Tax Guide for US Expats Living and Working in Guinea
Who Is Liable For Income Taxes in Guinea
Individuals resident in Guinea are subject to tax on worldwide income. Nonresidents are subject to tax on Guinea-source income only.
Individuals are considered resident if they meet either of the following conditions:
- They maintain a home in Guinea or stay there for more than six months in a year.
- They are engaged in employment or self-employment activities in Guinea, unless they prove that these activities are incidental to activities performed abroad.
Income subject to tax
Employment income. Taxable income generally consists of all remuneration received, including, salaries, treatments, indemnities, allowances, premiums and bonuses paid, benefits in kind and benefits in cash. However, the following indemnities, allowances, bonuses or premiums are not taxable:
- Housing
- Transportation
- Meals or food
- Cost of living
- Chalk
Self-employment and business income. In general, self-employed residents are subject to general income tax on their worldwide income from professional and commercial activities. Self-employed nonresidents are subject to general income tax on income derived from activities performed in Guinea.
Taxable income consists of total net income from all categories.
Taxable income from commercial activities includes all receipts, advances, interest and gains directly related to the activities. Generally, taxable income is calculated on an accrual basis; however, taxpayers may elect to calculate taxable income using a deemed profits system if gross revenue does not exceed a certain amount.
Taxable income from professional activities is determined on a cash basis, meaning the difference between receipts and expenses paid during the calendar year, including gains or losses from the sale of professional assets.
A loss incurred in one category of income may not offset income from other categories. However, the loss may be carried forward for three years to offset income in the same category.
Investment income. Dividends and interest income from investments in Guinea are subject to a withholding tax, which constitutes a prepayment of the general income. Under certain conditions, this withholding tax is a final tax. The withholding tax rate for dividends is 10%. Under the 2011 Finance Law, the withholding tax rate for interest is reduced from 15% to 10%.
Directors’ fees are treated as investment income and are subject to general income tax.
If the payer is a resident of Guinea and if the nonresident recipient does not have a business establishment in Guinea, the payer must withhold the final 10% general income tax on amounts paid to nonresidents for copyrights and for the use of intangible assets.
Capital gains. Under the 2011 Finance Law, gains derived from the transfer of shares are subject to withholding tax at a rate of 10%.
Capital gains related to self-employment activities generally are included with other self-employment income and taxed as described in Self-employment and business income and Rates. However, capital gains from sales of fixed assets may be exempt from tax if reinvested.
Deductions
Deductible expenses.
The following expenses are deductible:
- Social security contributions
- Amounts withheld by an employer for a legal pension plan
- Professional expenses of up to 10% of employment income after the deduction of social contributions and withholdings if these expenses are not reimbursed through specific indemnities
Personal deductions and allowances. No personal deductions or allowances apply if an employee receives only employment income and does not elect joint taxation of the combined income of all household members. If joint taxation of the household is elected, individuals may take a personal deduction of FG 30,000 for each member of the household, up to a maximum of six persons.
Business deductions. The following expenses are deductible for commercial, professional and agricultural activities:
- Expenses necessary to carry on the activities, including personnel and rental expenses
- Depreciation
- Provisions for losses and expenses if the accrual method of accounting is used
General income tax. General income tax is levied on taxable income. A withholding tax is levied separately on taxable income from commercial, professional and agricultural activities. The applicable rates are 35% for commercial activities, 30% for professional activities and 15% for agricultural activities. This withholding tax is a final, fixed rate general income tax for self-employed persons who do not elect the taxation of all household members and who have only one source of income that is taxed under a deemed-profits system. For self-employed persons with more than one source of income or for self-employed persons who are taxed on actual profits rather than deemed profits, the withholding tax is a prepayment that offsets the general income tax.
Nonresidents. Nonresident self-employed taxpayers are subject to a 10% final withholding tax, which is a fixed rate of general income tax. If a payer is a resident of Guinea and if the nonresident recipient does not have a business establishment in Guinea, the payer must withhold the final 10% general income tax on the following gross amounts:
- Amounts paid for independent professional services
- Amounts paid to inventors
- Amounts paid for services, regardless of their nature, materially rendered in Guinea
Nonresidents who perform incidental activities for employers established in Guinea are subject to withholding on their wages related to Guinean activities at the rates that apply to employment income. This withholding tax constitutes only a prepayment of tax. Nonresident employees receiving wages from non-established employers for incidental Guinean activities are subject to general income tax instead of withholding.
B. Inheritance and gift taxes
Inheritances and gifts are subject to tax at progressive rates ranging from 1% to 3%, depending on the net value of the inheritance or the gift and on the beneficiary’s relationship to the deceased or donor.
C. Social security
The following social security contributions are required.
Rate (%)
Paid by employers
Family allowances 6
Industrial accidents 4
Medical expenses and disability 4
Old age pensions and death benefits 4
Paid by employees
Medical expenses and disability 2.5
Old age pensions and death benefits 2.5
Contributions are levied on total remuneration paid, up to a monthly ceiling of FG 1,500,000. Employees’ contributions are withheld monthly by employers.
We have been preparing US income tax returns for US Citizens and permanent residents living in Guinea for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.
We have scores of clients located in Guinea and know how to integrate your US taxes into the local income taxes you pay. Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits. There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.
If you are self-employed, you will have to pay US self-employment taxes (social security). If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Guinea.
We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident. You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.
Let us help you with your US tax returns, US tax planning and other US tax and legal concerns. Download our expat tax questionnaire or request a consultation by phone, skype or email