Equatorial Guinea

Inventory valuation

Inventory is evaluated at cost price for tax purposes. The tax method generally matches the book method.

Capital gains

Capital gains are subject to CIT.

Capital gains different from those obtained on goods, resulting from free assignment of stock, corporate portions, or liabilities, as a consequence of the merger of corporations, limited partnerships by shares, or limited companies, will be exempt from the tax regarding the profits made by those corporations, under a condition that the take-over company or the new company has its corporate headquarters in Equatorial Guinea.

Dividend income

All dividends received by a resident company are subject to CIT.

A personal income WHT of 15% is applicable on dividends paid to individuals or companies not having their usual domicile or headquarters in Equatorial Guinea. This tax is a final tax for those taxpayers.

For companies or individuals that have their usual domicile or headquarters in Equatorial Guinea, the dividends tax will be assessed as follows:

• For companies this income will be considered as exceptional income in the company CIT return and subjected to the CIT.
• Individuals will be subject to a 10% WHT.

The net products of the shares owned and earned by the parent company from its subsidiary can be deducted from the total net profits of the parent company after offsetting from this amount 25% (expenses and charges lump sum amount) if the:

• shareholder holds at least 25% of shares of the subsidiary and
• shareholder guarantees the shares have always been registered in the name of the participating company and commits it will hold these shares for at least two consecutive years.

This proportional part is established at 5% of the amount of these products and represents the management expenses already deducted from overhead costs.

Interest income

Interest earned by companies not having their usual domicile or headquarters in Equatorial Guinea is considered as dividend income and subject to WHT at a 15% rate.

Royalty income

Royalties paid to foreign companies are subject to 10% WHT.

Royalties over gross production for the oil and gas industry are paid based on the respective Production Sharing Contracts.

Foreign income

Resident companies are subject to CIT on their worldwide income.

There is no tax deferral in Equatorial Guinea.