Tax is a compulsory payment, levied on qualified persons, companies or partnerships by a government. As a small business owner, you need to be aware and understand the common taxes and contributions that are levied in the Gambia. These business taxes and contributions are provided by the law, e.g. the Income & Value Added Tax Act 2012, Stamp Duty Act etc.
What are the Common Business Taxes in the Gambia?
Updated with 2018 Rates
1. Value Added Tax (VAT)
This is an indirect tax which replaced the sales tax in the Gambia. It is levied on the taxable supply of goods and services or taxable imports. The word taxable is used here because not all good or services are chargeable with VAT. Example basic goods like food (rice, sugar) are VAT exempted. VAT is collected by VAT-registered persons/company at the points of sale or delivery of services, and by Customs for the import of goods into The Gambia. Businesses or person with a turnover of taxable good or services above D1 million must register. However, you can voluntarily register if your turnover is more than D500,000 but less than D1 million. The Current standard VAT rate in the Gambia on a taxable supply is 15%.
You can read more details about good and services that are VAT exempted in the Gambia.
2. Income Tax
As the name applies, it is the tax on the income of an individual or a business entity. Therefore, income tax can be group under two subheadings:
- Corporate Income tax – This is paid by companies or partnerships on their turnover or profit. It is paid by quarterly instalment during the year and the final tax payable within three months after the end of the tax year. The annual return is also due within three months after the end of the tax year ( currently December). Corporate income tax rate is currently the higher of 27% of the taxable profit and 1.0% of turnover for the year. However, if for any reason the company accounts are not audited, the corporate tax on turnover should be 2.0%.
- Personal income tax – This is commonly known as PAYE (Pay As You Earn) on the employment income – It is the income tax levied on the gross employment incomes of individuals. It is calculated using the 1st Schedule as stated by Income and Value Added Tax Act 2012. This tax is payable on a monthly basis through direct deduction by the employers. Therefore, every employer is expected to deduct the right PAYE tax from the employees’ salaries. Employment income earners are not required to file returns unless they have other sources of taxable income.
The individual incomes are subject to progressive rates up to 25% depending on the employee’s income level. For example, individual gross earning less than D24,000.00 per annum (D2,000.00 per month) are taxed at 0%.
3. Capital Gains Tax (CGT)
Capital Gains Tax is a charge levied on the profit when a person sell or dispose an asset that increased in value. Example of such qualifying assets includes land, share, buildings etc. Any person who disposes a qualifying capital asset in The Gambia is liable to pay the capital gain tax. The CGT payable by individuals is currently the higher of 15% of the gains or 5% of the consideration received, however for companies and partnerships it is 25% and 10% respectively. CGT is payable within 15 days after the sale of the capital asset.
4. National Education Levy
This is a fixed educational tax levied on businesses per annum. It depends on the annual turnover of the firm. If the total income of a company exceeds GMD 5 million per annum the national education levy is GMD 50,000 and if it fall below GMD 5 million, a flat rate of GMD 30,000 is applied.
5. Municipal Business License
An operating license fee levied on the business. The amount depends on the type of business and the location of the branch. Example the amount levied on a business within Greater Banjul area differ from branches in the provinces.
6. Fringe Benefits Tax
Fringe benefit is benefit in kind provided by an employer to the employee. The fringe benefit tax is imposed on every employer who provides specific and direct benefits like housing, car, health, etc for its employees. The amount of fringe benefit tax paid is allowed as a deduction in computing the chargeable income of the company. The fringe benefits tax is based on the grossed-up value of the benefits provided. The tax is payable by the employer and not the employee.
7. Stamp Duty on Contracts:
Stamp duty is charged at either a flat rate or an ad valorem rate (based on the value of the transaction) depending on the particular document or transaction. In the Gambia, it is generally levied on documented financial obligations or real estate transactions that results to a flow of wealth between the parties involved legally.
8. Payroll Tax (Expatriate Quota)
It is also known as Expatriate Quota tax and it is paid by the employer of a non-Gambian employee and is not recoverable by the employer from the employee. It is an annual payment made per employee as follows: ECOWAS nationals D10,000 and Non-ECOWAS nationals D40,000. Self-employed non-Gambian individuals are not liable to pay the tax.
9. Injuries Compensation Fund Contribution
In addition to the provident funds, the employers are required to contribute 1% of the employee’s’ total earnings (salary plus all other allowances subject to a maximum contribution ceiling of D15) to the Industrial Injuries Compensation Fund. Where the employee’s total earnings exceed D1,500 per month, the contribution payable is limited to D15 per month.
10. Environmental Tax
This is another minor tax levied on each employee per month. You are expected to pay D1 per employee per month. This payment is also made on a monthly basis.
11. Social Security Contributions
Employees in the private sector of the Gambia are required to contribute 5% of their basic salary into a National Provident Fund as Social Security Contributions. In addition, employers are also required to contribute 10% of the employee’s basic salary towards the Provident Fund. The payment are file on or before 15th of every month and made with Social Security.
This article is not intended as an exhaustive explanation or replacement of the tax laws in the Gambia. If you require detail about the Gambia Bussiness Taxes, you should contact the nearest GRA Office.