TAX NEWS - DECEMber 2009

Gambia Fringe Benefits Tax (FBT): Tax Authorities further ramping up enforcement efforts

The Gambia Revenue Authority (GRA) has reaffirmed its commitment to step up enforcement of the fringe benefit tax and residential rental income compliance. This announcement follows one made earlier in 2009 that the GRA intends to focus on corporate and employment income tax obligations in an effort to gradually widen the tax net and more rigorously enforce the tax legislation. With two more taxes now under scrutiny, affected taxpayers need to be aware of their compliance obligations.


Fringe Benefits Tax (FBT)

Fringe benefits can form a significant component of the compensation paid to staff (particularly expatriate staff) in Gambia, and understanding how these benefits are taxed is essential. In Gambia, it is generally the employer that is taxed on these non-cash benefits and the employee therefore receives the benefit free of tax.

Fringe Benefits Tax is specifically imposed on the following: accommodations; household personnel; cars for private use; medical expenses and medical or life insurance; entertainment, including meals and refreshments; loans at below market rate and loan waivers; and any property or services provided by the employer. Any other benefits not specifically mentioned also are likely to attract Fringe Benefits Tax. The benefit generally is assessed as the cost to the employer or the market value, less any amounts paid by the employee. The applicable tax rate is 35% and the Fringe Benefits Tax is an allowable deduction for corporate tax purposes. Employers are required to file an annual Fringe Benefits Tax return no later than three months after the end of their accounting period. Installment payments based on the actual benefit value are due quarterly.


Residential rental income

Although many individuals in Gambia earn income from the rental of residential property, many are not aware they are required to report this income to the local tax authorities. Unlike PAYE, which is collected by the employer, tax on residential income must be settled directly with the GRA, complicating compliance obligations and resulting in some persons failing to comply. Residential rental income tax is imposed on a person (individual or business) that derives rental income from the letting out of a property used as a private residence. It does not include income from hotels, guest houses or boarding houses, as this is considered business income and taxed accordingly. The residential rental income tax is 10% of the gross income received from the tenant – this is a final tax. Expenses incurred in deriving the rental income are not deductible, nor can losses incurred or tax credits be set off when calculating taxable rental income. Landlords or their agents are required to report the rental income quarterly, together with an installment of 10% of the gross income received. This payment should be made no later than 15 days after the end of the quarter, with annual tax returns due within three months from the end of the tax year.