Companies must, in principle, close off their yearly financial accounts on 31 December each year. Where a company begins operations later in the year (say June 2018), it has the option of operating for a minimum of 12 months or a maximum of 18 months to close off its accounts.
Corporate tax returns are due on 30 April, at the latest, with the possibility to apply for an exceptional extension to 15 May.
Before fiscal year 2018, taxpayers could subscribe to a rectifying Statistical and Tax Statement at any time before any tax audit.
From fiscal year 2018, any taxpayer who has made errors or omissions in one’s spontaneous tax returns (monthly tax return, annual tax return, annual statement of salaries and wages) can subscribe to a rectificative tax return within two months from the date of filing of the initial tax return.
An amending declaration is binding to the tax administration if filed within two months.
Payment of tax
Certain taxes are considered instalment payments of corporate tax. Once the amount of corporate tax is known, these payments are deductible from the amount and only the balance has to be paid on 15 May. These taxes include the minimum corporate tax, the quarterly instalment payments, and the 4% discharge for retail goods, if applicable.
Minimum corporate tax (monthly and quarterly)
The minimum corporate tax shall be filed and paid, at the latest, on the 15th day of the month following the month of achievement of the turnover for companies subject to the normal tax regime and quarterly for companies subject to the simplified tax regime.
However, for the payment of the floor rate, payment may be made in four instalments of XAF 250,000 each, 15 days after the end of the quarter.
If this instalment payment exceeds the annual corporate tax, the remainder is lost.
One-third instalment payments (paid three times quarterly)
Corporations that fulfil the following conditions are subject to quarterly instalment payments:
- Liable to corporate tax.
- Made a profit during the prior fiscal year.
- The amount of the corporate tax of the prior fiscal year is superior to at least XAF 100,000.
The quarterly instalment payments are equal to one-third of the difference between the corporate tax due during the prior fiscal year and the minimum income tax paid during the same period.
The payment must take place before the 15th day of May, August, and November.
Since August 2017, taxpayers are authorised to pay taxes, penalties, and fines by electronic money. The tax administration has not yet precised the modalities of payment.
Tax audit process
In brief, the tax audit exercised by the Direction Générale des Impôts (Directorate General of Taxes) in Chad consists of three different types of control:
- Audit of monthly, quarterly, and annual tax returns, which requires no prior notice by the tax administration to the taxpayer.
- Spot checks, which are done on one or more taxes on a group of operations over a period of less than one fiscal year. Prior notice is obligatorily given by the tax administration to the taxpayer.
- General verification, which is the most important audit and needs prior notice by the tax administration to the taxpayer. This type also involves the other two audits aforementioned, so that the taxpayer can perform the necessary adjustments on previous declarations.
In all the audits, there are contradictory and contentious proceedings. The contradictory proceeding is engaged when the tax administration finds deficiency, inaccuracy, or omission in the information on the tax returns and notifies the taxpayer thereof. The contentious proceeding, on the other hand, is engaged when the taxpayer, in turn, disagrees with the observations of the tax administration and challenges its position directly with the tax administration and/or with the courts.
Taxpayers who dispute the justification or the amount of tax levied on them may, if they had formally filed the claim under certain conditions, obtain stay of payment of the disputed portion of the said taxes, on condition that they:
- expressly request respite of payment in the complaint
- state the amount or the basis of the tax relief requested
- provide supporting documents showing payment of the undisputed portion of the tax and 15% of the disputed one, and
- provide the bank guarantee obtained from a bank located in Chad.
Statute of limitations
The total or partial omissions found in the tax base, the inadequacies and inaccuracies, or the taxation errors, can be repaired by the tax administration until the end of the third year following that in which the tax or fee is payable.
Furthermore, any omission or insufficiency of tax revealed by a proceeding before the criminal courts or by a contentious claim may, without prejudice to the general period of repetitions established above, be repaired until the end of the third year following the revelation of the facts.
Validation of the taxpayer’s accounts: Competence of Chartered Accountants CEMAC
Before 2018, the certification of the taxpayer’s accounts made by an accountant or chartered accountant, accredited to the Court of Appeal of N'Djamena or approved CEMAC, is binding to the tax administration.
From fiscal year 2018, only CEMAC chartered accountant are authorised to validate the taxpayer’s accounts.
Fine applicable to the taxpayer: Fine of XAF 300,000 if the taxpayer’s account is validated by an accountant or chartered accountant of the Court of Appeal of N'Djamena.
Fines of XAF 5 million are applicable to any accountant who validates an accounting that is inconclusive or tainted by irregularities.
Furthermore, a suspension of approval for two years and criminal prosecution are applicable.
Prohibition of chartered accountants to provide tax advice
From 2018, any accountant who provides tax advice in contradiction to the texts that govern its profession is liable to a fine of XAF 5 million, the suspension of its authorisation for two years, and criminal prosecution.
There is an incompatibility of the practice of the profession of chartered accountant with the profession of tax advisory as defined by the Statute of Tax Council.
Topics of focus for tax authorities
- Foreign technical assistance fees.
- WHT on non-commercial profit.
- Stock variation.
- VAT on provision of foreign services.
- Non-deductible charges (e.g. liberalities, donation, commission on purchases).
- Transfer pricing documentation.
- Transactions between affiliated entities.