Equatorial Guinea

Rates and scope

The standard VAT rate is 15%. A reduced rate of 6% is applicable to a list of basic consumables and books, and a 0% rate is applicable to certain medical products and equipment.

All operations performed in Equatorial Guinea are subject to VAT, unless they are included in the list of exemptions in the Tax Code.

In practice, tax authorities consider that VAT is not applicable in the oil & gas sector. There is no written confirmation of this practical position.

However, during the last tax audits, the administration seems to consider that the legal VAT exemption should be limited to activities directly linked with oil operations.

Entities operating within the oil & gas sector are not required to invoice with VAT because VAT is not applicable within the sector. However, outside the sector, oil & gas companies may be required by non-oil & gas vendors to pay VAT if they do not justify an exemption from this tax granted by the Tax Administration. (said VAT is generally allowed as a deductible expense).

VAT is chargeable on:

• goods sold or assigned for valuable consideration

• services provided

• self-consumed goods and services

• imports

• other operations performed by individuals or legal entities in their sphere of business, whether professional or individual, including all kinds of extraction activities.

VAT registration

Compulsory registration

Individuals and legal entities (or their representatives) engaged in economic activities, regardless of their nature or outputs, that are classified as taxpayers under the Tax Code must register with the tax administration and obtain a tax identification number (‘Número de Identificación Fiscal’ in Spanish).

A branch of a company registered in terms of Equatorial Guinea legislation must also be registered with the tax administration.

Non-residents

Output tax

Calculation of output tax

VAT is calculated on:

• goods: all amounts or securities and all benefits, goods and services received or pending receipt in counterpart of the delivery

• services: all amounts and benefits received and, if applicable, the value of goods that are consumed in the execution of said services.

Suppliers’ invoices must clearly reflect the amount of VAT, separated from any other amounts, in order to allow the customer to deduct input tax.

Exempt supplies

The Tax Code gives an exhaustive list of goods exempted from VAT, as follows:

• raw agricultural goods

• the following operations, provided they are subject to some specific taxes:

  • sale of products resulting from soil and subsoil extraction activities

  • operations transferring real estate between individuals that do not qualify as real estate developers and that are subject to asset transfer tax

  • interest generated by foreign loans

  • interest generated by deposits of non-professional clients in credit or financial establishments

  • travellers with small imports when the value of the goods does not exceed (in CFA Franc BEAC) XAF500,000 (approximately USD1,000)

  • banking, insurance and reinsurance operations which are subject to a specific tax

  • operations transferring real estate, and real estate rights and mutations of goodwill that are subject to asset transfer tax or other equivalent taxes

• medical services

• staple commodities listed in the Tax Code

• services provided in the field of school or university teaching by public and private establishments or similar agencies

• importation and sale of school or university books

• sale of newspapers and periodicals

• rental of unfurnished houses

• social, educational, sports, cultural, philanthropic and religious services and operations

• amounts deposited by the Public Treasury into the Central Bank in its capacity as currency-issuing bank, as well as proceeds of the operations of the said currency-issuing bank

• operations relating to the international traffic of:

  • ships or vessels used in industrial or commercial activities on the high seas

  • salvage or rescue ships

  • aircraft and ships used for international transit operations and related services, in accordance with the provisions of the CEMAC Customs Code.

Zero-rated supplies

Input tax

Input tax allowed

In general, the right to deduct VAT is allowed when it is:

• paid on invoices related to transactions that have a deduction right (the taxpayer has a tax number, etc.)

• stated on purchase invoices issued to taxpayers by sellers who are legally authorised to include the tax on the said invoices

• paid at the time of the import

• levied on invoices for equipment goods.

Input tax expressly denied

Restrictions apply to the recovery of input tax incurred on the purchase of private vehicles and their spare parts and repair expenses. Input tax is also denied when:

• the invoice does not show the full name or any identification details of the client concerned

• it is not claimed within the period allowed (i.e. two years after the year of enforceability of the vat)

• the VAT relates to exempt or zero-rated supplies.

Partial exemption

Taxpayers who are partially or fully exempted from VAT must apply a pro rata factor to the amount of the deductible VAT. The pro rata factor will be set on an annual basis, where the ratio is:

• the amount of income for transactions subject to VAT, as the numerator

• the total amount of income of any kind obtained by the taxpayer, as the denominator.

Adjustments

When a component of the fixed assets for which input tax has been deducted is no longer part of the fixed assets of the company or its removal from the assets is not supported, the company must pay VAT equal to the tax fraction previously deducted, before the end of the fourth year of acquisition.

The fraction is equal to the difference between the total deduction made, and one-fifth per year or per fraction of a year since it was acquired.

In case of an assignment, if the goods constitute a component of the purchaser’s fixed assets, the latter can deduct the VAT in the amount reverted by the seller as regularisation, as long as it is also a VAT payer.

The seller must issue a statement to the purchaser reflecting the amount of the deductible VAT as a condition for making the deduction.

International trade

Imports

VAT payable on imports is calculated on the customs value, including all rights and duties paid upon entry except for VAT. According to the Tax Code, ‘import’ is understood as any entry of goods within the customs territory of Equatorial Guinea.

VAT liability on imports arises when goods and merchandise are introduced into the national territory as defined in the CEMAC Customs Code.

Exports

Place, time and value of supply

Place of supply

The Tax Code is based on the principle of territoriality, according to which all operations performed in Equatorial Guinea’s territory are subject to VAT.

A sales operation is treated as having been performed in Equatorial Guinea when it has been carried out under the conditions for the delivery of goods, or — in the case of other operations — when the service provided, right assigned, or object leased is used or put into operation in Equatorial Guinea.

Time of supply

The enforceability of VAT is determined as follows:

• sales and goods delivered — including self-consumed goods — at the time of delivery of the goods, merchandise and self-consumed goods 

• services — at the time of recovery of payment for the services

• imports — at the time when the declaration of consumption of the goods is registered

• real estate operations — on the date of transfer.

Value of supply

The value-of-supply rules are as follows:

• delivery of goods — all amounts or securities and all benefits, goods or services received or pending receipt in counterpart of the delivery

• imports — customs value, including all rights and duties paid upon entry except for VAT

• services — all amounts and benefits received and, if applicable, the value of goods that are consumable in the execution of the services

• exchanges — value of the products received in exchange for the goods provided plus the amount of compensation received

• real estate projects — amount of the operation, memoranda or invoices

• self-consumed goods — purchase price without VAT of the goods purchased or used but not transformed and the cost of goods extracted, produced or transformed.

VAT compliance

Returns and payment of VAT

All taxpayers must file monthly returns (before the 15th of each month) of their transactions during the preceding month, and make immediate payment.

to the Equatorial Guinea Revenue Authorities. Any taxpayer who has not performed any transaction during the said period must file a zero return.

Interest and penalties

The interest and penalty range depends on whether the administrative correction procedure is contradictory or unilateral. Both contradictory and unilateral correction procedures can be followed by a tax agent when noting any shortfall, inaccuracy, omission or concealment in the elements used as the basis of the tax calculation:

• contradictory procedure: in addition to the 10% interest for being in arrears, the fine will be 50% of the fees involved, which may be increased up to 100% if the taxpayer fails to show good faith

• unilateral procedure: in addition to the 10% interest, the fine will be 100% of the fees involved.

Interest will be levied even if the non-compliance does not result in a loss for the state or a benefit for the taxpayer.

Refunds

Objections

The taxpayer can appeal a decision with the same authority that took the decision or with a higher authority.

The case could also be submitted to tax panels (‘Jurados Tributarios’). Tax panels are the governing bodies that must resolve controversies regarding factual matters that may be brought between the tax administration and taxpayers.

VAT records

Invoices

Every taxpayer is required to issue and deliver invoices for goods delivered or services provided to its clients, as well as for down-payments received for these operations. Each invoice must reflect the following:

• serialised invoice number and chronological date

• name, address and tax number of the company

• prices, with the respective vat charges listed separately

• name, address and tax number of taxpayer.

Other Indirect taxes

Credit notes and debit notes

Credit notes and debit notes are not regulated under the tax legislation, but result from accounting practice. They are tolerated by the tax administration and must meet the same conditions that apply to invoices.

Record-keeping

Taxpayers are required to keep the following accounting books:

• a registry book of all invoices issued, which should be separated into those belonging to operations that are subject to VAT, exempt, not subject to VAT, and self-consumption

• a registry book of invoices received

• a registry book of investment goods

• a book with a current account of clients and suppliers.

Taxpayers must keep all accounting items showing income and expenses for five years following the respective operations. Accounting books must allow the precise determination of the following for each settlement period:

• total amount of VAT that the taxpayer has passed on to its clients

• total amount of VAT that suppliers have passed on to the taxpayer during the same settlement period

• total amount of VAT on imported goods.

Other Indirect taxes

Special duty tax

A standard special duty tax of 30% applies to an exhaustive list of products (mainly luxury goods) in the Tax Code. However, both the Tax Code and CEMAC provisions list special rates for products such as:

• sparkling wine and champagne — 20% (special duties) and 15% (CEMAC duties)

• cigars, cigarettes and tobacco — 50% (special duties) and 25% (CEMAC duties)

• photographic devices with automatic flashes — 25% (special duties).

Import duty

Additional measures

Ministerial Order (MO) n°6/2019 dated November 5, providing Additional Measures on the application of VAT in Equatorial Guinea (EG) published on November 6, 2019 (entered into force on the same date).

MO n°6/2019 has been adopted in consideration of the non-compliance with the provisions of article 370 of the Tax Code that provides the obligation for taxpayers to reflect on the invoices issued prices, with the respective VAT listed separately.

In order to guarantee taxpayers/operators’ effective compliance with mandatory obligations related to VAT, the Ministry of Finance, Economy and Planning has adopted the additional measures listed below:

• reminder on the scope of application of VAT (article 271 of the EG Tax Code):

  • goods sold or assigned for valuable consideration

  • services provided

  • self-consumed goods and services

  • imports

  • other operations done by individuals or legal entities in the sphere of their professional, individual, or business activities, including extraction industries of all kinds.

• compulsory statements of invoices (article 315 of the EG Tax Code) — The administration will not accept VAT returns with invoices that do not clearly separate the gross amount, the applicable VAT and the net amount, and do not meet the following mandatory requirements provided by art 315 of the EG Tax Law: Each invoice must reflect:

  • correlative number and chronological date

  • name, address and Taxpayer Number of the company

  • prices, with the respective VAT listed separately

  • name, address and Taxpayer Number of taxpayers.

Payment of VAT by public administrations

Public Administrations will not pay invoices for operations subject to VAT when such invoices do not comply with the above-mentioned requirements.

The Public Administration will automatically deduct from the total amount of the invoice presented by economic operators, the amount corresponding to VAT when said tax is not listed separately.

Adjustment period

The MO provides a three-month period following the date of its publication (i.e., by February 6, 2020) to comply with the above requirements (invoices, supported).