Value-added tax is a central consideration for businesses operating in Equatorial Guinea. It is an indirect consumption tax linked to turnover, covering transactions carried out within the country. The starting position is broad: an operation is taxable unless an exemption appears in the Tax Code or applies through a specific tax regime.
Businesses therefore need to examine what they supply and how the relevant rules classify each transaction. A commercial activity does not fall outside VAT simply because it differs from an ordinary retail sale. The framework also extends to professional activities and extraction operations undertaken by individuals or legal entities.
Transactions Within the VAT System
VAT generally applies when goods are sold or transferred for payment. Services supplied in the course of business also fall within its scope, alongside imports entering Equatorial Guinea. These categories make VAT relevant to trading companies, service providers and businesses purchasing goods from overseas.
The rules additionally cover goods and services consumed by businesses themselves. Consequently, an external customer payment is not the only circumstance that can bring an operation into the VAT system. Reviewing internal consumption alongside sales and imports helps businesses identify the full range of potentially taxable activities.
Applying the Correct VAT Rate
The standard VAT rate is 15%. This is the general rate for taxable operations that do not qualify for another specified treatment. However, applying the standard rate indiscriminately can overlook provisions intended for particular products.
A 0% rate applies to products and equipment expressly listed in the Tax Code. Examples include certain medical products and some construction equipment. Eligibility depends on the specific statutory list; these examples should not be interpreted as covering every medical supply or every item used in construction.
A reduced rate of 5% applies to a limited selection of basic consumables and books. Businesses dealing in these products should establish whether the goods concerned fall within the qualifying categories before selecting the reduced rate.
This makes product classification an important step when reviewing pricing, preparing invoices and assessing overall tax exposure.
Separating Exemptions and Refund Entitlements
Exempt transactions and supplies attracting a 0% rate represent separate classifications under the framework described. Businesses should retain that distinction when assessing their transactions, rather than treating every departure from the standard rate as an exemption.
Taxpayers may request VAT refunds where the conditions in the new tax legislation are satisfied. A refund is therefore conditional, rather than an automatic consequence of conducting taxable business. Companies considering an application should examine the applicable requirements and establish whether their circumstances support a claim.
Other Taxes Affecting Goods
Consumption taxes combine a 30% proportional charge with additional amounts for beverages and tobacco. Alcohol generally attracts XAF 75 per degree per litre, with beer carrying an additional XAF 200 per litre. Non-alcoholic drink supplements vary between XAF 30 and XAF 100 per litre. Tobacco supplements depend on product type and quantity.
Customs duties range from 5% for essential goods to 30% for consumption goods, with intermediate bands of 10% and 20%. Designated excisable products attract 30%. Vehicle charges depend on horsepower, while plastic bags attract XAF 15 each.
Property, Employment and Sector Charges
Annual urban property tax is 0.5% of 30% of land and building value. Goods transfers involving non-residents attract 10%; property transfers attract 5% between residents and 20% where non-residents are involved. Contract registration attracts 0.5%, alongside applicable stamp duties.
Employers withhold personal income tax and administer social contributions. Employer rates are 1% of gross salary for the Work Protection Fund and 21.5% for INSESO. Employee rates are respectively 0.5% of net salary and 4.5%. Telecommunications income attracts 10%, while tourism tax does not apply for 2026.
FAQs
Which activities are subject to VAT in Equatorial Guinea?
VAT generally covers goods sold for payment, services, imports, extraction activities, and goods or services consumed by businesses themselves.
Read Also: Equatorial Guinea: Corporate Tax Compliance
Which products qualify for lower VAT rates?
Selected basic consumables and books attract 5%. Certain medical products and construction equipment listed in the Tax Code qualify for 0%.
Can businesses claim VAT refunds?
Yes. Taxpayers can request refunds if they meet the conditions established under the applicable tax legislation.
How does zero-rated VAT differ from an exemption?
Zero-rated supplies fall within the VAT system but attract a 0% rate. Exempt transactions are excluded under specific legal provisions. Businesses should classify each correctly.