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5.1. Tax Base for Resident Entities

Under the prevailing territorial system, corporate tax is due only on income realized through an enterprise carried out in Guinea, or the taxation of which is attributed to Guinea under a tax treaty. An enterprise carried out in Guinea is defined as engaging in business through an autonomous establishment, a dependent agent or a complete lucrative business cycle. The territorial base of taxation is limited to business income; and resident entities remain subject to worldwide taxation with respect to passive income, unless such income is attributable to an enterprise carried out abroad.

Business expenses are deductible for corporate tax purposes if meeting general and, sometimes, additional specific conditions. Generally, expenses are deductible only if (a) engaged for the benefit of the enterprise, (b) remunerate an actual service and supported by documentary proof, and (c) booked in the relevant year. Capital assets are not deductible but may be depreciated. As an exception, low-value capital assets may be fully expensed.

Financial charges are deductible to the extent they meet the general conditions for expense deduction. Moreover, specific limitations apply (see Sec. 6.1.).

Dividends are normally added to taxable income. However, under a participation-exemption regime, dividends received from a qualifying interest are exempt for 95% of their amount. The remaining 5% (or actual expenses of the recipient, if lower) are added to taxable income (see Sec. 6.1.).

Capital gains include gains arising from the disposal/ sale of shares and business assets are considered in tax base. Taxation of capital gains can be deferred, if the gains are re-invested in acquisition of new fixed assets within three years from the original sale. For gains on shares, the capital gain relief applies only to significant long-term holdings. Capital gains arising from a merger or partial business transfer are exempt, subject to certain conditions.