreign countries outside of the Central African Economic and Monetary Community (CEMAC) area are subject to either a declaration or an authorisation:
VAT applies when the service is used or where the product is manufactured or first put on the market. Where such a place is different from the head office or the main establishment, the taxpayer must appoint a solvent representative accredited by the tax authority of the said place, who is a resident in Chad. This representative will be jointly and severally liable for VAT. In case of failure to appoint a representative, VAT and, where applicable, the attendant penalties will be borne by the client on behalf of such taxpayer without a fixed or permanent professional establishment in Chad. It is not a requirement for persons carrying out taxable transactions to have a bank account in Chad. |
Deregistration Any termination, transfer or modification of taxable activities is subject to a declaration online via the E-TAX platform within 15 days following the date of the termination transfer or modification to the Directorate of Large Enterprise. |
Output tax |
A taxpayer shall deliver an invoice for every operation entered into with other taxpayers. VAT is deductible if the following cumulative conditions are fulfilled:
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VAT exemption |
The following supplies, activities and income streams are exempted from VAT:
Goods and services which are not directly assigned to oil activities and which are not in the list and those which do not give rise to a right of deduction shall be submitted to VAT.
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Zero-rated supplies There is a 0% rate for certain export-related international transportation, aircraft groomers with Jet A1 for planes to foreign countries, destinations as well as products and by-products of the local food industry excluding alcohol. This 0% rate applies only to exports for which a duly stamped statement in this regard has been obtained from Customs. These include:
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Input tax |
Input tax allowed/Tax allowance Only registered taxpayers that are subject to the normal tax system and those subject to the simplified tax system are authorised to charge VAT in an apparent manner and to deduct it. They shall be required to submit their returns monthly. |
Partial exemption Some firms are subject to a partial exemption because they carry out both operations giving rise to a right of deduction and those not giving rise to a right of deduction. When performing taxable and non-taxable (exempted) operations, the deductible VAT is calculated on a pro rata basis, which is determined as follows: Pro rata = Taxable operations + exports of taxable goods
These are taxpayers who carry out taxable operations in their normal course of operations or occasionally, in an independent manner. VAT is only deductible if the goods or services are necessary for their activities. VAT is deductible until the end of the second fiscal year following the financial year of the generating event. Taxpayers are entitled to recover VAT cancelled and paid on annulled or terminated taxable operations. To this effect, a new invoice which substitutes the former shall be issued and sent to the customer. Taxpayers are also entitled to recover cancelled and paid VAT relating to operations for which the debt is definitively and truly irrecoverable. To this effect, the duplicate invoice which substitutes to the original shall be issued and sent to the customer. |
Input tax expressly denied Taxpayers subject to the flat-rate tax ‘Impôt Général Libératoire’ are not allowed to deduct VAT, except if they have expressly chosen the simplified tax system. Input VAT supported by taxpayers who are not mentioned on the list of active taxpayers provided by the General Directorate of Tax Services is not deductible. ‘Non-active taxpayers’ are any taxpayers that are not compliant with their tax declaration obligations. VAT deduction is expressly denied for certain operations, such as:
The taxpayer may also choose to divide its activities into sectors for VAT purposes (subject to conditions), namely a taxable sector (where VAT paid to providers is fully deductible) and an exempt sector (where VAT paid is not deductible). VAT paid to providers for goods and services used by both sectors is deductible on a proportional basis, calculated as indicated above. For the calculation of the relevant proportional shares, the following elements are not taken into account:
Deductible VAT is determined by means of a pro rata calculation, and the deduction may be made only after verification of the ratio. The amount of the final proportion must be settled at the latest by the filing date of the Statistical and Tax Declaration. Deductible VAT will only be approved after the pro rata calculation has been verified by the tax administration. In order to obtain the VAT deduction, the taxpayer must complete a declaration setting out the pro rata VAT calculation, and request that the tax administration validates it at the same time. |
VAT deduction on foreign services For foreign service providers without professional installation in Chad, VAT charged on taxable transactions may be deducted the month following that in which VAT has been collected and paid. |
Withholding tax on VAT Introduced by the 2017 Finance Law and modified by the 2017 Amending Finance Law, the withholding VAT was effective from September 1st, (decree N°114/PR/MFB/DGM/DGSI/2019). The 2020 Finance Law definitively fixed the regime of withholding VAT. State, local authorities, public companies, public and para-public institutions and private companies shall withhold VAT when paying suppliers of goods and services that are not listed in the list provided by the tax administration. The withheld VAT shall be declared online via the E-TAX platform and paid to the Public Treasury no later than the 15th of the month following that of payment. The Public Treasury shall issue a receipt to testify the payment. The taxable event and the due date for withholding tax on supplies of goods is the invoice. For supplies of services, a taxable event is the execution of services and the due date is payment of the invoice. Taxpayers entitled to withhold VAT shall attach to their VAT tax return the list of companies subject to withholding VAT, their tax identification member (TIN) and the withheld amounts. Public and private companies and public and para-public establishments that are authorised to withhold VAT are exempted from the said withholding tax on invoices for services rendered among themselves. Any compensation between the amounts of VAT withheld and tax due by the collector is not allowed. The list may be reviewed. To this day, only 90 public and private companies and public and para-public establishments are entitled to withhold VAT. The accountants of public and para-public institutions which have their name on a list established by the Tax Authorities and the financial directors of public or private companies are personally and financially liable for any VAT withheld which has not been paid or has been partially paid. |
Adjustments When VAT has been deducted on fixed assets and there is either a change in the law or a change of use before the fourth year following the year in which the assets were purchased, the taxpayer must pay back a part of the VAT previously deducted, calculated as one fifth per year that has passed since the asset was purchased. The full amount of VAT deducted must be paid back where services and goods that are not fixed assets are subsequently used for non-taxable operations. In case of transfer, if the goods are an asset to the buyer, the buyer can deduct the corresponding VAT or the amount repaid by the seller as regularisation, provided the buyer itself is subject to VAT. However, this deduction is subject to the seller providing the recipient with a certificate indicating the amount of tax, which is deductible. |
International trade |
Imports For the importing of goods, the VAT base consists of the value of the goods as defined by the CEMAC Custom Code plus customs duties and excise taxes, except the VAT and the 4% tax deduction at source. Usually, the value of the goods is the cost, insurance, and freight value upon arrival in Chad with the exclusion of VAT, and 4% tax deduction at source. VAT on imports will be paid at the same time. |
Exports There is a 0% rate for export-related international transportation, aircraft groomers with Jet A1 for planes to foreign countries, destinations as well as products and by-products of the local food industry excluding alcohol. This rate only applies to exports where the documentation has been duly stamped by the customs services. To the best of our knowledge, there are no specific rules relating to VAT refunds to foreigners. |
Place, time and value of supply |
VAT territoriality An operation is generally deemed to be performed in Chad in the following cases:
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Due date The time when payment of VAT must be made for a supply is as follows:
Service providers and contractors, or companies that operate mixed supplies of goods and services, may be authorised to pay VAT on a debit basis. This authorisation does not apply to business conducted with the state or local authorities. In case of collection of the instalment before the debit note, the tax is due at the collection time. |
Taxable base The value of supplies, which constitutes the taxable base, is as follows:
The bases defined above consist of all included costs and taxes with the exception of the VAT and withholding tax liquidated by natural and legal persons. The following amounts also form part of the value of a supply:
The following items do not form part of the value of the supply:
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VAT compliance |
Accounting basis and tax periods The amount of VAT payable corresponds to the VAT collected minus the deductible VAT. The balance has to be paid when submitting the return to the tax administration. Even if there is neither taxable nor deductible VAT for a month, the form should be filled in and submitted. At the end of the fiscal year, when the turnover is determined, the proportion of deductibility has to be recalculated accordingly, and deductible VAT regularised. If the taxpayer has chosen to divide its activities into sectors for VAT purposes, it is possible to adjust the sectors according to exempted/non-exempted activities performed. |
Returns and payment of VAT VAT returns shall be submitted online via the E-TAX platform within 15 days of the month following the carrying out of the taxable operations for the taxpayers whose turnover is more than XAF 50 million. If there are no taxable operations during the month, a blank tax return with the wording ‘néant’ (none) shall be filed with the tax administration. When submitting the annual tax return online, taxpayers shall join the annual input deductible VAT file with the required information (identity of suppliers and service providers, amounts of transaction, full address, invoice number, amount of input VAT). The late filing or submission of such declarations in electronic form is subject to a fine of 5% of the duties due, without prejudice to other tax penalties. |
Penalties Penalties concerning declarations:
Penalties for acting in bad faith:
Penalties concerning sales invoices:
There is a 5% interest for late payment per month or fraction of a month sanctioned for late payments, with a maximum of 50%. The interest will not be waived if the non-compliance does not result in a loss to the state or in a benefit to the taxpayer, but the taxpayer will be sanctioned for late filing with a fine of XAF200,000 per month. |
Penalties relating to withholding VAT requirements In case of non-payment of the withheld VAT to the Public Treasury (PT) by the 15th of the following month at the latest, forced recovery measures shall be immediately implemented against the offenders without prejudice to the suspension of the authorisation to withhold VAT by the General Directorate of Tax Services. These measures include in particular:
In the case of non-withholding tax, partial payment or non-payment of the withheld VAT, a penalty shall be applied at the rate of 100% to the amount to be paid. In the case of non-withholding tax, the public companies, public and para public establishments, which are authorised to withhold VAT, will be prosecuted and sentenced to a fine between XAF5 million and XAF 25 million. In addition, the managers of the said authorised entities shall be subject to prison sentence between two and five years. Penalties and interests for late payment on withholding VAT are excluded from tax remittance (Article 42, 2020 Finance law). |
Refunds If the amount paid exceeds the VAT payable, the tax credit can be offset against the VAT payable during the 24 months following the tax credit-generating event. Since 2018, VAT credits of taxpayers, which depend on and are managed by the General Directorate of Tax Services, shall be reimbursed at their request. However, taxpayers who benefited from VAT exemptions are excluded from VAT refunds. The quarterly VAT credits of traders, which exceed 5m, shall be approved before being reported. Applications for refunds of VAT credits are addressed to the Director General of Taxes or to the territorially competent tax offices according to a form provided for this purpose or online via the e-Tax platform. Under penalty of inadmissibility, the refund application shall include:
The refund of the VAT credit is effective after examination, control and checking of the taxpayer's tax situation. All applications for VAT credit refunds recognised as justified after investigation by the General Tax Directorate give rise to a cash refund of this VAT via an account lodged at the Bank of Central African States (BEAC). |
Time limits If there is any insufficiency, mistake or omission, the tax administration can claim the VAT owing within a period of three years from the time the VAT became due (Article 1072 of General Tax Code). If the credit (resulting from excess input tax) is not offset against the VAT payable during the 24 months following the issuing of the credit, it will be lost. Such a loss is an expense that is deductible under corporate tax. |
VAT records |
Tax invoices Invoices delivered by the taxpayer to the customer shall contain the following information:
Finally, partial taxpayers shall make a distinction between transactions subject to VAT (some of which may be exempt), and those that are out of scope (i.e. not within the scope of VAT). Since January 2019, any turnover realised with natural persons or legal entities within the scope of VAT is deemed to be inclusive of all taxes (including VAT), whether or not the VAT appears on the invoice sent by the supplier to his customer. |
Electronic Invoice The finance act of 2023 introduced the electronic invoice obligation. Any transaction carried out by a natural or legal entity subject to corporate income tax, local tax or VAT, IGL gives rise to the issuance of a standardised electronic invoice. Any person carrying out purchases of goods and services from persons subject to the obligation to issue a standardised electronic invoice shall require the issuance of a standardised electronic invoice. The issuance and transmission of the standardised electronic invoice is done through a machine, in production mode, certified by the tax authorities. This machine can also be presented in a dematerialised version. A certified electronic billing machine is a billing unit or system for electronic invoicing approved by the tax authorities linked to a billing control module. An electronic invoice shall contain:
The provisions relating to the electronic Invoice shall be effective on January 1, 2024. |
Additional export documentation Exporters have to show written proof in the form of a receipt from the country to which the goods were exported and proof of the repatriation of the money by the foreign exchange transaction service. |
Record-keeping In the case of the simplified tax system, taxpayers must have regular and available bookkeeping in Chad with the following documents:
Under the normal (real tax) system, taxpayers must keep the following documents:
All these documents must be kept for a period of ten years. |
Specific VAT rules |
Land and buildings, and insurance and reinsurance contracts The following supplies fall outside the scope of the VAT system:
The following transactions are subject to specific taxation exclusive of any tax on the turnover:
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Secondhand goods For second-hand goods, the VAT base consists of the following:
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Other indirect taxes |
Import duty The tax base of customs duties corresponds with the customs valuation, namely the selling price of the goods, including the cost of delivery to Chad (costs of insurance, transportation, etc.). The rates of customs duties depend on the nature of the goods and range from 5% to 30%, with the rate for essential goods being 5%; raw materials and equipment goods: 10%; intermediate and various goods: 20%; and convenience goods: 30%. |
Excise duty Since January 2020, excise duty applies to consumer goods: tourist vehicles, wines, liquor, beers, cigars, carbonated water, soft drinks, gambling activities and machines, jewellers, precious metals and stones, motorcycles of one-cylinder capacity, perfumes and toilet waters and cosmetics. Excise duty rates depend on the nature of the goods, ranging from 5% to 30%. The taxable basis is as follows:
Mobile network operators (MNO) shall pay the excise duty at the rate of 18% on the monthly declaration of their turnover. The excise duty is levied on the turnover of mobile network operators, excluding revenue from fixed, wireline and internet communications and revenue from international interconnection as incoming international interconnection operations (calls made by customers outside Chad and established outside Chad and routed on the networks of an operator established in Chad) Fixed and wireline communications, internet and incoming international electronic communication from one State member of Group G5 Sahel (Burkina Faso, Chad, Mali, Mauritania, Niger) or from one State member of the CEMAC area (Chad, Cameroon, Congo-Brazzaville, Gabon, Guinea Equatorial, Central Africa Republic) are excluded from the basis of excise duty. |
Transfer duty Fixed or proportional transfer duties are due on the transfer of ownership, usufruct or enjoyment of personal property and real estate either by gift or as a result of death. They are also due on contributions to companies, because of marriage, and in the case of the division of property. |
Tax on money transfer From January 2022 a tax on money transfers has been introduced. Money transfer tax applies:
Tax on money transfers is not applicable to bank transfers and transfers for the payment of taxes, duties and fees. The taxable basis is the amount of money transferred or withdrawn. Money transfer tax rate is 0.2%. This rate will be increased to 0.5% for money withdrawals made on the stored communication credit (stored side). Service providers (banks, MNOs, offices and agencies) are the legal taxpayers (in charge of the collection of the money transfer tax). Money transfer tax is due by the 15th of the month following the month in which the transactions were carried out. |
Stamp duty Stamp duties are due on each civil or judicial document that is intended to be used as evidence. Stamp duty is generally XAF1,000 per sheet. There is no stamp duty greater than XAF 2,000 or less than XAF 900, whatever the size of the paper might be. Some amendments (article 557 of GCT, 2016) consist of the following:
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