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Hiring in Equatorial guinea
Equatorial Guinea, officially known as the Republic of Equatorial Guinea, is a country in Central Africa. Malabo is the capital and Bata is the largest city of Equatorial Guinea. Oil production, forestry, farming and fishing are the main contributors of the country’s GDP. Its main trading partners are the United States, China, Spain, Japan and France. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Equatorial Guinea’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to one month of paid annual leave. Residents taxed on their worldwide income and non-residents are only taxed on their EG-source income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with El Salvador’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- Any probation period under a contract must be for the first 90 days
Annual Leave
- The worker is entitled to one month of paid annual leave, for each year of continuous work.
- After 10 years of service, annual leave shall be increased one day per year worked.
Public Holidays
- New Year's Day (1st January)
- Good Friday (10th April)
- Labour Day (1st May)
- President's Day (5th June)
- Corpus Christi (11th June)
- Freedom Day (3rd August)
- Constitution Day (15th August)
- Independence Day (12th October)
- Feast of the Immaculate Conception (8th December)
- Christmas Day (25th December)
Maternity Leave
- Women shall be entitled to maternity leave as from 6 weeks before the birth, after having informed the employer and presented the medical certificates attesting the pregnancy.
- Maternity leave benefits shall be paid to all women covered by the social security, during the first 6 weeks before the birth and 6 weeks after the birth.
Paternity Leave
There is no paternity leaveSick Leave
- Employees receive sick pay after 3 days if they have contributed in the past year
Work Hours
- The duration of work cannot exceed 8 hours per day or 48 hours per week, of daily work
- If mixed, the duration of work cannot exceed 6 hours per day, and 36 hours per week.
Overtime
- Regular working time can be extended up to 2 hours per day, respecting a maximum of 200 hours per year, with the finality of performing preparatory or complementary work, which shall be accomplished outside the habitual working time, or to allow the employer to face extraordinary increase of work.
- Overtime work hours shall be paid an increase of 25% over the regular amount due for an hour of work performed during the day; and 50% over the regular amount when performed during the night, or when they constitute an extension of the mixed working time entering the night period.
Notice Period
- The notice period is one month after six months of service.
- For redundancies the employee must have 3 months’ notice
Severance
- For redundancies the employee will receive 45 days’ pay for each year of service
13th / 14th Month Pay
- Yes (Mandatory)
- There seems to be a statutory requirement to pay the 13th month salary equating to 15 days pay to be given before December 24th.
- The 14th month salary is also payable before the 12th of October. Both bonuses are payable after one year of service.
income tax
- Resident individuals are subject to tax on their worldwide income and non-residents are only taxed on their EG-source income.
- However, Non-resident individuals also are subject to tax on transactions and services carried out in Equatorial Guinea (EG).
- An individual working in EG who is present in the country for more than three months in one calendar year, or more than six months over two years, is considered resident in EG.
- Individuals working in the oil and gas sector in EG are considered resident only where the individual is present in EG for more than three months in a calendar year.
- Absences of less than 30 days are not taken into account when computing the period of residence.
- Income from salaries and wages (including benefits in-kind and cash allowances), pensions, annuities, dividends, interest, royalties, income from self-employment, capital gains, etc. and per diems for attending directors’ board meetings are taxable.
- Specific allowances to cover expenses relating to the position are not taxable to the extent the expenses are effectively used for their objective and are not excessive.
- Capital gains accruing to individuals from company mergers are not subject to tax if the new company has its registered office in EG or another Communauté Economique et Monétaire d’Afrique Centrale (CEMAC) state (i.e. Cameroon, Central African Republic, Chad, Congo or Gabon).
- Rates for resident individuals are progressive up to 35%.
- Additionally, benefits-in-kind and cash allowances are taxable at the following rates: housing – 15%; water, electricity, housekeeping and company car – 5%; and food – 20% (imposed on gross salary up to a maximum of XAF150 000 for food only).
- Non-resident individuals are subject to a final withholding tax on their gross income from EG sources generally at 20%
|
Taxable Income |
Rate |
|
0 – 1 million |
0% |
|
1 000 001 – 3 million |
10% |
|
3 000 001 – 5 million |
15% |
|
5 000 001 – 10 million |
20% |
|
10 000 001 – 15 million |
25% |
|
15 000 001 – 20 million |
30% |
|
Over 20 million |
35% |
deductible expenses
Personal Deductions
- The extent to which a deduction from income will be allowed depends on the category of income.
- Allowable deductions include business expenses, contributions to pension funds (under specific conditions), interest on loans obtained to build or repair the taxpayer’s main residence in EG, alimony and payments made to the welfare fund on behalf of domestic employees.
- For salaries, wages, pensions and annuities, a lump-sum deduction for business expenses of 20% of income is available, subject to a maximum deduction of XAF1 million.
Business Deductions
- Expenses incurred that are necessary for carrying out a company’s taxable activity in EG are deductible.
- To be deductible, depreciation must be recorded in the accounting books.
- A company can defer depreciation claims indefinitely if it is in a loss position.
|
Deductible Expenses |
|
|
Personal Deductions |
|
|
Business Deductions |
|
immigration
- A person who wants to enter Equatorial Guinea must apply for a temporary visa.
- This visa can be obtained by contacting an Equatorial Guinea Embassy in Belgium, Cameroon, China, Ethiopia, France, Gabon, Morocco, Nigeria, the Russian Federation, Spain or the United States.
- Foreigners who do not have an Equatorial Guinea Embassy in their countries may obtain a temporary visa in any country where an Equatorial Guinea Embassy is located.
- Tunisian and US nationals are not required to obtain visas.
- The labor ministry issues the following five types of work permits:
-
- Permit A (PA) is granted to an employee who will work in a single work location for less than six months. It is not renewable.
- Initial Permit B (IPB) is granted to an individual who will engage in an established profession, working place or activity. It is valid for one year.
- Permit B Renewed (PBR) is granted to individuals holding IPB at the end of the validity period for IPB. It is valid for two years.
- Permit C (PC) is granted to individuals holding PBR at the end of the validity period for PBR. It is valid for three years.
- Permanent Permit (PP) is granted to individuals holding PC at the end of the validity period for PC.
- A company must apply for a work permit before the foreign employee begins work in Equatorial Guinea.
- An application must be filed with the employment office of the city where the employer resides or where the employment contract will be carried out.
- Before applying for a work permit, a person must apply for the authorization of recruitment.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Permit A (PA) |
|
6 months |
|
|
Initial Permit B (IPB) |
|
1 year |
|
|
Permit B Renewed (PBR) |
|
2 years |
|
|
Permit C (PC) |
|
3 years |
|
|
Permanent Permit (PP) |
|
Indefinite |
|
value added tax
- VAT is imposed on the supply of goods or services and on imports.
- Companies engaged in business in the oil and gas sector are not subject to VAT in EG.
- The standard VAT rate is 15%.
- A zero rate applies to exports and similar transactions.
- Some products are subject to a reduced rate of 6%, others are exempt and others are assessed to a special duty tax at a rate of 30%.
- Where special duty taxes apply, the transaction will be assessed at 30% rather than the 15% VAT.
|
VAT |
|
|
Special Duty Tax |
30% |
|
Standard Rate |
15% |
|
Reduced Rate |
6% |
|
Zero Rate |
0% |
withholding tax
The following table sets out the applicable WHT rates on dividends, interest and royalty payments made to residents and non-residents (the tax is a final tax for non-residents and the rate may be reduced under an applicable tax treaty):
|
Payment |
Residents |
Non-residents |
|
Dividends |
10% |
25% |
|
Interest |
- |
20%/25% |
| Royalties |
- |
20% |
|
Technical Service Fees |
- |
20% |
|
Capital gains |
35% |
35% |
|
Oil and gas services |
6.25% |
20% |
|
Mobilization, demobilization and transportation services related to oil and gas |
5% |
- |
termination
- Article 83 of the labor law of Equatorial Guinea states that a company can terminate employment contracts due to a reduction in work force or the end of its contract.
- It also states that the Company may end the contracts of employees due to economic, technological, structural or comparable reasons.
- The notice period is one month after six months of service.
- For redundancies the employee must have 3 months’ notice
- For redundancies the employee will receive 45 days’ pay for each year of service
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity 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 |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The tax year is the calendar year.
- The head of a family is subject to personal income tax on his/her own income and on the income of his/her spouse and dependent children, subject to the individual’s right to elect to be assessed separately.
- A married woman is assessed separately if she is separated from her husband or if her husband is not subject to tax in EG.
- Tax payments withheld from income from salaries and wages must be paid by the employer by the 15th of the following month.
- Individuals are not required to file their own returns; the employer is responsible.
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 Equatorial Guinea ranked 178th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
Based on one month bonus |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay that equals 45 days of pay after one year of service (12.36% of annual salary) |
| Vacations % | The worker is entitled to 1 month of paid annual leave, for each year of continuous work (8.33% of annual salary) |
| Notice % |
Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | Based on 15 days bonus by October 4.12% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 37.17% |
employer accruals
Additional information (Country Accruals)
| INSESO | 21.50% |
| WPF | 1.00% |
| Maternity leave | 12 weeks |
| Vacations | 6.03% |
| Descritption: | The employer part of contributions to the National Institute of Social Security (INSESO for its Spanish acronym) is 21.5%. The employee part is 4.5%. The employer part of contributions to the Work Protection Fund (WPF) is 1%. The employee part is 0.5% |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | The worker is entitled to one month of paid annual leave, for each year of continuous work. | This equals 8.33% (1/12 months) of annual income |
| Maternity Leave | Women shall be entitled to maternity leave as from 6 weeks before the birth, after having informed the employer and presented the medical certificates attesting the pregnancy. Maternity leave benefits shall be paid to all women covered by the social security, during the first 6 weeks before the birth and 6 weeks after the birth. |
Paid by social security |
| Sick Leave | Employees receive sick pay after 3 days if they have contributed in the past year | This equals 0.82% (3/365 days) of annual income |
| Overtime | Regular working time can be extended up to 2 hours per day, respecting a maximum of 200 hours per year. Overtime work hours shall be paid an increase of 25% over the regular amount due for an hour of work performed during the day; and 50% over the regular amount when performed during the night, or when they constitute an extension of the mixed working time entering the night period |
Normal hourly wage is around 2,758 XAF. Overtime is paid at an additional 1379 XAF. |
| Severance | For redundancies the employee will receive 45 days’ pay for each year of service | This equals 12.3% (45/365 days) of annual income |
| Social Security | Employer contributions are 1% of the gross salary to the Work Protection Fund and 21.5% to INSESO. | This equals 22.5% of annual income |
