The standard corporate profits tax (known locally as tax on professional income) rate for resident companies is 25%.
Capital gains on the disposal of assets are taxed as ordinary income. However, capital gains from transactions involving immovable property or real estate and related rights and from the sale of securities are taxed at 5% on the net capital gain. The net capital gain is the difference between the transfer price of the property and its purchase price (or market value in certain specified situations).
Effective 1 January 2022, capital gains derived on the first sale of assets are subject to tax at the rate of 10%.
Dividends are not taxable in Djibouti.
- Investment companies engaged solely in the purchase and sale of securities are exempt from corporate income tax; and
- Royalties are exempt from corporate income tax.
There are certain tax incentives/ tax holidays available to the companies, which reduces corporate tax burden (see Sec. 10 below)
A minimum lump-sum tax applies at the rate of 1% on turnover (excluding VAT), but the amount of tax cannot be less than DJF 120,000. The minimum tax applies to loss years or where tax calculated at standard rate is lower than the alternate minimum tax.
The minimum tax is also due by companies benefitting from a preferential tax treatment under the Investment Code. However, it does not apply to public-private joint ventures in the hydrocarbons sector.