Are you self-employed in Equatorial Guinea? (By Pablo Mitogo and Ana Vizcarro Dyombe)



By Pablo Mitogo, partner and Ana Vizcarro Dyombe

From challenge to solution.

In the African environment with economies facing growth challenges, the self-employed take on an indispensable role in the functioning of the market economy, as they constitute the first step in the creation of an overpopulated and competitive market.

The self-employed face serious and exclusive challenges. Given their fragile condition, they need a special treatment regime that subsidizes their successful operations.

According to the law of Equatorial Guinea, a self-employed worker is any natural person who carries out economic activities on his behalf. Compared to working for someone else, being independent has many advantages such as self-management, flexibility, devoting yourself completely to your passion and, above all, being your boss.

It should be taken into account that this also implies obligations of an administrative and fiscal nature.

1. Register as self employed:

In recent years, the government of Equatorial Guinea has tended to promote the development of economic activities of small entrepreneurs, which is why self-employment is now more common in Malabo and Bata.

To register as a self-employed person, you need a Tax Identification Number (TIN), a business certificate and a business registration certificate. To obtain the above, you are obliged to inquire at the VUE business one-stop shop. It is compulsory to present your identity document and indicate the place of business operations.

2. What taxes do you have to pay and what are your advantages?

  • Income tax

Personal income tax is levied on the net income obtained in Equatorial Guinea. The procedure involves filling out a form, within the first ten days of each month, declaring the gross income for the previous month. This must be submitted to the tax authorities.

The tax rate varies from a minimum rate of 0% to a maximum of 35% depending on income. If the annual income obtained is less than $ 1,800, it will be exempt.

As a general rule, if the self-employed person carries out the activity through a commercial company, he will be liable for corporation tax instead of personal income tax.

  • Value added tax (VAT)

Value added tax (15% in Equatorial Guinea) is levied on the consumption of goods and services. All self-employed people should be aware that as suppliers of goods and services, they act as a simple intermediary between the tax administration and the end consumer.

The VAT return is submitted within the first 15 days of each month. If no transaction has been completed, a negative feedback must be submitted.

3. What are the challenges and how to overcome the obstacle of autonomy?

The actions of the self-employed are subject to risk and instability. In addition to tax obligations, there are some common difficulties encountered on a daily basis. The question is how to manage them.

  • Liquidity issues: In many cases, this is due to late payment from consumers and / or customers. It obliges the self-employed to advance financial sums to meet tax obligations. Taxes must be paid regardless of the actual payment received. This not only puts your assets at risk, but also the survival of your businesses.

As a solution, there are several strategies a freelance writer can adopt. For example, keep track of income and expenses so that a forecast can be made taking into account both fixed and variable costs. Likewise, it is important to know the payments due in order to take into account any irregularities and delays. The adjustment of expenses, favorable agreements for the company that allow flexibility and payment in installments are another solution. As an alternative, the self-employed can resort to credit. EG banks such as BANGE offer loans specifically geared towards the self-employed. ECOBANK GE offers loans to support women entrepreneurs. In addition, other entities offer loans to small entrepreneurs after meeting certain requirements.

  • Problems with deductions: Many freelancers do not have an office and resort to working from home. This can be a problem when presenting the expenses to be deducted. Despite the appearance of business expenses with the right to deductibility, it can be complex for the tax administration to effectively make such deductions due to the difficulty of separating.

To overcome these problems, it is important to be able to justify and have a financial statement of your activity. A financial file always requires an invoice for all related expenses. It is imperative to ensure that invoices are generated correctly and to always apply the corresponding VAT or personal income tax.

As a general rule, an expense can only be deducted if it is directly related to the specific activity. Therefore, it is better not to present any expense that cannot be fully justified, as this will result in a penalty.

  • Management issues: The self-employed have many responsibilities. These tasks include, among other things, developing their business, taking care of administrative matters and management tasks (which include accounting and taxation)

It is essential that the self-employed accurately enter the income and expenses of their activity in the books of account. Accounting books must be kept for a period of five years to avoid penalties from the tax administration.

At Centurion, we recognize the value and importance of self-employed workers in the evolution of the local economy. We understand the constraints related to compliance with tax obligations and the competitive difficulty encountered on a daily basis. Contact the Centurion Law Group offices in Malabo for further support.

Short Link: https://wp.me/pcj2iU-3y8a


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