New Caledonia

Corporate - Income determination

Last reviewed - 16 April 2024

Inventory valuation

Inventories must be valued at the lower of cost or market. Cost must be determined in accordance with the first in first out (FIFO) or the average-cost method. The last in first out (LIFO) method is prohibited.

Capital gains

Capital gains from the sale of fixed assets are subject to separate regimes depending on whether they are realised in the short or long term.

The short-term capital gains regime is applicable:

  • to capital gains arising from the sale of assets acquired or created less than two years ago, and
  • to capital gains realised on the sale of assets held for at least two years to the extent that they correspond to depreciation deducted for the tax base.

The short-term capital losses regime applies:

  • to capital losses suffered on the transfer of non-depreciable assets held for less than two years, and
  • to capital losses suffered on the transfer of depreciable assets, regardless of the duration of their holding.

Capital gains that do not meet short-term capital gains conditions are deemed to be long-term capital gains.

Transfers of securities included in the portfolio are deemed to relate in priority to securities of the same nature acquired or subscribed on the earliest date.

The long-term capital gains regime is applicable to proceeds from the transfer of patents, processes, and techniques, as well as to concessions of exclusive operating licences.

The net amount of long-term capital gains is taxed at a 15% CIT rate, with the exception of capital gains from the sale of building land and similar assets (as well as securities of companies whose assets are mainly constituted by this type of assets), the amount of which is taxed at a 25% CIT rate. Capital gains subject to tax at the rate of 15% or 25%, reduced by the amount of this tax, are placed in a special reserve.

Any excess of long-term capital losses can only be set off against long-term capital gains realised during the following ten financial years.

The net amount of short-term capital gains can be distributed equally over the year of their realisation and over the following two years. Where applicable, the excess of short-term capital losses recorded during a financial year is deducted from the profits of the financial year.

Dividend income

Dividends received by companies based outside New Caledonia are taxable as ordinary income and subject to CIT at the standard rate. However, if the beneficiary holds at least 10% of the distributing company for four years (two years before and two years after), these dividends are not included in the taxable base, except a lump sum of 10%.

Dividends received from companies based in New-Caledonia are, without any condition, tax exempted.

The withholding tax (WHT) paid in the country of the distributing company is considered as a tax credit.  

Interest income

Interest income generally is taxable as ordinary income and subject to CIT at the standard rate.

Royalty income

Royalties are, in principle, subject to CIT at the standard rate (plus additional social contribution if relevant).

Foreign income

Resident corporations are not taxed on foreign-source income derived from activities carried out abroad through foreign branches and foreign PEs. Other foreign income is not taxable until actually repatriated to French-resident corporations. As a result, undistributed income of foreign subsidiaries is not taxable.