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Taxation structure
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When you have a business, whether industrial, commercial or liberal activity, you are subjected to the payment of a certain number of taxes listed below.
The Activity and Importer Patent:

The contribution to the Activity Patent is due by anyone, national or foreigner, who possess commerce, an industry or a profession not included in the exceptions indicated in the General Tax Code (Art 91 GTC).
How this patent is calculated?

The patent is composed by a fixed right and a proportional right which elements of calculation are defined by the General Tax Code (GTC).
Any individual or entity engaged in an import activity has also to take an importer patent.

According to the Law n190/AN/17/7emeL amending the General Tax Code, an exemption is granted to new companies depending on their activities. The article n1 of the General Tax Code classifies all activities and those from 5 to 8 are exempted during the first three years.


The Value Added Tax and Home Consumer Tax (TIC):

Any individual or entity including the companies of the Free Zone and those benefiting from the Investment Code (with a turnover equal or higher than 50 000 000 DJF) as well as community services or public entity realizing a taxable activity must pay the Value Added Tax (Art. 173/174 GTC).
The Home Consumer Tax is paid on the products imported and consumed in Djibouti.
How the VAT / TIC are calculated?

The Value Added Tax represents 10% of services or products. The Home Consumer Tax depends on the nature of the product, which are classified according to different rate.

Who is exonerated?

The companies, which, benefit from the Investment Code exemption are not subjected to the Home Consumer Tax.
The License:

All entities or individuals who have obtained prior administrative authorization to run trade of alcoholic beverages, including officers mess, clubs, community and association which sell those beverages exclusively to their members, are hence subject to a special contribution called license (Art. 130 GTC).
How this license is calculated?

The tariffs of licenses are calculated based on the nature of the operations performed and the location where the trade is ran.

Income and Salary Tax (IST):

Any individual who is receiving a salary against a professional activity performed under the authority and direction of another, public or private entity or person is expected to the payment of a salary and income tax. The income and salary tax is subjected to deduction withheld by the employer (Art 3 GTC).

How the income and salary tax is determined?

The ITS, is calculated on the basis of a salary scale with a progressive rate established by the GTC.

Income Tax:

The tax of the professional benefits (profits) is established on the profits made by individuals or entities running a commercial, industrial, handicraft or liberal profession, excepted, exonerated ones (Art 19 GTC).

How this tax is determined?

The tax equals 25% of the annual net profit.

Who is exonerated?

The companies which are benefiting from the Investment Code are exonerated of this tax as well as income from property and income from assets.

The minimum flat tax (MFT):

The MFT is due by individuals and entities running a handicraft, commercial, industrial or other liberal profession. It is a tax on the turnover realized on the national territory and not deductible from the taxable profit. The MFT is due on the hypothesis of a deficit result. The MFT equals to 1% of the turnover and the companies benefiting from the Investment code are subject to this tax (Art 57 GTC).
The tax on wages paid to individuals or entities not residing in Djibouti by a debtor established in Djibouti
It is a tax perceived by the means of a withholding at the source on the earnings paid to individuals and entities not residing in Djibouti. The taxable earnings are the sums paid against services rendered and those perceived on the author rights and products of industrial, commercial property or similar activities.
However this tax is calculated?

The tax equals to 10% of the gross amount of the earnings paid.

The tax on services:

The sector of service providers and hotel services (not affected by the VAT), are solely subjected to the payment of tax on services (Art. 213 GTC). The tax is to be paid spontaneously every month.
How is it calculated?

The tax equals to 7% of service provided.
The tax base equals the total of all the sums and advantages received and if also applicable to the value of the goods incorporated in the delivery of the service.
What forms are to be used for the declaration of these various taxes?
? The declaration of the IST
? The declaration of taxes on profits
? The declaration of advantages in kind
? The declaration on the withholding tax
? The declarations of the patent