DOING BUSINESS IN CHAD IN 2020
Since 2003, Healy Consultants Group PLC has assisted our Clients with starting their business in Chad. Our services include i) Chad business registration ii) government license registration iii) corporate bank account opening services in Chad and abroad iv) employee recruitment v) visa strategies and vi) office rental solutions in Chad.
Summary table of Chad company registration
|Summary||LLC||Public limited company||Trading company||Representative office||Branch office|
|Also known as||SPRL||SA||SPRL||Bureau de représentation||Succursale|
|Best use of company?||All products and services||To secure public funding||Import and export||Marketing & research||Specific projects|
|How soon can you invoice Clients\sign sales contracts?||3 months||4 months||3 months||3 months||3 months|
|How soon can you hire staff?||3 months||4 months||3 months||3 months||3 months|
|How soon can you sign a lease agreement?||1 month||1 month||1 month||1 month||1 month|
|How long to supply corporate bank account numbers?||2 months||2 months||2 months||2 months||2 months|
|How long to supply company registration \ tax numbers?||3 months||4 months||3 months||3 months||3 months|
|Corporate tax rate on annual net profits?||35%||35%||35%||Cannot trade||35%|
|Limited liability entity?||Yes||Yes||Yes||No||No|
|Government grants available?||No||No||No||No||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/ legal representative required?||No||No||No||Yes||Yes|
|Minimum paid up share capital?||US$1,725||US$17,300||US$1,725||None||None|
|Can bid for Government contracts?||Yes||Yes||Yes||No||Yes|
|Corporate bank account location?||Société Générale||Ecobank||BSIC||BAC||Orabank|
|Can secure trade finance?||Yes||Yes||Yes||No||Yes|
|VAT payable on sales to local customers?||18%||18%||18%||Cannot trade||18%|
|Average total business set up engagement costs?||US$27,100||US$31,100||Request a proposal||US$30,850||US$30,100|
|Average total engagement period?||6 months||6 months||6 months||6 months||6 months|
Chad company registration summary
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Advantages and Disadvantages
Advantages of Chad company registration
- It is possible to register a company in Chad with only i) one shareholder ii) one director and iii) a paid-up capital of US$1,260 (CFA 1 million). Our Clients are not required to travel for Chad business formation and corporate bank account opening procedures;
- Foreigners forming a business in Chad are eligible to up to three years of tax holidays since the adoption of the National Investment Charter of 2008;
- Chad is currently governed by a politically stable government that is focused on improving the economic and social conditions of the economy. The government of Chad is determined to attract foreign investment with an inclination towards North American investors. Therefore, the business environment is gradually improving in Chad.
Disadvantages of Chad company registration
- It is difficult for foreigners to start a company in Chad because:
- The procedures to register a business in Chad are complex and cumbersome, taking at least three months to complete (twice the average in Sub Saharan Africa). Licensing requirements are also opaque and bureaucratic, can be costly and offer plenty of opportunities for Government officials to request bribes in order to timely complete them;
- Foreigners willing to start a company in Chad are required to enter into a lease agreement with a landlord for office or industrial space in Chad. Registered and virtual offices are not allowed by the Chad authorities;
- Chad is a French speaking country, so foreign corporations setting up a subsidiary in Chad are required to provide certified translations of their corporate documents, which can significantly increase to costs of Chad business setup;
- While it only takes 3 months for a local company to get connected to the local electricity network, the costs of doing so are twice the Sub Saharan Africa average;
- For all these reasons, Chad is ranked by the World Bank as the world’s fifth most difficult place to start a business.
- Our Clients’ sales will be low in Chad because the country i) only has a population of 11 million and ii) a GDP per capita of only US$1,000. The size of the economy is barely US$12 billion, 1/30th the size of Singapore’s;
- Our Clients will pay a high amount of taxes in Chad because:
- The corporate tax rate of 35% is one of the highest in the world. Chad also implements a scheme by which all companies (even those running at a loss) are required to pay a minimum corporate income tax of 1.5% of the annual turnover of the company;
- Companies are also required to pay withholding tax on i) dividends payments at a 20% rate and ii) interest, royalties and technical services fees at a 25% rate. Withholding tax is payable on payments made to both residents and non-residents;
- There’s no room to legally waive or reduce withholding tax payments, as the country has signed only one (regional) double taxation avoidance agreement with i) Cameroon ii) Central African Republic iii) Republic of Congo iv) Equatorial Guinea and v) Gabon;
- Employers are also required to pay social security contributions and payroll tax corresponding to approximately 28% of their employees’ gross salary;
- VAT registration is virtually always mandatory. Businesses registered in Chad must charge VAT on all their local sales, with a standard rate of 18%;
- For all the reasons listed above, Chad is ranked as the 5th worst place in the world for businesses to pay taxes, which average close to 65% of their annual earnings according to the World Bank;
- Chad has been poorly ranked at the 135th position (out of 137 countries) in the Global Competitiveness Index 2017-2018 edition. This is majorly due to its i) government instability and inefficient government bureaucracy, ii) poor infrastructural facilities as well as iii) inadequately trained labour force with poor work ethics.
Best uses for a Chad company
Chad has untapped oil and gas reserves. Most of our Clients are therefore interested to form companies in Chad offering products and services to this industry.
- Time to incorporate: Twelve weeks
- Cost to set up: US$27,100
- Minimum capital: US$1,650
- Physical office required: Yes
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 40%
- Corporate tax base: Territorial
- Shelf companies: Unavailable
- Main company type: LLC
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Useful links for Chad
Government and public authority websites:
- Taxation of Foreign Nationals Working in Chad
- IMF: Chad – Selected Issues
- Trade Policy Review by WTO
- Chad – Economic Profile 2015
- African Economic Outlook – Chad