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Djibouti Finance Law for 2022 Includes New Individual Income Tax Brackets/Rates, Profit Tax Installment Requirements, and Other Changes — Orbitax Tax News & Alerts

The Djibouti government has published the text of the Finance Law for the 2022 Budget (Law No. 142/AN/21/8ème L), which was published in the Official Gazette on 30 December 2021. The law contains various tax measures, including:

  • The income tax brackets and rates for employment income (salary and wages) are set as follows:
    • up to DJF 30,000 - 2%
    • DJF 30,001 to 50,000 - 12%
    • DJF 50,001 to 150,000 - 15%
    • DJF 150,001 to 300,000 - 22%
    • DJF 300,001 to 600,000 - 25%
    • DJF 600,001 to 1,000,000 - 30%
    • DJF 1,000,001 to 2,000,000 - 35%
    • over DJF 2,000,000 - 45%
  • Provisions regarding installment payments for the tax on professional profits are revised, including:
    • monthly installments are due in the months April to December;
    • the monthly installment is equal to 8% of the tax established on the taxable profit in the previous year, which is established by way of a notice of payment from the tax authority; and
    • the installments are due by the 25th of each month with payment allowed up to the 5th of the following month, after which penalties will be imposed;
  • An exceptional contribution is introduced on the 2021 results of companies exempted under the Investment Code or established in free zones, with the contribution equal to 1% on turnover or 10% on profits, depending on the applicable method defined in the Tax Code;
  • The consumption tax (TBS) on goods and services is repealed;
  • Subject to certain conditions, new companies and enterprises investing in the hotel industry, real estate (rental, sale), and the processing industry may benefit from a VAT zero rate on their imports of equipment during the constriction period;
  • The annual turnover thresholds for VAT for natural and legal persons supplying goods or services are set to:
    • DJF 20,000,000 for the supply of goods, as well as sales for consumption on-site, (with or without hotel services), and for construction companies that, in addition to labor, supply materials under the limit of DJF 20,000,000; and
    • DJF 10,000,000 for other activities, including the provision of services, non-commercial professions, and hotel activities without sales for consumption on-site.

Note, the VAT thresholds are essentially aligned with the turnover thresholds for small taxpayers to qualify for the simplified regime for the taxation of profits.

In addition to the above, the Finance Law for the 2022 Budget also sets rates of excise, customs, and other indirect taxes on various goods.