By Gemma Jones
You have read correctly, the last 24th of July of the current year, the equatoguinean government approved law no.1/2020, of 7th July, which establishes Special tax incentives measures, by granting “tax pardon” to taxpayers that failed in an effective way the self-assessment of the following tax concepts: Corporation Tax, Value added Tax, Personal Income Tax and Registration & Enrolment Fees of Rustic and Urban Properties.
Now let’s analyse and define what tax amnesty is, it’s purpose, subjective scope, time scope, benefits and the conclusion taken from the analysis and background of the regulation, adapted to the current social and political situation of the Republic of Equatorial Guinea.
¿What is Tax amnesty?
Tax amnesty is an undefined legal term within the legal framework of the Republic of Equatorial Guinea, however, performing a comparative law exercise, tax amnesty can be defined as “legislative pardon “restricted to the tax field, with temporary nature and granted to the contributors of a specific territorial area, by which the authors liability, derived from the commission of certain tax infringements, is extinguished.
Purpose of the regulation
Through the presentation of a “special tax statement”, like many others States have made in the past, as in the case of Spain through the approval of Royal Decree Law 12/2012 of 30th March, the equatoguinean Public Accounts grants the taxable person the opportunity of regulating its tax situation.
Without any doubts, the main target of tax amnesty raised through Law 1/2020 of 7th July, in any case, is to increase the collection of public revenue.
Subjective outreach of the regulation
According to article 1 of the referred regulation, “it shall apply to all contributors, natural and legal persons, resident and non-resident in the Republic of Equatorial Guinea, debtors of tax obligations”
Temporary reach of the regulation
The incentive period regulated by the present law covers the tax period between 2015 and 2019, both financial periods included.
Extinction of the tax debt and 20% debt cancellation
“Once the tax debt is determined, it can be extinguished as follows:
A- Down payments. The contributors choosing this payment method will benefit from a 20% reduction of the total amount of the tax debt, if it’s made thirty (30) days after the protocol’s signature.
B- Instalment payments. The pay plan will have up till 10 years deadline, with a 10% annual penalty. The amount to be paid during the instalment payment plan will be calculated as from the date in which this present Law comes into effect.”
The approval of the regulation is an unprecedented opportunity for resident and non resident contributors of the Republic of Equatorial Guinea. We are in front of an enthusiastic initiative that all contributors should know how to take advantage of. We live in pandemic times and along with the COVID-19 an economic crisis with multifactorial origins and plural territorial scope has abruptly appeared.
We kindly remind the sceptical that the Equatoguinean Tax Administration has the authority and the power to initiate in a non-superior period of five(5) years, since the expiration of the financial year, and under the protection of articles 86 and 117 respectively of the current 2014 tax code, a checking and investigation/inspection procedure, through which the Tax Administration will be able to check and investigate facts, situations, activities, operations and any other circumstances that integrate or conditionate the taxable event as well as other functions.
That’s why it’s important to highlight the background in which we are, where the contributors are given the opportunity of self-assessing the tax, pay it and extinguish the extemporaneous debt, making it impossible for the financial year subject to regularization to be inspected and/or checked twice, provided that the tax statement is presented and that the transactional protocol of regularisation of the tax situation is complied.
The opinion of the author don’t necessarily reflect those of Africanian News.
About the author
INTERNATIONAL TAX LAWYER
CEO AT JONES & SACRISTAN SLU
TAX AND LEGAL BUSINESS ADVISORS
-Lawyer n.º 228 of the Honourable Bar Association of Republic of Equatorial Guinea
-Lawyer of the Honourable Bar Association of Madrid
-Law graduate by the National Distance Education University(UNED)
-Fiscal International Tax Law Expert certified by the Center of Financial Studies of Madrid(CEF)
-Tax consultancy and Taxation Expert certified by the Center of Financial Studies of Madrid(CEF)