Verified Facts
The tax rates in Djibouti range from 2% to 33% for personal income tax, with a corporate tax rate of 25%, a value-added tax (VAT) rate of 10%, and a capital gains tax rate that is included in the income tax brackets.
Tax laws change frequently. Always consult a qualified tax professional for advice specific to your situation. This is a general guide only.
Quick Facts
Tax System Overview
Djibouti has a territorial taxation system, where individuals and companies are taxed only on their income derived from sources within the country. However, residents are also subject to tax on their worldwide income, with a credit given for foreign taxes paid. To be considered a resident for tax purposes, an individual must have a permanent home in Djibouti, or have been present in the country for at least 183 days in a calendar year. Non-residents are taxed only on their income from Djibouti sources.
The tax system in Djibouti is relatively straightforward, with a focus on simplicity and ease of compliance. The country has a relatively small tax treaty network, but is a member of several international organizations and has committed to implementing various international tax standards. Taxpayers can file their tax returns electronically, and the tax authority provides various forms and guides to help with the filing process.
Personal Income Tax
| Income Bracket (DJF) | Tax Rate |
|---|---|
| 0 - 150,000 | 2% |
| 150,001 - 300,000 | 5% |
| 300,001 - 500,000 | 10% |
| 500,001 - 750,000 | 20% |
| 750,001 and above | 33% |
| Deductions and allowances are available for personal income tax, including a standard deduction of DJF 50,000, as well as allowances for dependents, housing, and education expenses. Taxpayers must file their tax returns by March 31st of each year, and can claim a refund if they have overpaid their taxes. Filing requirements include submitting a tax return form, along with supporting documentation such as pay slips and receipts for deductions claimed. |
Corporate & Business Tax
- The corporate tax rate in Djibouti is 25%, which applies to all companies, including foreign companies with a permanent establishment in the country.
- Small businesses with an annual turnover of less than DJF 1 million may be eligible for a reduced tax rate of 10%.
- The country has several free zones, including the Djibouti Free Zone, which offer various tax incentives and exemptions to companies operating within the zone.
- Companies must register with the tax authority and obtain a tax identification number before commencing business operations.
- Companies are required to file their tax returns electronically, and must pay any taxes due by the end of the month following the end of the tax year.
VAT / Sales Tax
- The standard VAT rate in Djibouti is 10%, which applies to most goods and services.
- A reduced VAT rate of 5% applies to certain essential goods, such as food, medicine, and education services.
- Exemptions from VAT include financial services, insurance, and lease of immovable property.
- Tourists may be eligible for a VAT refund on certain purchases, such as goods taken out of the country.
For Expats & Foreign Workers
- Expats and foreign workers are considered tax residents in Djibouti if they have been present in the country for at least 183 days in a calendar year.
- Double taxation treaties are in place with several countries, including France, Ethiopia, and Somalia, to prevent double taxation of income.
- Social security contributions are mandatory for all employees, including expats, and are used to fund various social welfare programs.
- Remittances of income earned in Djibouti are subject to taxation, and may be subject to withholding tax at a rate of 10%.
- Expats may be eligible for a tax exemption on foreign-earned income, if they meet certain conditions, such as being a resident of a country with which Djibouti has a double taxation treaty.
- Foreign workers may also be required to obtain a work permit and register with the tax authority before commencing employment in Djibouti.
Crypto & Investment Income
- Investment income, including dividends, interest, and capital gains, is subject to taxation in Djibouti, and is included in the income tax brackets.
- Cryptocurrency transactions are subject to taxation, and may be subject to VAT at a rate of 10%.
- Dividends paid to non-residents are subject to withholding tax at a rate of 10%.
- Foreign investment income, including dividends, interest, and rent, may be subject to taxation in Djibouti, and may be eligible for a foreign tax credit.