Djibouti Income Tax Rates

Djibouti personal income tax in 2009 is progressive between 2% - 30%.

Monthly Taxable Income (DJF) / Tax Rate %

Up to DJF 30,000                           2%
DJF 30,000 - 50,000                     15%
DJF 50,000 - 150,000                   18%
DJF 150,000 - 500,000                 20%
Above DJF 600,000                      30%

For the calculation of income tax, income below DJF 5,000 is tax exempt in Djibouti.

Withholding Taxes on Royalties: Withholding taxes on royalties are taxed at the corporate tax rate of 25% in Djibouti. The tax rate is 10% for nonresidents.

Withholding Taxes on Management Fees: Withholding taxes on management fees are taxed at the corporate tax rate of 25% in Djibouti. The tax rate is 10% for nonresidents.

Djibouti Corporate Tax Rate

Djibouti corporate tax rate in 2009 is a flat 25%. Nonresident taxation is 10%.

Withholding Tax on Dividends: Tax exempt

Withholding Tax on Interest: Tax exempt

Withholding Tax on Royalties: Withholding tax on royalties is subject to company income tax in Djibouti, which is set at 25%.

Fees: Fees are subject to company income tax in Djibouti, which is set at 25%.

Djibouti Capital Gains Tax:
- Capital gains in Djibouti are taxed at the rate of 5% and capital gains less than DJF 1,000 are exempt.
- Capital gains are not applicable to entities subject to company tax.

Trading Loss: Losses arising from normal business activity are deductible in Djibouti and may be carried forward for up to 3 years.

Exchange Controls in Djibouti: Djibouti has an open economy and there are no exchange controls in the country.

Capital Allowances: Deductions allowed as is the norm in the particular industry, business or branch of activity the taxpayer is in.

Social Security Contributions: 15.7%

Local Tax (trash collection etc): 4.5%

Sales Tax in Djibouti: A consumption tax is applied on imported goods at the rates of 1%, 13% and 26%. The old sales tax rates in Djibouti were 8%, 20% and 33% respectively, before the 7% Value Added Tax was introduced beginning 01/01/2009.

Property Tax: All buildings are subject to an annual property tax. To calculate the land tax on built properties, it is done applying the following rates depending on the tax base:
- DJF 0 - 1,120,000: 10%
- DJF 1,120,001 to 3,840,000: 18%
- Over DJF 3,840,000: 25%

Special Business License Duty: This is payable by specific individuals and entities with activities in Djibouti. 0.3% - 0.5% of share capital.

Tax Incentives in Djibouti: Djibouti has an investment code which provides incentives under two regimes, namely Regime A and Regime B.

Regime A refers to the incentives involved with the agricultural and mining sector. Investors are exempted from the business licence duty in the year in which the investment activities start, and for the following 5 years.

Regime B governs companies that invest in the construction of buildings for specific purposes, such as industrial, commercial, tourism purposes, etc. Under regime B, investors are exempt from business license duty, industrial and commercial profits tax and company tax with effect from the year that activities commence and the following 10 years. Imported goods used during the first 10 years are exempt from domestic consumption tax. Exemptions from property tax for a period of 10 years with effect of completion of construction are also available. Minimum investment quotas are applied.

Djibouti has created free zones and industrial free zones. Several incentives are given to companies located within the designated zones, including an exemption from company tax for a period of time.

Djibouti Value Added Tax (VAT) Rates

The standard rate of Value Added Tax in Djibouti is 7%.

In a bid to raise tax revenue, Djibouti government introduced a single-rate value added tax (VAT) in January 2009 at 7 per cent.

The Value Added Tax consists of a flat rate of 7% which is imposed on companies with an annual turnover exceeding 80 million Djiboutian Francs (approximately US$ 450,000). Whenever VAT is levied at 7 per cent, other existing taxes on the same transaction will be reduced by 7 per cent.

The sales tax in Djibouti, which was at rates of 8%, 20% and 33% is now reduced 7 points to 1%, 13% and 26%.