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BASIC COUNTRY FACTS

Republic of Djibouti

Djibouti‎

  • French
  • Arabic

958,920

Djiboutian franc

.dj

+253

Djiboutian franc

STATUTORY LABOR REQUIREMENTS

Probation Period

  • Probationary periods for indefinite-term contracts are allowed as follows:
    • Hourly employees: 15 days
    • Monthly wage employees: 1 month
    • Supervisors, executives, and equivalents: 3 months.

Annual Leave

  • Employees are generally eligible for 30 days of paid annual leave.

Public Holidays

  1. New Year's Day (1st January)
  2. Prophet's Ascension
  3. Labor Day (1st May)
  4. Eid al-Fitr
  5. Independence Day (28th June)
  6. Day of Arafat
  7. Eid al-Adha
  8. Islamic New Year
  9. Prophet's Birthday
  10. Christmas Day (25th December)

Maternity Leave

  • Female employees are entitled to 14 weeks of paid maternity leave. 
  • 8 weeks to be taken before the birth and 6 after.

Paternity Leave

  • Fathers are entitled to 3 days of paid paternity leave.

Sick Leave

  • For the first 29 days of temporary disability, employees are generally entitled to receive 50% of their salary. 
  • After 29 days, they are entitled to receive 75% of their salary.

Work Hours

  • The standard work week is 48 hours.

Overtime

  • The employer can, after informing both workers and the labor inspector, require workers to perform overtime work, within a limit of 5 hours per week and per worker.
  • Overtime work is remunerated at an increased rate specified by a collective agreement.

Notice Period

  • Under the Labor Code, the employer must give one month’s notice of termination of a contract to general employees and laborers, and three months to supervisors, managers and those in similar positions of responsibility.

Severance

  • The damages and interest payable in respect of a termination of the contract without just reason can be between two and six months’ salary depending on the size of the company.
  • Special conditions apply to staff representatives who may be dismissed without the authorization of the labor inspectorate. In such cases, the employer must pay 12 months’ salary.
  • However, if the ground of dismissal invoked constitutes a real and serious reason, even without observance of the usual forms of notice, a labor tribunal may require the employer to pay compensation, which will not exceed one month’s salary

13th Month Salary in Brazil

  • No
  • There is no statutory requirement to pay the 13th or 14th month salary.
  • There is no evidence that it is customary. Employees, however do get a generous leave of 30 days.
  • The employer may nevertheless withhold the leave if they inform the employee that they need them.

INCOME TAX

  • Djibouti operates a territorial tax system. 
  • Both Djiboutian nationals and non-Djiboutian nationals with Djiboutian-source income are subject to tax in Djibouti. 
  • Non-Djiboutian nationals also are subject to tax on salary paid outside of Djibouti for work performed in Djibouti.
  • Individuals are subject to two main taxes on income: the tax on salaries, wages, pensions and ancillary income; and the tax on professional and business profits (the latter is the same tax applicable to companies).
  • Tax rates are progressive up to 30% for employment income. 
  • Individuals who derive business and professional income other than from employment are taxable at the standard corporate income tax rate of 25%.

Taxable Income (DJF)

Rate (%)

Up to 30 000

2%

30 001 – 50 000

15%

50 001 – 150 000

18%

150 001 – 600 000

20%

Over 600 000

30%

DEDUCTIBLE EXPENSES

Personal Deductions

  • Employment income under DJF50 000 is exempt from tax.
  • The Tax Code lists deduction rates for expenses and allowances that range from 20% to 40% based on the function or employment in various professions

Business Deductions

  • Expenses incurred in the operation of a business generally are deductible, unless specifically excluded in the tax law. 
  • Depreciation expenses may be deductible in line with industry norms based on the taxpayer’s industry or activity. 
  • Reserves and provisions normally are deductible for tax purposes provided they cover clearly specified tax deductible expenses that are likely to occur in the taxpayer’s business and if they are included in the financial statements and in a specific statement in the tax return. 
  • Non-deductible expenses include dividends, penalties, fines and extra payments charged to companies for infringements of the law or regulations, and certain payments made to shareholders, partners and directors.

Deductible Expenses

Personal Deductions

  • Employment income under DJF50 000 is exempt from tax.
  • The Tax Code lists deduction rates for expenses and allowances that range from 20% to 40% based on the function or employment in various professions

Business Deductions

  • Expenses incurred in the operation of a business generally are deductible, unless specifically excluded in the tax law. 
  • Depreciation expenses may be deductible in line with industry norms based on the taxpayer’s industry or activity. 
  • Reserves and provisions normally are deductible for tax purposes provided they cover clearly specified tax deductible expenses that are likely to occur in the taxpayer’s business and if they are included in the financial statements and in a specific statement in the tax return. 
  • Non-deductible expenses include dividends, penalties, fines and extra payments charged to companies for infringements of the law or regulations, and certain payments made to shareholders, partners and directors.

IMMIGRATION

  • Foreign nationals have several options for visas to enter Djibouti, including business visas and tourist e-visas. 
  • To live and work in Djibouti, foreign employees will need three documents:
  • Entry visa
  • Residence permit
  • Work permit
  • The Residence Permit functions as an identity card for foreign nationals.
  • Before traveling to Djibouti, foreign employees will need to obtain an entry visa.
  •  Visa requirements vary, but applicants will need a passport that’s valid for at least six months after the planned departure date. 
  • Passports must also have a minimum of two blank pages, and applicants will need to be vaccinated for yellow fever.
  • The documents required to obtain these permits include:
  • A copy of the employment contract with a company based in Djibouti
  • A valid passport
  • A long-stay visa
  • Four passport photos
  • A copy of the Free Zone company license
  • A written request with the details of the job position and employer

Type of Visa/Permit

Documentation

Validity

Eligibility

Entry Visa

  • Valid Passport
  • Passport size photos
  • Completed visa application form
  • Certificate showing vaccination for yellow fever

1 month

  • Foreigners who wish to entry Djibouti must obtain an entry visa

Work Permit

  • A copy of the employment contract with a company based in Djibouti
  • A valid passport
  • A long-stay visa
  • Four passport photos
  • A copy of the Free Zone company license
  • A written request with the details of the job position and employer

1 year (renewable)

  • Foreigners who wish to seek employment in Djibouti must apply for a work permit

VALUE ADDED TAX

  • The standard rate of VAT is 10%

VAT

Standard Rate

10%

WITHHOLDING TAX

Certain payments to domestic companies and individuals and non-resident companies/investors are subject to WHT at the following rates:

Payment

Residents

Non-residents

Dividends

0%

0%

Interest

0%

0%/15%

Royalties

25%

0%/15%

Fees (technical)

10%

0%/15%

Fees (management)

25%

0%/15%

TERMINATION

The employer may invoke:

    • Personal reasons (e.g. the employee’s state of health).
    • Economic reasons (including, among other things, the substantial transformation of a position due to technological change (section 48 of the Labor Code), in which case, the affected employee must be given priority for re-employment during the first year following his dismissal and is eligible for compensation, which is calculated by the labor inspectorate based on the type of contract, salary, and the employee’s seniority.
    • Serious misconduct as defined by any of the nine cases clearly stated in article 59 of the Labor Code, or as stipulated in the company’s regulations.
    • An element of greater flexibility is open to employers, where the company can resort to utilizing an option for technical unemployment for a period of three months, renewable once (article 41 of the Labor Code), under which minimal compensation is paid, provided any employees so laid off are given priority for re-employment in the first year following dismissal.
  • Under the Labor Code, the employer must give one month’s notice of termination of a contract to general employees and laborers, and three months to supervisors, managers and those in similar positions of responsibility.
  • The damages and interest payable in respect of a termination of the contract without just reason can be between two and six months’ salary depending on the size of the company.
  • Special conditions apply to staff representatives who may be dismissed without the authorization of the labor inspectorate. In such cases, the employer must pay 12 months’ salary.
  • However, if the ground of dismissal invoked constitutes a real and serious reason, even without observance of the usual forms of notice, a labor tribunal may require the employer to pay compensation, which will not exceed one month’s salary

STATUTORY BENEFITS

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Paternity Leave

Sick Leave

Overtime Pay

Notice Period

Severance Pay

Social Security Benefits

 PAYMENTS AND INVOICING 

  • The tax year is the calendar year
  • Married couples are assessed separately, i.e. every individual taxpayer is taxed individually regardless of marital status.
  • Individuals who derive professional income must file a tax return no later than 1 March of the year following the fiscal year.
  • The personal income tax payable by employees must be withheld at source each month by the employer and remitted to the Treasury no later than 15 days following the salary payment. 
  • If the amount of the monthly withholding tax is less than DJF50 000, the payment may be made within the following three-month period. 
  • An individual who derives income from business or professional independent activities must pay the tax due by March of the following fiscal year.

EASE OF DOING BUSINESS

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Djibouti ranked 112th in the World in 2019 in terms of ease of doing business

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