Tax Guide for US Expats Living and Working in Gabon
Who Is Liable For Income Taxes in Gabon
Territoriality. Subject to double tax treaties entered into by Gabon with foreign countries, residents are subject to general income tax on worldwide income. Nonresidents are taxed on income derived from Gabon only.
Definition of resident. The Gabon Tax Code provides that an individual is deemed to be resident in Gabon if he or she stays at least six months in Gabon or if he or she maintains his or her main residence in Gabon.
An individual is deemed to have his or her main residence in Gabon if he or she satisfies either of the following conditions:
- He or she has a home available to him or her as an owner, usufructuary or lessee.
- He or she has his or her center of economic or vital interests or his or her habitual abode in the country.
Income subject to tax
Employment income. Taxable income includes all remuneration or compensation paid for services provided, including but not limited to, base salary, overtime, fringe benefits, allowances, and benefits in kind. Under the Gabon Tax Code, a deemed value for benefits in kind is included in the tax base. The deemed value equals a percentage of gross salary.
Individuals may claim a deduction for professional expenses equal to 20% of gross salary after deduction of social contributions, subject to a cap of XAF 10 million per year.
Self-employment and business income. Self-employment income is divided into the following categories:
- Commercial (including trades)
- Professional
- Agricultural
The net income from each of the above categories is combined, and the total is subject to the progressive rates. A 10% withholding tax is imposed on remuneration paid to foreigners for activities performed or services rendered in Gabon.
Self-employed individuals engaged in commercial activities calculate taxable income in the same manner as companies. Taxable income equals the difference between income received, includingcapital gains, and expenses paid during the calendar year. The accrual method of accounting is used.
At the option of the individual, instead of calculating taxable income from commercial activities as described above, such income may be subject to simplified taxation if the gross turnover ranges from XAF 20 million to XAF 80 million. Individuals performing certain activities and having an annual gross turnover under XAF 20 million are exempt from personal income tax and must pay a fixed tax amount determined according to their activity.
Investment income. Dividends, interest and directors’ fees are subject to the tax on movable capital (IRCM). The IRCM on such income is generally withheld at a rate of 20% if the income benefits an individual or 15% if the income benefits a resident or nonresident corporate body. The IRCM is a final tax.
A 10% withholding tax is imposed on royalties paid to nonresidents.
Capital gains. Gains derived from the sale of real property held by individuals are not taxable, unless they are included in income from commercial, professional or agricultural activities.
Gains on the transfer of shares held by individuals are taxed at a rate of 20%. This tax is a final tax. Capital gains on business assets are generally included in taxable income. Under certain specified conditions, capital gains on business assets may be exempt from tax if reinvested in the business.
Deductions
Deductible expenses. The following items are deductible:
- Voluntary pension fund premiums not exceeding 10% of taxable income before deduction of deductible charges
- Interest on loans and debts contracted by taxpayers for the construction and acquisition of, or for major repairs to, buildings located in Gabon and used by taxpayers as their principal place of residence, up to a maximum amount of XAF 6 million
- Life insurance premiums not exceeding 5% of taxable income before deduction of deductible charges
- Alimonies paid under a court order
- Social security contributions paid for domestic servants
Personal allowances. The family coefficient system is used to reduce the general income tax calculated for families.
Business deductions. For individuals engaged in commercial, professional or agricultural activities, the following expenses are deductible under specific conditions:
- General expenses incurred for business purposes, mandatory and non-mandatory social contributions up to certain limits, certain taxes, insurance premiums, gifts and subsidies, rental expenses and financial charges
Rates.
Income tax is levied at progressive rates, up to a maximum of 35%. Income is taxed under a family coefficient system, which adjusts the amount of income subject to the progressive tax rate table according to the number of family members. Taxable income is divided by the applicable number of family allowances, and the final tax liability is calculated by multiplying the tax computed for one allowance by the number of allowances claimed.
Relief for losses. In general, losses from one category may be offset against profits in other categories. However, losses from commercial, professional or agricultural activities may not offset income in other categories. Such losses may be carried forward for three years to offset income from the same category.
B. Inheritance and gift taxes
Inheritances and gifts are taxable if the transferred goods are located in Gabon. Inheritance and gift tax rates range from 0% to 35%, depending on the net value of the property and the relationship between the beneficiary and the donor or deceased.
C. Social security
Social security contributions are computed on monthly gross remuneration paid, including fringe benefits and bonuses, up to XAF 1,500,000.
The rate of the employee contribution is 2.5%. This contribution, which is withheld by the employer, is for the pension allowances.
The total social security contribution for employers is 20.1%.
To learn more about the history, culture, economy and other information about the Gabon
We have been preparing US income tax returns for US Citizens and permanent residents living in Gabon 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 Gabon 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.
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