1 January 2025 Value Added Tax replaced 19% Sales Tax
The West African country of Guinea-Bissau confirmed in the circular the introduction of a Value Added Tax regime from January 2025. This replaces the 19% Sales Tax, Imposto Geral Sobre Vendas e Serviços. There is a VAT registration threshold of FCA 10million. It is possible to opt to join the 5% simplified regime for enterprises with a turnover of up to FCA 40million.
VAT rates
The headline VAT rates are:
- 10% on basic goods and services, including imports;
- 19% of other supplies;
- 5% for businesses under simplified regime; and
- 0% exports
Exempt: financial services; real estate; domestic gas heating; education; and medicines.
Key points from the Circular:
- The measure is based on Law No. 4/2022, which establishes the VAT Legal Regime;
- Obligations of Taxpayers, with the entry into force of VAT, all taxable persons covered by the VAT code (Law No. 4/2022) shall:
- Declare the start of activity in VAT in the DGCI (fill in and send DIRASCA), if they have not yet done so;
- Request the issuance of standardized invoices and other fiscally relevant documents in accordance with order No. 1/2023 that approves the invoice regulation;
- Comply with the declarative and payment obligations associated with VAT.
Once registered, taxpayers will need to submit monthly VAT returns by the 15th of the following month. Records supporting taxable transactions must be kept for at least 5 years.
The country’s government looks confident in the new tax’s introduction as the economy has recovered well from the worst effects of the COVID lockdowns. It has originally planned to impose the indirect tax in January 2023.
The previous sales tax (imposto geral sobre vendas e serviços) is levied on most goods and services. There is a luxury rate of 20%; and reduced 10% rate on certain imports.
Guinea-Bissau became the 175 country to introduce VAT.
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