Corporate - Income determinationLast reviewed - 24 March 2023
Inventory is evaluated at cost price for tax purposes. The tax method generally matches the book method.
Capital gains are, in principle, subject to CIT.
Some exemptions and specific tax regimes can apply, as follows:
- Capital gains that come from the assignment, in the ongoing operation, of the components of the fixed assets will not be included in the taxable profit of the fiscal year in the course of which they have been obtained if the taxpayer puts them in a special account named 'capital gains to be reused' and is committed to reinvesting in new fixed assets in the company before the expiration of a period of time of three years, starting from the close of this fiscal year, an amount equal to the amount of these capital gains plus the cost of the assigned components.
- 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, on condition that the take-over company or the new company has its corporate headquarters in Equatorial Guinea.
All dividends received by a resident company are subject to CIT.
A personal income WHT of 25% 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:
- Individuals will be subject to PIT at the progressive scale (0% to 35%) according to section 252 of the EG Tax Code.
- Companies 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 10% of the amount of these products and represents the management expenses already deducted from overhead costs.
Interest earned by companies established in Equatorial Guinea is subject to WHT at a rate of 10%.
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 25% rate.
Royalties over gross production for the oil and gas industry are paid based on the respective Production Sharing Contracts.
Resident companies are subject to CIT on their worldwide income.
There is no tax deferral in Equatorial Guinea.