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5.1. Tax Base for Resident Entities

Under the domestic tax laws, resident companies are subject to corporate tax on their worldwide income earned from within and outside Burundi (but foreign losses may not be set off against profits sourced from Burundi, see Sec. 7)

Income from agricultural & livestock companies that do not exceed BIF 20,000,000 are exempt from tax.

Dividend income received by a resident company from another resident company is exempt from income tax.

Capital Gains derived from sale of assets by resident companies are taxed as ordinary income at same rate as corporate tax.

Expenses incurred for the production of income are normally deductible subject to general rules and unless the deduction is specifically limited or disallowed by tax law. The general conditions for deduction are that the expense must:

  • have been incurred for the benefit of the business;
  • correspond to an effective outlay and be justified by adequate documentary proof;
  • result in a reduction of the net assets; and
  • relate to the relevant year.

Forex differences, including with respect to forex denominated indebtedness and loans, must be recognized at year-end and will result either in a taxable income or a deductible loss. The exchange rate used is normally the average exchange rate on the last day of the tax year as published by the Central Bank.

Note that the ad valorem tax levied under the petroleum and mining acts is deductible for corporate tax purposes.