Farley And Partners

CORPORATION TAX

Corporation Tax

Corporation tax is a tax changed on the earnings of companies, partnerships or bodies or trust. This could be based on the turnover or chargeable income. All companies must use the accrual method of accounting for income tax purpose. For partnership and bodies of trust, revenue and earnings can accounted for on an accrual or cash basis.

All companies, partnership or bodies of trust operating in The Gambia are liable to pay corporation tax. Those incorporated and or controlled in the country are resident companies and are therefore, liable to pay corporation tax on all incomes. Non-resident companies, partnerships or bodies of trust are liable to pay tax only on the Gambia-sourced income.

The Corporation tax rate is

  • 31% of net profit or
  • 1% of turnover on audited accounts or
  • 2% of turnover for unaudited accounts.

The corporation tax liability is the applicable tax rate multiplied by the net profit/chargeable income or turnover. All taxpayers must retain proper accounts, documents and record, and issues proper invoices and receipts for all transactions. In determing chargeable income, the following are not allowable as expenditures or deductions.

  • The closing value of stock-in-trade on hand at year end.
  • Fines and penalties for violating laws, rules and regulations
  • Personal expenditure
  • Taxes, except those on fringe benefits
  • Bribes, tips and kick-backs
  • Business and personal entertainment
  • Depreciation and capital expenditure
  • Gifts, Prizes and Donations
  • Losses carried back

However, the following deductions are allowable:

  • The cost of stock-in-trade disposed in a tax year
  • Business expenditures generating income
  • Contribution to qualified pension schemes
  • Capital allowance and amortization
  • Pre-commencement expenditures
  • Bad debts relating to the business line
  • Losses carried forward within sic year
  • Foreign tax credit provided in a tax treaty

For example, if X & Co. Ltd’s turnover on 2014 is D5 million and the company’s net profit is D1.5 million, then the company’s tax liability, computed below, will be D465000.

 

Tax Base

Types

 

Tax Base

Amount

Tax Rate

Tax Liability

Audited

D5,000,000

1.5%

D75,000

Unaudited

D5,000,000

2.5%

D125,000

Profit

D1,500,000

31%

D465,000

The Calendar Year is the tax year. However, a company can apply to the Commissioner General for a Special Tax Year. Companies are required to

  • File returns annually through the self-assessment process.
  • Make quarterly/instalments payment on their quarterly turnover.

The quarterly/instalments payment are credited to their tax liability at the end of the tax year. The closing dates for quarterly instalment payments are the 15th of the month following the end of the quarter. The closing date for filling and payment of final tax liability is 3 months after the end of the tax year.

In addition, a taxpayer can apply to the Commissioner General for extension of time to file a corporate income tax return if they have paid at least 90% of the tax liability due. The application should be made before the due date for filing. Extensions cannot exceed 30 days and can only be granted once a year.

Companies under the large Taxpayer Unit (LTU) should submit their corporation tax returns at the Kanifing Revenue Office. All other companies should submit their corporation tax returns at the nearest GRA office payments should be made at any GRA office or at any of GRA’s designated partner banks.

Companies not satisfied with any tax decision can, within 30 days appeal such decision through the Objection and Appeal process. The process starts with objecting to the decision of the Commissioner General through to the Tax Tribunal and then to the High Count.

All companies are required to file tax returns. However, only the following are exempted from corporation tax

  • Special investment Certificate (SIC) and Export Processing Zone License (EPZL) holders for the specified duration
  • Those qualified under double taxation treaties.
  • The quarter/instalments payment made are not final tax but credited to the final tax liability for the tax year.
  • Any shortfall should be settled within 3 months after the end of the tax year.
  • Any excess is applied to other tax obligations and the balance, if any, refunded if claimed.
  • In the allocation of tax credit, foreign tax credits are utilized first, followed by instalments paid during the tax year and then taxes withheld which are not final taxes
  • Credit not utilized or refunded can be carried forward for a maximum of 3 years and used on a first-in-first-out basis.
  • Failure to maintain proper records
  • Failure to pay corporate tax
  • Failure to furnish corporate tax returns
  • Giving false or misleading information
  • Failure for a change in business or address
  • Failure to recover tax from a person holding money on behalf of a taxpayer
  • Improper use of TIN
  • Obstructing revenue officers in the performance of their duty.
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