Abstract
Efficiency and equity reasons suggest placing a high priority on ensuring that fiscal policy is on a sustainable path. This chapter has sought to estimate the sustainable long-term non-oil primary deficit and the optimal adjustment path toward that level. The banks’ inability to monitor effectively the quality of their loan portfolios, paired with the high interest-rate floor on deposits, are key factors behind the very low degree of financial intermediation. The reform of fuel price subsidies in Gabon is necessary to facilitate pro-poor economic growth.
V. Gabon: Assessing the Quality of Public Investment 54
A. Introduction
Despite an abundance of fiscal resources through the years, Gabon has to date had little success in raising growth and reducing poverty. Real per capita non-oil growth has been negative in every year from 1998 through 2003 and has been close to zero since then. This poor performance is particularly surprising given large budgetary appropriations for the public investment program (PIP). Over the last 15 years, Gabon’s public investment program has averaged 5 percent of GDP. Capital spending exceeded 10 percent of GDP in the late 1990s during presidential elections.
The paper examines why despite the large quantity of resources allocated to the PIP, the quality of expenditure has been disappointing. The paper uses international comparisons to assess the efficiency of resources devoted to public investments in terms of results in key social variables. Secondly, it analyzes the degree to which the PIP has been directed towards the types of poverty-reducing projects described in the recently completed GPRSP. Thirdly, it presents the findings of a private-sector audit on the quality of so-called fêtes tournantes investment—which accounts for about one-third of the total investment budget.55
The remainder of the paper is structured as follows. Section B explains the methodology used in other countries to measure public investment efficiency and the approach followed in this note; Section C discusses Gabon’s capital expenditure trends; Section D analyzes the efficiency of public investment in Gabon; Section E compares PIP projects with the priorities in the recently completed PRSP; Section F focuses on the largest part of the PIP, the socalled fêtes tournantes investment; and Section G concludes.
B. Measuring The Efficiency of Public Investment
Several techniques can be used to measure the efficiency of public spending. For instance, Gupta and Verhoeven (2001) use an approach that establishes a production possibility frontier that represents best practices within a sample of observations. Measuring the relative inefficiency of producers inside that frontier in terms of distance to the frontier, they show that, on average, countries in Africa are less efficient than countries in Asia and the Western Hemisphere. They also suggests that improvements in educational attainment and health output in African countries require more than simply higher budgetary allocations.
Herrera and Pang (2005) used also a production possibility frontier approach to score a sample of 140 countries on several health and education output indicators using data from 1996 to 2002. Gabon scored high in primary school enrollment, but low in other education and health variables. The table below reports part of their results grouped by countries with similar GDP per capita in dollar terms and other countries with lower GDP per capita.
Efficiency Score for Investment(Output Efficiency)
Efficiency Score for Investment(Output Efficiency)
| Primary School Enrollment | Secondary School Enrollment | Life expectancy | Immunization DPT | |
|---|---|---|---|---|
| Similar per capita | ||||
| Botswana | 0.747 | 0.551 | 0.535 | 0.975 |
| Mauritius | 0.776 | 0.611 | 0.955 | 0.932 |
| Gabon | 1.000 | 0.419 | 0.691 | 0.452 |
| Lower per capita | ||||
| Ghana | 0.564 | 0.292 | 0.746 | 0.765 |
| Cameroon | 0.689 | 0.238 | 0.659 | 0.482 |
| Namibia | 0.832 | 0.469 | 0.623 | 0.723 |
Efficiency Score for Investment(Output Efficiency)
| Primary School Enrollment | Secondary School Enrollment | Life expectancy | Immunization DPT | |
|---|---|---|---|---|
| Similar per capita | ||||
| Botswana | 0.747 | 0.551 | 0.535 | 0.975 |
| Mauritius | 0.776 | 0.611 | 0.955 | 0.932 |
| Gabon | 1.000 | 0.419 | 0.691 | 0.452 |
| Lower per capita | ||||
| Ghana | 0.564 | 0.292 | 0.746 | 0.765 |
| Cameroon | 0.689 | 0.238 | 0.659 | 0.482 |
| Namibia | 0.832 | 0.469 | 0.623 | 0.723 |
The approach used in this note is to compare budgetary allocations and variables on the three main social sectors across countries, drawing on Public Expenditure Management and Financial Accountability in Gabon (PEMFAR) from the World Bank.56
C. Capital Expenditure Trends
PIP performance over the years has been disappointing. Through the 1970s and the 1980s capital outlays increased steeply, as a strategy was implemented to modernize and diversify the economy. The government embarked on an ambitious program of large infrastructure projects. At the center of the strategy stood the construction of the Transgabonese railroad and large agro-industrial parastatals. Public investment surged from less than 4 percent of GDP in the early 1970s to about 30 percent of GDP in the mid-1980s. However, this first wave of ambitious public investment was accompanied by substantial weaknesses in the design and execution of the strategy. For instance, soon after the Transgabonese was completed it needed government operating subsidies, and the agro-industries yielded negative returns on investment because they were in remote locations, where transportation costs were high and labor in short supply.
Gabon. Capital Expenditure
(Percent of GDP)
Citation: IMF Staff Country Reports 2006, 232; 10.5089/9781451813999.002.A005
Source: Gabonese authorities.Gabon. Capital Expenditure
(Percent of GDP)
Citation: IMF Staff Country Reports 2006, 232; 10.5089/9781451813999.002.A005
Source: Gabonese authorities.Gabon. Capital Expenditure
(Percent of GDP)
Citation: IMF Staff Country Reports 2006, 232; 10.5089/9781451813999.002.A005
Source: Gabonese authorities.The PIP has mimicked the booms and boosts associated with international oil prices. In the context of the decline in oil prices during the early 1990s the PIP was severely curtailed to less than 5 percent of GDP. This reflected the government’s strategy of internal adjustment, which was supported by Fund arrangements. However, as oil prices rose in 1997 and 1998, also years when elections were held, the PIP rose again to more than 10 percent of GDP.
In the recent years, about one-third of the PIP has been devoted to so-called fêtes tournantes expenditure. The fêtes tournantes were re-established in 2001 after a long period of inactivity.57 President Bongo announced that beginning in 2002, two provinces a year would be favored by a budgetary allocation of CFAF 25 billion each for projects to improve local welfare. The allocations amount to about one-third of the capital investment budget. The allocation within the provinces would depend on their particular needs. The projects would be inaugurated on August 17 to celebrate Gabon’s independence (August 17, 1960).58
D. The Efficiency of Public Investment in Gabon.
In the health sector, Gabon’s expenditures would appear to have been comparatively ineffective, mainly because of poor allocative efficiency and regional inequity. Gabon has a relative high spending per capita on health yet by international comparisons health indexes are worse than in peer countries. The infant mortality rate in Gabon at 60 per 1000 infants is high compared with other countries with similar levels of health and spending per capita, for instance Morocco has a rate of only 39 per 1000; or Ghana spending only one third of what Gabon spends has a lower rate. Life expectancy at 54.5 years is low compared with Ghana, Morocco, Libya, Peru, and Jamaica, with lower spending per capita. Also in terms of physicians the country lags behind its peers.
Health Indexes
Health Indexes
| Public health spending per capita (PPP US$) 2002 | Life expectancy at birth (years) 2003 | Infant mortality rate (per 1,000 live births) 2003 | Physicians (per 100,000 people) 1990-2004 | |
|---|---|---|---|---|
| Gabon | 248 | 54.5 | 60 | 29 |
| Ghana | 73 | 56.8 | 52.9 | 9 |
| Morocco | 186 | 69.7 | 39 | 48 |
| Equatorial Guinea | 139 | 43.3 | 97 | 25 |
| Libya | 222 | 73.6 | 13 | 129 |
| Dominica | 310 | 75.6 | 12 | 49 |
| Venezuela | 272 | 72.9 | 18 | 194 |
| Peru | 210 | 87.7 | 26 | 117 |
| Jamaica | 234 | 70.8 | 17 | 85 |
| Lesotho | 119 | 36.3 | 63 | 5 |
| Cameroon | 68 | 45.8 | 95 | 7 |
Health Indexes
| Public health spending per capita (PPP US$) 2002 | Life expectancy at birth (years) 2003 | Infant mortality rate (per 1,000 live births) 2003 | Physicians (per 100,000 people) 1990-2004 | |
|---|---|---|---|---|
| Gabon | 248 | 54.5 | 60 | 29 |
| Ghana | 73 | 56.8 | 52.9 | 9 |
| Morocco | 186 | 69.7 | 39 | 48 |
| Equatorial Guinea | 139 | 43.3 | 97 | 25 |
| Libya | 222 | 73.6 | 13 | 129 |
| Dominica | 310 | 75.6 | 12 | 49 |
| Venezuela | 272 | 72.9 | 18 | 194 |
| Peru | 210 | 87.7 | 26 | 117 |
| Jamaica | 234 | 70.8 | 17 | 85 |
| Lesotho | 119 | 36.3 | 63 | 5 |
| Cameroon | 68 | 45.8 | 95 | 7 |
Capital investment in the health sector in Gabon does not respond to the country’s priorities, which may explain the poor outcomes (Figure V.2). According to the World Bank, investment in health should be directed to improving the primary care and secondary delivery system of 413 dispensaries, 41 health centers, and 9 regional hospitals spread across Gabon. Instead, the trend has been to invest in tertiary care—centrally managed facilities and programs. The construction of the military hospital in Libreville in 2005 and the decision to build more hospitals in 2006 confirms this trends.59 Not only does this ignores priorities, it also entails unplanned high recurrent costs, which are making a permanent dent in the budget.
Gabon. Health Expenditures
Citation: IMF Staff Country Reports 2006, 232; 10.5089/9781451813999.002.A005
Source: Gabonese authorities.Gabon. Health Expenditures
Citation: IMF Staff Country Reports 2006, 232; 10.5089/9781451813999.002.A005
Source: Gabonese authorities.Gabon. Health Expenditures
Citation: IMF Staff Country Reports 2006, 232; 10.5089/9781451813999.002.A005
Source: Gabonese authorities.Primary health programs have been neglected. Primary health programs account for less than 6 percent of the total health budget. This is inefficient in terms of both outcomes and costs, because the unit cost of providing primary care is low and is closely associated with delivering health services to the poor. At this stage any health budget should entail a reorientation of investment within the health sector to allocate more to primary care.
International comparisons with countries with similar levels of per capita income show that Gabon’s educational expenditures are not efficient, either. Though Gabon allocates a substantial share of public spending to education, adult literacy in 2002 was lower than in most countries with similar per capita public spending on education.60 Because Gabon’s repetition rates are relatively high,61 many students are spending more time than necessary at school. Moreover, a large proportion of the recurrent budget is devoted to scholarships for higher education, an allocation that often does not respond to job market requirements.
Education Indexes.
Education Indexes.
| Public expenditure on education (As % of GDP)2000-02 | Adult literacy rate (% ages 15 and above) 2003 | Education index | |
|---|---|---|---|
| Gabon | 3.9 | 71.0 | 0.72 |
| Togo | 2.6 | 53.0 | 0.57 |
| Morocco | 6.5 | 50.7 | 0.53 |
| Equatorial Guinea | 0.6 | 84.2 | 0.78 |
| South Africa | 5.3 | 82.4 | 0.81 |
| Colombia | 5.2 | 94.2 | 0.86 |
| Ecuador | 1.0 | 91.0 | 0.86 |
| Peru | 3.0 | 87.7 | 0.88 |
| Jamaica | 6.1 | 87.6 | 0.83 |
| Lesotho | 10.4 | 81.4 | 0.76 |
| Cameroon | 3.8 | 67.9 | 0.64 |
Education Indexes.
| Public expenditure on education (As % of GDP)2000-02 | Adult literacy rate (% ages 15 and above) 2003 | Education index | |
|---|---|---|---|
| Gabon | 3.9 | 71.0 | 0.72 |
| Togo | 2.6 | 53.0 | 0.57 |
| Morocco | 6.5 | 50.7 | 0.53 |
| Equatorial Guinea | 0.6 | 84.2 | 0.78 |
| South Africa | 5.3 | 82.4 | 0.81 |
| Colombia | 5.2 | 94.2 | 0.86 |
| Ecuador | 1.0 | 91.0 | 0.86 |
| Peru | 3.0 | 87.7 | 0.88 |
| Jamaica | 6.1 | 87.6 | 0.83 |
| Lesotho | 10.4 | 81.4 | 0.76 |
| Cameroon | 3.8 | 67.9 | 0.64 |
As with health, the problems of educational performance in Gabon reflect the bias of education expenditures towards the secondary and tertiary levels. In 2002-04 about 70 percent of the investment budget went to secondary and tertiary education. While investment in tertiary education increased by 233 percent for the period, investment in primary education only increased by 29 percent. This is inefficient; it is cheaper to educate a child in primary school than in secondary or tertiary establishments. Moreover, much of the current spending in education is allocated to scholarships for secondary and higher education, and in particular foreign scholarships.
For infrastructure, the budgeted allocations have not achieved the desired results. Investment in infrastructure is affected by at least three key problems:(i) poor project evaluation, which usually means unrealistic budgetary allocations; (ii) high construction costs—roads have cost more than twice as much as originally planned; and (iii) poor maintenance, which means that the road network continuously deteriorates. The road fund intended for maintenance has been used to finance large-scale construction and rehabilitation projects. The road sector has incurred large debts and some projects were discontinued after substantial spending.
E. Public Investment Versus PRSP Priorities
How efficient has the PIP been in achieving GPRSP objectives in health, education, and infrastructure?
The primary objectives established in the GPRSP are as follows: (i) reduce unemployment, (ii) stop the decline of the rural economy, (iii) improve access to basic social services, (iv) revitalize social protection nets, (v) improve the livelihoods of the poor, (vi) promote gender integration, and (vii) improve governance.
Assessing past spending in light of current GPRSP priorities is complicated by the lack of a functional classification of public expenditure. Currently, the budget is presented in administrative form, allocating by spending ministries rather than by function. The PEMFAR, however, offers a proxy for functional classification by categorizing administrative spending according to the major government functions. 62
Public spending in Gabon is not being effectively directed towards the government’s objectives emerging from the GPRSP process. Based on the PEMFAR, it could be concluded that there are no clear shift towards GPRSP priorities. Expenditures in education and the health sectors have remained relatively static. Notably, education declined from 23 percent to 21 percent of public expenditure, between 1999 and 2003.
F. The Quality of Fêtes Tournantes Public Investment
The quality of the fêtes tournantes investment is low. Maintenance is often poor, as recurrent costs have not been budgeted for and the social return of many of these projects appears to be zero or even negative. In addition, it distorts the PIP by using one-third of the resources on projects with no clear priorities and appropriate appraisal.
The fêtes tournantes’ mechanism involves a national commission approving the project proposals of regional committees. These committees select projects in consultation with the communities; no separate project appraisal is done. Once the regional committee makes a proposal, a technical committee is in charge of allocating and monitoring the spending.
A recent private-sector audit of the 2002-03 fêtes tournantes revealed the following problems:63
Poor project documentation. More than 50 percent of the projects have no documentation supporting financial transactions. For those that do, the auditor ranked the quality of documentation, setting 15 as the maximum grade. The mean over 202 operations evaluated was only 2.3. Only seven operations received a grade higher than 7.
Weak programming. There are many unfinished projects or projects that have failed, leaving empty buildings. This reflects serious weaknesses in project planning. No appraisal evaluation is done.
Variable project quality. While the sewage work appears to be done properly, the quality of buildings and houses is poor and many residential and commercial systems malfunction. Some buildings are unusable.
Costs have been high. The audit found ample evidence of overcharging. Often prices charged are twice as much as current prices. The cost of a project in Gabon was higher than that of a comparable project in neighboring countries.
Weak quality control. Lack of ex-ante and ex-post evaluation is compounded by absence of technicians in the technical commissions in charge of control.
G. Conclusions
The PIP needs a severe makeover. The current system is undermining Gabon’s goals of alleviating poverty and stimulating growth. An overhaul of the public investment system is needed to support the GPRSP strategy recently presented.
The quality of public investment has been low. It has been inefficient and it is inconsistent with the priorities emerging from the GPRSP. The poor results of the fêtes tournantes and the fact that it is managed outside the circuit of the investment budget further weaken PIP performance.
In the context of the PRSP and the current oil windfalls, improving public expenditure management is critical to raising the quality of public spending. The authorities need to take a number of steps highlighted in the recently completed fiscal ROSC and the PEMFAR. These measures include:(i) introduce a full functional classification of expenditure to allow better tracking of expenditure, including against the priorities established in the PRSP; (ii) strengthen the investment budget preparation and execution process by heightening the role of the three-year public investment program; (iii) improve the coordination between the current and investment budgets and, over time, integrate them in a single consistent mediumterm expenditure framework; (iv) strengthen further the role of the public tender office to reinforce ex-ante quality control; and (v) eliminate the Fêtes Tournantes. It is essential that for the 2007 budget the fêtes tournantes are folded into the PIP. All the resources should be available for the PIP and consistent with the PRSP priorities.
References
Groupe 2 AC, 2005. “Audit technique et financier des projets financés par le Fonds pour le 17 août (exercices 2002 et 2003),” (November), mimeo.
Gupta, Sanjeev, and Martij Verhoeven, 2001, “The Efficiency of Government Expenditure, Experiences from Africa,” Journal of Policy Modeling, Vol. 23, pp. 433–67
Santiago, Herrera, and Gaobo Pang, 2005, “Efficiency of Public Spending in Developing Countries: An Efficiency Frontier Approach,” World Bank Policy Research Working Paper No. 3645 (Washington: World Bank).
Appendix: Summary of the Tax System, as of End-March 2006
Gabon: Summary of the Tax System, as of End-March 2006
(All amounts are in CFA francs; unless otherwise indicated)
Gabon: Summary of the Tax System, as of End-March 2006
(All amounts are in CFA francs; unless otherwise indicated)
| Tax | Type of Tax | Exemptions, Rebates, and Deductions | Tax Rates |
|---|---|---|---|
| 1. Tax on income and profits | |||
| 1.1 Corporate income taxes (IS) | Levied on the taxable income of corporations under Gabonese and foreign law from their activities carried out in Gabon, subject to the provisions of international conventions. | ||
| 1.11 Tax on non-oil companies | Levied on all the profits or earnings of companies and other legal entities operating outside the oil sector. Payment modalities: Corporate income tax payable in three installments:
| The tax is calculated on net income from an activity carried out in Gabon, less all necessary operating costs: production costs, taxes paid (except corporate income tax), and interest. Note: Under the 2005 Budget Law, tax on developed and undeveloped property may be deducted from taxable income. Depreciation: rates range from 8 to 33⅓ percent. Generally, straight-line depreciation is applied—except for enterprises that exploit and process natural resources eligible for depreciation under special codes provided for in the Investment Charter, whereby capital goods may be depreciated using the sum-of-the-year’s-digits method. New material and equipment acquired for use in industrial operations in manufacturing, handling, transportation, agriculture and forestry, prescribed operations for site development for building or construction, which have a usable life of no less than three years and a minimum value of CFAF 10 million, may be subject to accelerated depreciation. Excluded from taxable income are:
Exemptions:
|
The following are deducted from the tax, as applicable:
|
| 1.111 Corp. income tax withheld at source (forestry sector) | Levied on payments made by purchasers to timber suppliers. This withholding tax is considered to be a share of the corporate income tax payable by the timber supplier. | Companies meeting the following requirements are exempted from the withholding:
|
|
| 1.112 Corp.income tax withholding | Levied on the amounts paid to service providers subject to corporate income tax. | Companies subject to VAT | 9.5 percent |
| 1.113 Taxation of head offices | Head offices established as joint-stock companies or branches providing executive, management, or supervisory services exclusively to companies in the group to which they belong are subject to corporate income tax under special terms: the corporate income tax base is calculated at a flat rate of 5-12 percent determined by the finance ministry and applied to operating costs. | Non-nationals working at head offices under certain conditions benefit from a 50-percent rebate on their pre-tax income, in accordance with the terms of ordinary law governing personal income tax | 35 percent |
| 1.114 Minimum flat tax on corporations | Levied on all companies subject to corporate income tax when the tax chargeable to them is lower than the minimum levy. In loss years, the minimum levy is deductible in thirds from the corporate income tax of subsequent profit years, over a period of three years. | The following are exempt from the minimum flat tax:
| 1.10 percent (with a minimum of CFAF 600,000) applied to the overall turnover for the previous year less:
|
| 1.12 Tax on oil companies | The tax is levied on the income of oil companies as follows:
| The tax is assessed in accordance with the provisions agreed upon with each oil company. This tax is not applicable to production sharing contracts. The special regime for oil companies provides that these companies may maintain tax exempt provisions for reactivating used oil fields. These provisions must be kept below two limits:
| |
| 1.13 Taxation of oil sector subcontractors | The simplified tax regime reserved for oil company subcontractors, which is not applicable to companies based in Gabon for more than nine years, calculates a flat assessment of the corporate income tax and payroll taxes and charges based on actual turnover. Provided that they meet certain conditions, the earnings and payroll (for expatriate personnel) of companies that qualify for this regime are taxed at a rate of 15 and 14 percent, respectively, of their pre-tax turnover in Gabon. | Corporate income tax rate: 35 percent (15 percent of turnover). Flat rate for taxes due from employees: 22 percent of payroll (14 percent of turnover). These rates are applicable to FY 2006, 2007, and 2008 (Order No. 27 of 12/20/2005). | |
| 1.14 Corporate income tax on foreign companies, withheld at source | Withholding at source of corporate income tax on all amounts paid by a debtor based in Gabon to legal entities with no permanent facilities there, levied on:
| 10 percent | |
| 1.2 Taxes on individuals | |||
| 1.21 Personal income tax (IRPP) | This tax is levied on the overall net income of the taxable household, which comprises the sum of net income in the following categories:
Modalities for collecting the IRPP: The IRPP is collected using the tax rolls after filing tax returns for all income other than tax on industrial and commercial income (BIC) and the tax on agricultural income (BA), based on actual earnings, and the tax on noncommercial income (BNC), based on verified tax returns [déclarations contrôlées] by March 1 of the following fiscal year. In the latter case, the declaration of all income must be filed together with the declaration of net income by April 30 of the following fiscal year. BIC and BA taxpayers taxed on actual income and BNC taxpayers under the verified tax returns regime must pay installments on February 15 and April 15 equal to one fourth of the IRPP or of the minimum levy of the previous year. The balance is collected through the tax rolls after settlement of the tax return. Taxpayers of BIC and BA by standard assessment and BNC taxpayers by administrative assessment (évaluation administrative), must pay by April 15, July 15, and October 15 three installments equal to one third of the IRPP or minimum prior-year levy. The balance is collected through the tax rolls after settlement of the tax return. | Deductions:
| In taxing the taxable household, a ratio system similar to the French IRPP (the number of children is limited to 6) is applied to determine the amount of the tax, assessed using the following progressive scale: Q = Net overall income/number of family members 11 tax brackets ranging from 0 to 50 percent. IRPP exemption for households for which Q is less than CFAF 1.2 million, and taxation at a rate of 50 percent for the bracket where Q is greater than CFAF 22 million. The gross income so determined is reduced by:
|
| Taxes on real estate earnings: All income derived from the rental of real estate in Gabon, provided that rental income is not included in the profits of an individual, industrial or commercial companies. Net real estate income = Gross earnings - expenses | The following are exempt: income from real estate intended for the proprietor’s own personal use. Deductible expenses (or property expenses) include:
| ||
| Profits from farming comprise earnings from the operation of rural properties by farmers, tenant farmers, or the owners themselves in connection with stockbreeding, poultry farming, fish farming, and oyster farming. Two taxation regimes:
| Proceeds from the farming of land exclusively used for food crops, where the cultivated surface area is less than 5 hectares, is exempt. The law makes it possible to opt for the higherrate regime. In the event that the taxpayer elects to use the itemized basis, account shall be taken of:
| ||
| Earnings from noncommercial professions include income equivalent to noncommercial earnings principally from the liberal professions, but also from positions and offices held, and any other income not classified elsewhere. Two tax regimes:
| The law makes it possible to opt for the higherrate regime. Taxation under the verified tax returns regime is on the following basis:
| ||
| Salaries, pensions, and annuities include salaries, benefits, emoluments, wages, pensions, and annuities earned from engaging in an activity in Gabon. In-kind benefits provided to employees are taxable on the basis of the following standard assessment:
| The following are exempt from the tax: Gross earned income is subject to a 20-percent rebate limited to CFAF 10 million, for professional fees. | ||
Investment income includes:
|
| 5 percent: income from securities with an original maturity of less than five years is subject to withholding at source by the payer. This withholding at source fully discharges all other taxes. 15 percent: Levied at source on interest on bank short-term borrowing. Subject to the provisions of international conventions, income from claims, deposits, and security, whose beneficiaries are nonresident individuals or corporations is subject to a withholding at source of 20 percent by the payer, remitted to the Revenue Authority. This withholding at source fully discharges all IRPP payments. 20 percent: for dividends, interest, arrears, other returns of all types of shares, and interests of the founders or beneficiaries of companies. 22 percent for directors’ fees and attendance fees, lump sum refunds of costs, and all other compensation paid to the sole director, or board members of companies and enterprises of any type. 30 percent: payouts divided among creditors and claim holders. | |
| 1.212 Personal income tax (IRPP) withheld at source (forestry) | Levied on payments made by purchasers to timber suppliers. This withholding tax is considered to be a share of the corporate income tax payable by the timber supplier. |
| |
| 1.213 Personal income tax (IRPP) withheld at source (government payments) | The withholding is applicable to all government payments to suppliers subject to the IRPP. | The special real estate tax on rentals is deductible from property income In addition to the other charges deductible from income, the flat deduction for management, insurance, maintenance, and depreciation fees is set at 30 percent. |
|
| 1.214 Business income tax (IRPP/BIC/BNC) withheld at source | Levied on amounts paid to service providers subject to IRPP/BIC/BNC. | 9.5 percent | |
| 1.215 Installment payments of personal income tax (IRPP)on imports | Payment of a standard installment of the IRPP on merchandise imports for commercial purposes. The installment is assessed on the declared customs value. It is collected by the carrier and remitted to the Treasury. | Entities subject to VAT are exempt. | 2.5 percent |
| 1.22 Levy at source of the personal income tax (IRPP) on capital gains | The levy at source of the IRPP applies to capital gains by individuals or corporations when they transfer goods or rights of any kind for consideration. The capital gains derived by individuals from the management of their private assets may be generated at the time of sale, exchange, division, expropriation, input of capital into a company, or liquidation of a company from personal or real property or rights of any kind. Gains on real property are equivalent to capital gains from the transfer for consideration of equity in companies whose assets comprise mainly property or rights thereto. Entities subject to this tax are:
Any costs of construction, reconstruction, renovation, and improvement since the purchase are added to the purchase price, if they have not been previously deducted from the taxable income. | Exempted from the levy at source of the IRPP are capital gains resulting from:
| |
| 1.23 Minimum flat tax on personal income | The amount of the tax due by taxpayers on industrial, commercial, and artisan earnings, earnings from farming, from noncommercial professions, and equivalent income may be no lower than the minimum levy. This minimum levy is announced and collected in the same manner as the IRPP, which it replaces if it is higher. | Same exemptions as for the corporate income tax (IS) | 1.10 percent on overall turnover in the previous fiscal year plus miscellaneous proceeds and profits or CFAF 350,000 |
| 1.24 Flat income tax (IFR) | Levied on the income of individuals subject to the business fees, namely:
| IFR rates, which correspond to a fixed tax, are established for each taxable activity based on the vehicle used by the transporter or the establishment, in the case of other taxpayers. | |
| 1.25 Personal income tax (IRPP) on foreign companies, withheld at source | Withholding at source of the IRPP levied on all amounts paid by a debtor based in Gabon to individual enterprises that are not based in the country on:
| 10 percent | |
| 2. Taxes on goods and services | |||
| 2.1 Value-added tax | This tax is assessed on value added. The tax is levied on all production, delivery, import, and service provision activities conducted on a regular or occasional basis, independently, for consideration. Subject to this tax are all corporate or individual taxpayers with a turnover of:
To be subject to the tax, a business transaction must be carried out in Gabon. For a sale, the merchandise must be delivered to Gabon and, for other operations, the service provided, right transferred, or thing leased must be used in Gabon. Apart from the general rule of imputing VAT deductions to gross VAT, the law provides for a system of possible credits of the tax limited to the following cases:
Special case: The VAT regime applicable to petroleum exploration, exploitation, and production is established within the framework of the underlying contracts. VAT withholding: VAT on payments on contracts by the national government, local governments, and administrations with financial autonomy is withheld at source (60 percent of the full amount), as provided in the contract or related invoice. | The following are not eligible for deductions:
The rules on ineligibility for deduction are applied on a prorated basis in the case of mixed activities. Exemptions:
Provided that there is reciprocity, diplomatic or consular personnel benefit from an exemption for the purchase of vehicles for professional or personal use on the domestic market. VAT refunds are granted to diplomatic or consular missions based in Gabon for:
|
|
| 2.2 Excise taxes | Levied on imports or on domestic sales of nonalcoholic or alcoholic beverages, cigarettes, cigars, and tobacco. The tax base for imports is the c.i.f. value plus customs duties. The tax base for domestic production is the producer’s sales price, excluding taxes. | For domestic products, the base is reduced by a rebate of 30 percent on the sales price. |
|
| 2.3 Special taxes on fuels | |||
| 2.31 Domestic consumption tax | Levied on deliveries of liquid or gaseous petroleum products refined by distribution companies on the domestic market | Within the framework of the petroleum pricing structure, the Directorate General of Taxes, in agreement with the Petroleum Price Commission, sets the tax rates per distribution unit (liter or metric ton) for each product marketed. | |
| 2.32 Municipal tax on fuels | Domestic tax levied only on the use of petroleum products in Libreville and Port Gentil. Levied on deliveries of hydrocarbon liquids or gases refined by distribution companies on the domestic market. | Within the framework of the petroleum pricing structure, the Directorate General of Taxes, in agreement with the Petroleum Price Commission, sets the tax rates per distribution unit (liter or metric ton) for each product marketed. | |
| 3. Business and license fees | |||
| 3.1 Business fees(contribution des patentes) | Any Gabonese national or foreigner engaging in a commercial or industrial activity or an activity that is not expressly exempted by law is subject to business fees. Business fees are personal. Each establishment of the business must pay business fees. However, if several activities are carried out within the same establishment, the taxpayer is subject only to the highest fixed tax. Business fees for the full year from each taxpayer exercising a taxable activity are due in the first quarter of the year. For new activities, business fees are due only from the first day of the quarter in which the activity started. For seasonal activities, business fees are not pro rated. An installment of the business fees equal to 100 percent of the previous year’s fees must be paid by March 31. The balance is assessed through the tax rolls after the tax return for the year is filed. Business fees are levied on behalf of local governments, communes, and departments. | Exemptions:
New establishments created by an enterprise and “using a workshop operating machinery” are exempt from business fees during the year in which they are established and for the next two years. Some duly authorized enterprises under the Investment Charter may benefit from temporary exemption from business fees. | Business fees consist of fixed fees at variable rates defined in accordance with the activity and the conditions under which it is exercised. |
| 3.2 License fees (contribution des licences) | Levied on all individuals or legal entities engaged in the sale of spirituous or fermented alcoholic beverages in any form. Business fees are levied on behalf of local governments, communes, and departments. | The licenses are defined by category based on the terms and conditions of the activity, The law defines three categories of licenses. License fees consist of a fixed fee, set by law on the basis of each category of license. | |
| 4. Property taxes | |||
| 4.1 Land taxes | |||
| 4.11 Land tax on improved property | The tax on improved property is levied on construction (registered or not) set on masonry foundations, such as houses, factories, hangars, and factories located in Gabon. It is also levied on the equipment of industrial plants incorporated in goodwill in perpetuity or attached to special foundations that are an integral part of the building, as well as any commercial or industrial installations. The land tax is established on the basis of a taxable income equal to the rental value at January 1 of the property concerned, less 25 percent for wear and tear and maintenance and repairs. Persons or businesses holding a property deed, a temporary or permanent occupancy title, and who are actually residing at a property on which a taxable construction has been built, are considered the proprietor of said property A rebate or reduction may be granted in the event that the house is vacated or the commercial or industrial establishment becomes non-operational for reasons beyond the control of the taxpayers and if the premises remain idle for at least six consecutive months. By March 31, an installment of the tax on improved property equal to 100 percent of the business fees paid the previous year must be paid by taxpayers subject to corporate income tax. The balance is assessed through the tax rolls after the tax return for the current year is filed. | Exemptions:
| 25 percent of 75 percent of the rental valu |
| 4.12 Land tax unimproved property | The land tax on unimproved property is assessed on all types of unimproved property, except property under provisional concessions. Persons or businesses holding a property deed, a temporary or permanent occupancy title, and who are occupying the property in their own right are considered the proprietor of said property. The tax is assessed on a base equivalent to 4/5 of the rental value, which itself is equal to 10 percent of the market value of the unimproved property. The land tax on unimproved property is levied on taxpayers of the corporate income tax and subject to payment of an installment by March 31 equal to 100 percent of the business fees paid the year before. The balance is assessed through the tax rolls after the tax return for the current year is filed. | Exemptions:
| 25 percent of 80 percent of the rental value, which is estimated at 10 percent of the market value. |
| 4.2 Land tax | Levied on building land, playgrounds, and unused land. Building land is considered to be any land located within the perimeter of urban centers on which there is no construction, even if the land is enclosed and maintained. Playgrounds are considered to be any land within the perimeter of urban centers around buildings subject to the land tax on improved property (CFPB) or temporarily exempt from that tax. Unused land is considered to be any land outside urban centers that has not been used for the five years preceding January 1 of the tax year. | Exempt from land tax are:
|
|
| 4.3 Tax on property in mortmain | Annual tax representing the right of conveyance inter vivos or upon death, levied on real property belonging to companies subject to corporate income tax (IS). The tax base is the declared gross value of the property at January 1 of the tax year. | Exemptions:
| 0.25 percent |
| 4.4 Special real estate tax on rents (TSIL) | Subject to the special tax on property rentals are the individual or corporate owners who rent bare land, improved property for housing or for industrial or commercial development. The tax base is gross income from the rentals. The TSIL is due every quarter based on the amount of rent earned in the preceding quarter. For rentals to the state, the TSIL is withheld by the Treasury when rents are deposited to the owners. | Exemptions:
| 15 percent |
| 5. Recording taxes | |||
| Taxes are fixed, progressive, or proportional, depending on the nature of the acts and their amendments. Fixed taxes apply to “acts recording no transfer of ownership, usufruct or enjoyment of personal or real property, no obligation, no pecuniary or other judgment for value, no acquisitions by marriage, no acquisitions of equity, no sharing of personal or real property, and, generally, any other acts, even those exempt from recording, which are voluntarily submitted to this formality.” Progressive or proportional taxes are levied “on transfers of the enjoyment of personal or real property, inter vivos or upon death, obligations, pecuniary or other judgments for value, as well acts representing acquisitions through marriage, acquisitions of equity, division of personal and real property. The taxes are levied on the value.” | Some acts are recorded free of charge:
| The amounts of the fixed taxes range from CFAF 5000 to CFAF 50000, depending on the nature of the acts involved. Progressive taxes increase by tax bracket and are applied in accordance with a scale established by the finance ministry. Proportional taxes fall within a range of 1-6 percent. | |
| 6. Forestry taxes | |||
| 6.1 Stumpage fee (taxe d’abattage) | Persons or businesses, regardless of whether or not they hold a logging permit, who engage in forestry and cut logs that are intended for local processing or for export, are subject to the logging tax. The tax base for the logging tax is assessed using the value of the logs, as determined by their standard value, on the cutting date and the volume felled. Lumber operators must file a logging tax return and submit a payment instrument (a certified check made out to the tax administration or in cash) by the 20th day of the month following the month in which the logs were felled. Permit holders, timber operators, and lumber buyers must jointly and severally pay the logging tax. This provision has facilitated the application of a logging tax withholding (précompte) by obliging lumber buyers to withhold and pay 9 percent of the purchase value to the tax administration. Private contract holders (community forestry) are subject to the payment of a flat logging tax. |
| The logging tax rate varies by forestry zone. The different rates are: The annual reference scale is applied to logging in accordance with each classified zone of forestry units:
|
| 6.2 Area tax (taxe de superficie) | Persons or businesses holding a logging permit who are regularly taxed by the competent authorities of the Water and Forest Administration are subject to the area tax. The area tax is payable in advance by March 31 of every year for the whole year. If the amount payable exceeds CFAF 20 million, the permit holder may, at their request, be authorized to pay the tax according to the payment schedule established by the Directorate General of Taxes. The permit holder and timber operator must jointly and severally pay the area tax. | Area tax rates are as follows:
| |
| 7. Miscellaneous taxes | |||
| 7. 1 Tax on games of chance | The tax on games of change is levied on parimutuel bets at racetracks and any other games of chance. The tax base is the total amount played by gamblers and players. The tax on games of chance is payable voluntarily by the 25th of each month. | 4.5 percent | |
| 7. 2 Highway tax (taxe vicinale) | All male individuals between the ages of 18 and under 50 residing in Gabon at January 1 of the tax year are subject to the highway tax. The highway tax is withheld by employers three times a year from the wages of employees earning a monthly wage of no more than CFAF 65 000, and once a year for others. | The following are exempt from the highway tax:
| May be revised each year. Fixed annual tax:
|
| 7.3 Flat national solidarity tax | The flat national solidarity tax is levied on all individuals, male or female, residing in Gabon, between the ages of 18 and 50 on January 1 of the tax year. | The following are exempt from the flat national solidarity tax:
| CFAF 2000 per year. |
| 7.4 Suppl. tax on public and private salaries, benefits and emoluments, and wages | The tax base is taxable income subject to the IRPP on salaries and wages. The tax is withheld by employers on a monthly basis. |
| |
| 7.5 Flat residential user fee | The flat residential user fee is levied on:
| The flat residential user fee is not levied on the following:
| Tax introduced in 2000 and not yet applied. Rate to be set by MINEFI instruction. |
Gabon: Summary of the Tax System, as of End-March 2006
(All amounts are in CFA francs; unless otherwise indicated)
| Tax | Type of Tax | Exemptions, Rebates, and Deductions | Tax Rates |
|---|---|---|---|
| 1. Tax on income and profits | |||
| 1.1 Corporate income taxes (IS) | Levied on the taxable income of corporations under Gabonese and foreign law from their activities carried out in Gabon, subject to the provisions of international conventions. | ||
| 1.11 Tax on non-oil companies | Levied on all the profits or earnings of companies and other legal entities operating outside the oil sector. Payment modalities: Corporate income tax payable in three installments:
| The tax is calculated on net income from an activity carried out in Gabon, less all necessary operating costs: production costs, taxes paid (except corporate income tax), and interest. Note: Under the 2005 Budget Law, tax on developed and undeveloped property may be deducted from taxable income. Depreciation: rates range from 8 to 33⅓ percent. Generally, straight-line depreciation is applied—except for enterprises that exploit and process natural resources eligible for depreciation under special codes provided for in the Investment Charter, whereby capital goods may be depreciated using the sum-of-the-year’s-digits method. New material and equipment acquired for use in industrial operations in manufacturing, handling, transportation, agriculture and forestry, prescribed operations for site development for building or construction, which have a usable life of no less than three years and a minimum value of CFAF 10 million, may be subject to accelerated depreciation. Excluded from taxable income are:
Exemptions:
|
The following are deducted from the tax, as applicable:
|
| 1.111 Corp. income tax withheld at source (forestry sector) | Levied on payments made by purchasers to timber suppliers. This withholding tax is considered to be a share of the corporate income tax payable by the timber supplier. | Companies meeting the following requirements are exempted from the withholding:
|
|
| 1.112 Corp.income tax withholding | Levied on the amounts paid to service providers subject to corporate income tax. | Companies subject to VAT | 9.5 percent |
| 1.113 Taxation of head offices | Head offices established as joint-stock companies or branches providing executive, management, or supervisory services exclusively to companies in the group to which they belong are subject to corporate income tax under special terms: the corporate income tax base is calculated at a flat rate of 5-12 percent determined by the finance ministry and applied to operating costs. | Non-nationals working at head offices under certain conditions benefit from a 50-percent rebate on their pre-tax income, in accordance with the terms of ordinary law governing personal income tax | 35 percent |
| 1.114 Minimum flat tax on corporations | Levied on all companies subject to corporate income tax when the tax chargeable to them is lower than the minimum levy. In loss years, the minimum levy is deductible in thirds from the corporate income tax of subsequent profit years, over a period of three years. | The following are exempt from the minimum flat tax:
| 1.10 percent (with a minimum of CFAF 600,000) applied to the overall turnover for the previous year less:
|
| 1.12 Tax on oil companies | The tax is levied on the income of oil companies as follows:
| The tax is assessed in accordance with the provisions agreed upon with each oil company. This tax is not applicable to production sharing contracts. The special regime for oil companies provides that these companies may maintain tax exempt provisions for reactivating used oil fields. These provisions must be kept below two limits:
| |
| 1.13 Taxation of oil sector subcontractors | The simplified tax regime reserved for oil company subcontractors, which is not applicable to companies based in Gabon for more than nine years, calculates a flat assessment of the corporate income tax and payroll taxes and charges based on actual turnover. Provided that they meet certain conditions, the earnings and payroll (for expatriate personnel) of companies that qualify for this regime are taxed at a rate of 15 and 14 percent, respectively, of their pre-tax turnover in Gabon. | Corporate income tax rate: 35 percent (15 percent of turnover). Flat rate for taxes due from employees: 22 percent of payroll (14 percent of turnover). These rates are applicable to FY 2006, 2007, and 2008 (Order No. 27 of 12/20/2005). | |
| 1.14 Corporate income tax on foreign companies, withheld at source | Withholding at source of corporate income tax on all amounts paid by a debtor based in Gabon to legal entities with no permanent facilities there, levied on:
| 10 percent | |
| 1.2 Taxes on individuals | |||
| 1.21 Personal income tax (IRPP) | This tax is levied on the overall net income of the taxable household, which comprises the sum of net income in the following categories:
Modalities for collecting the IRPP: The IRPP is collected using the tax rolls after filing tax returns for all income other than tax on industrial and commercial income (BIC) and the tax on agricultural income (BA), based on actual earnings, and the tax on noncommercial income (BNC), based on verified tax returns [déclarations contrôlées] by March 1 of the following fiscal year. In the latter case, the declaration of all income must be filed together with the declaration of net income by April 30 of the following fiscal year. BIC and BA taxpayers taxed on actual income and BNC taxpayers under the verified tax returns regime must pay installments on February 15 and April 15 equal to one fourth of the IRPP or of the minimum levy of the previous year. The balance is collected through the tax rolls after settlement of the tax return. Taxpayers of BIC and BA by standard assessment and BNC taxpayers by administrative assessment (évaluation administrative), must pay by April 15, July 15, and October 15 three installments equal to one third of the IRPP or minimum prior-year levy. The balance is collected through the tax rolls after settlement of the tax return. | Deductions:
| In taxing the taxable household, a ratio system similar to the French IRPP (the number of children is limited to 6) is applied to determine the amount of the tax, assessed using the following progressive scale: Q = Net overall income/number of family members 11 tax brackets ranging from 0 to 50 percent. IRPP exemption for households for which Q is less than CFAF 1.2 million, and taxation at a rate of 50 percent for the bracket where Q is greater than CFAF 22 million. The gross income so determined is reduced by:
|
| Taxes on real estate earnings: All income derived from the rental of real estate in Gabon, provided that rental income is not included in the profits of an individual, industrial or commercial companies. Net real estate income = Gross earnings - expenses | The following are exempt: income from real estate intended for the proprietor’s own personal use. Deductible expenses (or property expenses) include:
| ||
| Profits from farming comprise earnings from the operation of rural properties by farmers, tenant farmers, or the owners themselves in connection with stockbreeding, poultry farming, fish farming, and oyster farming. Two taxation regimes:
| Proceeds from the farming of land exclusively used for food crops, where the cultivated surface area is less than 5 hectares, is exempt. The law makes it possible to opt for the higherrate regime. In the event that the taxpayer elects to use the itemized basis, account shall be taken of:
| ||
| Earnings from noncommercial professions include income equivalent to noncommercial earnings principally from the liberal professions, but also from positions and offices held, and any other income not classified elsewhere. Two tax regimes:
| The law makes it possible to opt for the higherrate regime. Taxation under the verified tax returns regime is on the following basis:
| ||
| Salaries, pensions, and annuities include salaries, benefits, emoluments, wages, pensions, and annuities earned from engaging in an activity in Gabon. In-kind benefits provided to employees are taxable on the basis of the following standard assessment:
| The following are exempt from the tax: Gross earned income is subject to a 20-percent rebate limited to CFAF 10 million, for professional fees. | ||
Investment income includes:
|
| 5 percent: income from securities with an original maturity of less than five years is subject to withholding at source by the payer. This withholding at source fully discharges all other taxes. 15 percent: Levied at source on interest on bank short-term borrowing. Subject to the provisions of international conventions, income from claims, deposits, and security, whose beneficiaries are nonresident individuals or corporations is subject to a withholding at source of 20 percent by the payer, remitted to the Revenue Authority. This withholding at source fully discharges all IRPP payments. 20 percent: for dividends, interest, arrears, other returns of all types of shares, and interests of the founders or beneficiaries of companies. 22 percent for directors’ fees and attendance fees, lump sum refunds of costs, and all other compensation paid to the sole director, or board members of companies and enterprises of any type. 30 percent: payouts divided among creditors and claim holders. | |
| 1.212 Personal income tax (IRPP) withheld at source (forestry) | Levied on payments made by purchasers to timber suppliers. This withholding tax is considered to be a share of the corporate income tax payable by the timber supplier. |
| |
| 1.213 Personal income tax (IRPP) withheld at source (government payments) | The withholding is applicable to all government payments to suppliers subject to the IRPP. | The special real estate tax on rentals is deductible from property income In addition to the other charges deductible from income, the flat deduction for management, insurance, maintenance, and depreciation fees is set at 30 percent. |
|
| 1.214 Business income tax (IRPP/BIC/BNC) withheld at source | Levied on amounts paid to service providers subject to IRPP/BIC/BNC. | 9.5 percent | |
| 1.215 Installment payments of personal income tax (IRPP)on imports | Payment of a standard installment of the IRPP on merchandise imports for commercial purposes. The installment is assessed on the declared customs value. It is collected by the carrier and remitted to the Treasury. | Entities subject to VAT are exempt. | 2.5 percent |
| 1.22 Levy at source of the personal income tax (IRPP) on capital gains | The levy at source of the IRPP applies to capital gains by individuals or corporations when they transfer goods or rights of any kind for consideration. The capital gains derived by individuals from the management of their private assets may be generated at the time of sale, exchange, division, expropriation, input of capital into a company, or liquidation of a company from personal or real property or rights of any kind. Gains on real property are equivalent to capital gains from the transfer for consideration of equity in companies whose assets comprise mainly property or rights thereto. Entities subject to this tax are:
Any costs of construction, reconstruction, renovation, and improvement since the purchase are added to the purchase price, if they have not been previously deducted from the taxable income. | Exempted from the levy at source of the IRPP are capital gains resulting from:
| |
| 1.23 Minimum flat tax on personal income | The amount of the tax due by taxpayers on industrial, commercial, and artisan earnings, earnings from farming, from noncommercial professions, and equivalent income may be no lower than the minimum levy. This minimum levy is announced and collected in the same manner as the IRPP, which it replaces if it is higher. | Same exemptions as for the corporate income tax (IS) | 1.10 percent on overall turnover in the previous fiscal year plus miscellaneous proceeds and profits or CFAF 350,000 |
| 1.24 Flat income tax (IFR) | Levied on the income of individuals subject to the business fees, namely:
| IFR rates, which correspond to a fixed tax, are established for each taxable activity based on the vehicle used by the transporter or the establishment, in the case of other taxpayers. | |
| 1.25 Personal income tax (IRPP) on foreign companies, withheld at source | Withholding at source of the IRPP levied on all amounts paid by a debtor based in Gabon to individual enterprises that are not based in the country on:
| 10 percent | |
| 2. Taxes on goods and services | |||
| 2.1 Value-added tax | This tax is assessed on value added. The tax is levied on all production, delivery, import, and service provision activities conducted on a regular or occasional basis, independently, for consideration. Subject to this tax are all corporate or individual taxpayers with a turnover of:
To be subject to the tax, a business transaction must be carried out in Gabon. For a sale, the merchandise must be delivered to Gabon and, for other operations, the service provided, right transferred, or thing leased must be used in Gabon. Apart from the general rule of imputing VAT deductions to gross VAT, the law provides for a system of possible credits of the tax limited to the following cases:
Special case: The VAT regime applicable to petroleum exploration, exploitation, and production is established within the framework of the underlying contracts. VAT withholding: VAT on payments on contracts by the national government, local governments, and administrations with financial autonomy is withheld at source (60 percent of the full amount), as provided in the contract or related invoice. | The following are not eligible for deductions:
The rules on ineligibility for deduction are applied on a prorated basis in the case of mixed activities. Exemptions:
Provided that there is reciprocity, diplomatic or consular personnel benefit from an exemption for the purchase of vehicles for professional or personal use on the domestic market. VAT refunds are granted to diplomatic or consular missions based in Gabon for:
|
|
| 2.2 Excise taxes | Levied on imports or on domestic sales of nonalcoholic or alcoholic beverages, cigarettes, cigars, and tobacco. The tax base for imports is the c.i.f. value plus customs duties. The tax base for domestic production is the producer’s sales price, excluding taxes. | For domestic products, the base is reduced by a rebate of 30 percent on the sales price. |
|
| 2.3 Special taxes on fuels | |||
| 2.31 Domestic consumption tax | Levied on deliveries of liquid or gaseous petroleum products refined by distribution companies on the domestic market | Within the framework of the petroleum pricing structure, the Directorate General of Taxes, in agreement with the Petroleum Price Commission, sets the tax rates per distribution unit (liter or metric ton) for each product marketed. | |
| 2.32 Municipal tax on fuels | Domestic tax levied only on the use of petroleum products in Libreville and Port Gentil. Levied on deliveries of hydrocarbon liquids or gases refined by distribution companies on the domestic market. | Within the framework of the petroleum pricing structure, the Directorate General of Taxes, in agreement with the Petroleum Price Commission, sets the tax rates per distribution unit (liter or metric ton) for each product marketed. | |
| 3. Business and license fees | |||
| 3.1 Business fees(contribution des patentes) | Any Gabonese national or foreigner engaging in a commercial or industrial activity or an activity that is not expressly exempted by law is subject to business fees. Business fees are personal. Each establishment of the business must pay business fees. However, if several activities are carried out within the same establishment, the taxpayer is subject only to the highest fixed tax. Business fees for the full year from each taxpayer exercising a taxable activity are due in the first quarter of the year. For new activities, business fees are due only from the first day of the quarter in which the activity started. For seasonal activities, business fees are not pro rated. An installment of the business fees equal to 100 percent of the previous year’s fees must be paid by March 31. The balance is assessed through the tax rolls after the tax return for the year is filed. Business fees are levied on behalf of local governments, communes, and departments. | Exemptions:
New establishments created by an enterprise and “using a workshop operating machinery” are exempt from business fees during the year in which they are established and for the next two years. Some duly authorized enterprises under the Investment Charter may benefit from temporary exemption from business fees. | Business fees consist of fixed fees at variable rates defined in accordance with the activity and the conditions under which it is exercised. |
| 3.2 License fees (contribution des licences) | Levied on all individuals or legal entities engaged in the sale of spirituous or fermented alcoholic beverages in any form. Business fees are levied on behalf of local governments, communes, and departments. | The licenses are defined by category based on the terms and conditions of the activity, The law defines three categories of licenses. License fees consist of a fixed fee, set by law on the basis of each category of license. | |
| 4. Property taxes | |||
| 4.1 Land taxes | |||
| 4.11 Land tax on improved property | The tax on improved property is levied on construction (registered or not) set on masonry foundations, such as houses, factories, hangars, and factories located in Gabon. It is also levied on the equipment of industrial plants incorporated in goodwill in perpetuity or attached to special foundations that are an integral part of the building, as well as any commercial or industrial installations. The land tax is established on the basis of a taxable income equal to the rental value at January 1 of the property concerned, less 25 percent for wear and tear and maintenance and repairs. Persons or businesses holding a property deed, a temporary or permanent occupancy title, and who are actually residing at a property on which a taxable construction has been built, are considered the proprietor of said property A rebate or reduction may be granted in the event that the house is vacated or the commercial or industrial establishment becomes non-operational for reasons beyond the control of the taxpayers and if the premises remain idle for at least six consecutive months. By March 31, an installment of the tax on improved property equal to 100 percent of the business fees paid the previous year must be paid by taxpayers subject to corporate income tax. The balance is assessed through the tax rolls after the tax return for the current year is filed. | Exemptions:
| 25 percent of 75 percent of the rental valu |
| 4.12 Land tax unimproved property | The land tax on unimproved property is assessed on all types of unimproved property, except property under provisional concessions. Persons or businesses holding a property deed, a temporary or permanent occupancy title, and who are occupying the property in their own right are considered the proprietor of said property. The tax is assessed on a base equivalent to 4/5 of the rental value, which itself is equal to 10 percent of the market value of the unimproved property. The land tax on unimproved property is levied on taxpayers of the corporate income tax and subject to payment of an installment by March 31 equal to 100 percent of the business fees paid the year before. The balance is assessed through the tax rolls after the tax return for the current year is filed. | Exemptions:
| 25 percent of 80 percent of the rental value, which is estimated at 10 percent of the market value. |
| 4.2 Land tax | Levied on building land, playgrounds, and unused land. Building land is considered to be any land located within the perimeter of urban centers on which there is no construction, even if the land is enclosed and maintained. Playgrounds are considered to be any land within the perimeter of urban centers around buildings subject to the land tax on improved property (CFPB) or temporarily exempt from that tax. Unused land is considered to be any land outside urban centers that has not been used for the five years preceding January 1 of the tax year. | Exempt from land tax are:
|
|
| 4.3 Tax on property in mortmain | Annual tax representing the right of conveyance inter vivos or upon death, levied on real property belonging to companies subject to corporate income tax (IS). The tax base is the declared gross value of the property at January 1 of the tax year. | Exemptions:
| 0.25 percent |
| 4.4 Special real estate tax on rents (TSIL) | Subject to the special tax on property rentals are the individual or corporate owners who rent bare land, improved property for housing or for industrial or commercial development. The tax base is gross income from the rentals. The TSIL is due every quarter based on the amount of rent earned in the preceding quarter. For rentals to the state, the TSIL is withheld by the Treasury when rents are deposited to the owners. | Exemptions:
| 15 percent |
| 5. Recording taxes | |||
| Taxes are fixed, progressive, or proportional, depending on the nature of the acts and their amendments. Fixed taxes apply to “acts recording no transfer of ownership, usufruct or enjoyment of personal or real property, no obligation, no pecuniary or other judgment for value, no acquisitions by marriage, no acquisitions of equity, no sharing of personal or real property, and, generally, any other acts, even those exempt from recording, which are voluntarily submitted to this formality.” Progressive or proportional taxes are levied “on transfers of the enjoyment of personal or real property, inter vivos or upon death, obligations, pecuniary or other judgments for value, as well acts representing acquisitions through marriage, acquisitions of equity, division of personal and real property. The taxes are levied on the value.” | Some acts are recorded free of charge:
| The amounts of the fixed taxes range from CFAF 5000 to CFAF 50000, depending on the nature of the acts involved. Progressive taxes increase by tax bracket and are applied in accordance with a scale established by the finance ministry. Proportional taxes fall within a range of 1-6 percent. | |
| 6. Forestry taxes | |||
| 6.1 Stumpage fee (taxe d’abattage) | Persons or businesses, regardless of whether or not they hold a logging permit, who engage in forestry and cut logs that are intended for local processing or for export, are subject to the logging tax. The tax base for the logging tax is assessed using the value of the logs, as determined by their standard value, on the cutting date and the volume felled. Lumber operators must file a logging tax return and submit a payment instrument (a certified check made out to the tax administration or in cash) by the 20th day of the month following the month in which the logs were felled. Permit holders, timber operators, and lumber buyers must jointly and severally pay the logging tax. This provision has facilitated the application of a logging tax withholding (précompte) by obliging lumber buyers to withhold and pay 9 percent of the purchase value to the tax administration. Private contract holders (community forestry) are subject to the payment of a flat logging tax. |
| The logging tax rate varies by forestry zone. The different rates are: The annual reference scale is applied to logging in accordance with each classified zone of forestry units:
|
| 6.2 Area tax (taxe de superficie) | Persons or businesses holding a logging permit who are regularly taxed by the competent authorities of the Water and Forest Administration are subject to the area tax. The area tax is payable in advance by March 31 of every year for the whole year. If the amount payable exceeds CFAF 20 million, the permit holder may, at their request, be authorized to pay the tax according to the payment schedule established by the Directorate General of Taxes. The permit holder and timber operator must jointly and severally pay the area tax. | Area tax rates are as follows:
| |
| 7. Miscellaneous taxes | |||
| 7. 1 Tax on games of chance | The tax on games of change is levied on parimutuel bets at racetracks and any other games of chance. The tax base is the total amount played by gamblers and players. The tax on games of chance is payable voluntarily by the 25th of each month. | 4.5 percent | |
| 7. 2 Highway tax (taxe vicinale) | All male individuals between the ages of 18 and under 50 residing in Gabon at January 1 of the tax year are subject to the highway tax. The highway tax is withheld by employers three times a year from the wages of employees earning a monthly wage of no more than CFAF 65 000, and once a year for others. | The following are exempt from the highway tax:
| May be revised each year. Fixed annual tax:
|
| 7.3 Flat national solidarity tax | The flat national solidarity tax is levied on all individuals, male or female, residing in Gabon, between the ages of 18 and 50 on January 1 of the tax year. | The following are exempt from the flat national solidarity tax:
| CFAF 2000 per year. |
| 7.4 Suppl. tax on public and private salaries, benefits and emoluments, and wages | The tax base is taxable income subject to the IRPP on salaries and wages. The tax is withheld by employers on a monthly basis. |
| |
| 7.5 Flat residential user fee | The flat residential user fee is levied on:
| The flat residential user fee is not levied on the following:
| Tax introduced in 2000 and not yet applied. Rate to be set by MINEFI instruction. |
Prepared by Oscar Melhado.
The fêtes tournantes refer to the spending associated with the rotating independence day celebrations.
The PEMFAR was presented to the authorities in January 2006. It integrates procurement and financial management with the standard public expenditure review. The aim is to enhance the country’s understanding of public financial management arrangements and reform challenges.
Budgetary allocations for the fêtes tournantes existed during the 1970s, but were suspended during the 1980s.
The calendar of provinces is the following:2002- Nyanga & Ogooué, 2003- Ngounié & Moyen Ogooué, 2004- Haut Ogooué & Ogooué Lolo, 2005- Woleu Ntem & Ogooué Maritime, and 2006- Estuaire (currently in process).
At the moment of drafting this paper, the government was looking at choices to finance a hospital in the university. The preliminary estimate of the investment was about US$83 million.
It has to be acknowledged that the literacy rate has sharply increased from 71 percent in 2002 to 85 percent in 2005.
During 2002-03 the repetition rate was about 37 percent in primary schools, 30 percent in secondary, and 26 percent in secondary technical schools. The proportion of promotions to a higher class was on average only 36 percent of students.
This estimation includes current and capital spending and excludes debt payments and the fêtes tournantes, which could not be easily associated with particular functions.
