Djibouti

Exchange

No stock exchange

Current number of listed companies

There are no listed companies in Djibouti Companies Register as there is no stock exchange.

Listing rules

N/A

Regulatory body or bodies

ODPIC is in charge of Individual Merchants and Companies Registers.

Principal legislation

Civil Code of Djibouti instituted by Law No. 003/AN/18/8th L of April 12, 2018 - (Article 1969 to Article 2070 governing civil companies).
Commercial Code instituted by Law No. 134/AN/11/6th L of August 1, 2012, amended and supplemented by Law No. 001/AN/18/8th L of April 12, 2018 - governing commercial companies.
Law No. 103/AN/05 of April 10, 2005, on free zone commercial companies.

Corporate Governance Code

Civil Code of Djibouti instituted by Law No. 003/AN/18/8th L of April 12, 2018 - (Article 1969 to Article 2070 governing civil companies).
Commercial Code instituted by Law No. 134/AN/11/6th L of August 1, 2012, amended and supplemented by Law No. 001/AN/18/8th L of April 12, 2018 - governing commercial companies.
Law No. 103/AN/05 of April 10, 2005, on free zone commercial companies;

Takeover / merger regulations

Commercial Code instituted by Law No. 134/AN/11/6th L of August 1, 2012, amended and supplemented by Law No. 001/AN/18/8th L of April 12, 2018 - governing commercial companies.

Public offers / disclosure regulation

Article  L301.1 to L347.1 of the new Commerce Code of 1 August 2012 on all types of companies.

Legislation

Law No. 28/AN/08/6e L dated 21 December 2008 on fair competition and consumer protection, and Decree No. 2011-030/PR/MCI dated 21 February 2011 apply.

Articles 2291-1 to 2303-15 Commercial Code 1 August 2012

Impact of regulatory regime on business

Mergers and takeovers

No limitation of mergers and acquisitions except if it is creating an abuse of dominant position.

Scope

The scope entails freedom of prices, prohibition of cartels or abuse of a dominant position, or anti-competition actions, and transparency of the market.

CORRUPTION PERCEPTION INDEX SCORE FOR 2022

The "Corruption Perceptions Index" for the public sector showed 70 points in Djibouti for 2022. The scale has a range from 0 to 100. The more corruption rises, the higher the number is. With this result Djibouti ranks 130th. So, compared to other countries, it is considerably below the average.
Compared to the previous year, in 2022, the level of corruption remained unchanged. In the long term, it has risen moderately in recent years.

CORRUPTION PERCEPTION INDEX RANK WORLDWIDE FOR 2017

Djibouti ranks 130th

SIGNATORIES TO UNITED NATIONS CONVENTION AGAINST CORRUPTION (UNCAC)?

Yes

(UNCAC) RATIFIED?

Yes, by Law n°96/AN/86/5eL dated 8 February 2005

SIGNATORIES TO THE AFRICAN UNION CONVENTION ON PREVENTING AND COMBATTING CORRUPTION?

Yes

SIGNATORIES TO THE OECD CONVENTION ON COMBATING BRIBERY OF FOREIGN PUBLIC OFFICIALS IN INTERNATIONAL BUSINESS TRANSACTIONS?

No

RATIFIED?

No

Effectiveness of the court system

In practice, the duration of the process depends on several factors such as: the complexity of the case; the degree of urgency; and procedural objections raised by the opposing party. Decisions on urgent interlocutory motions can be obtained between one day and one month after the referral to the court, depending on the urgency of the case.

For an ordinary case, the procedure lasts on average one year in first instance, one year in appeal, and from one to three years before the Supreme Court. There are several types of interim remedies available to preserve the interests of the parties, pending judgment, for example:

Protective measures. In the event of an emergency where the recovery of a debt is compromised, the president of the court of first instance may authorize any creditor who can prove a justified debt, and which appears to be justified in principle to carry out a protective seizure or to register a pledge on the debtor's business or real estate. The creditors present their requests accompanied by the supporting documents of their claim to obtain an order from the President of the Court of First Instance. They then enforce the provisional measure and finally notify the debtor of the order accompanied by a summons to obtain validation of the judgment on the merits, garnishment. Any creditor may ask the court for authorization to seize sums or property belonging to the debtor, but in the hands of a third party and the debtor, to secure a definitive claim. If the creditor holds an enforceable title (judgment, notarial deed), the execution can be carried out directly through a bailiff. If the obligee does not have an enforceable title, a petition must be made to the presiding judge of the court of first instance and an authorization order obtained. Then, the creditor must serve the order on the debtor accompanied by an order on the merits and in validation of the garnishment.

In all urgent cases or when it is necessary to rule in summary proceedings on problems of execution of a title or an enforceable judgment, the plaintiff may have the other party summoned before the judge in summary proceedings without complying at the usual deadline for a quotation, on a date other than the ordinary date. trial court hearing dates.

The interim relief judge may, among other things, order an expert report, prohibit certain manifestly unlawful acts punishable by a daily fine, evict a tenant, order a receiver, appoint a provisional or special receiver of a company.

But to avoid judicial slowness, the Djiboutian legislator has quantified the number of adjournments and extension of deliberations in the new code of civil procedure instituted by law n° 004/AN/18/8ème L of April 12, 2018. In this meaning that it provided in article L212-16 of the code of civil procedure that “The procedure, from its starting point until the pronouncement of the final judgment, must be carried out within a reasonable time.
The maximum number of adjournments for the exchange of submissions and documents of the parties is limited to six for each instance and the period between the introduction of the instance and the pleadings may not exceed eight months.

The maximum number of extensions of his deliberation by the judge is limited to three and the time between the pleadings and the pronouncement of the judgment cannot exceed two months.
The limits of dismissals and deadlines provided for in paragraphs 2 and 3 can only be exceeded in the event of unforeseen and exceptional circumstances”.

Under the terms of the said article, an ordinary case must be judged within a reasonable period of up to ten months before each instance (first instance, court of appeal and supreme court). The unreasonable delay in judgment entails defective functioning of the justice service and obliges the State to repair the damage caused as a result.

Arbitration

The right of arbitration was governed by a dispersed way between three sources of laws namely:

1. The International Code of Arbitration of February 13, 1984 (Code): which governs only arbitrations involving international commercial interests. This code is still in force but has never been implemented in practice because the institutions it refers to have not been established (e.g. the Arbitration Appeals Commission and the International Center for arbitration services). This code is supplemented by the articles of the Civil Procedure Code of Djibouti instituted by Law No. 004/AN/18/8th L of April 12, 2018.
2. Articles 1003 to 1028 of the civil procedure code of Djibouti: corresponding to the same provisions of the old French civil procedure code, and which apply to all types of arbitration. These texts are repealed and replaced by the articles of the Civil Procedure Code of Djibouti instituted by Law No. 004/AN/18/8th L of April 12, 2018.
3. Articles L2311-1 to L2316-4 of the Djibouti Commercial Code of August 1, 2012 (NDCC): which apply to any arbitration between traders (national or international) when the seat of the arbitration is in the Republic of Djibouti.There are no arbitration institutions at the national level. The parties appoint ad hoc arbitrators (e.g. the President of the Port Authority and the President of the Bar etc.).

The new Code of Civil Procedure instituted by Law No. 004/AN/18/8th L of April 12, 2018, has consolidated and harmonized the rules relating to Internal Arbitration and International Arbitration which were dispersed between the three texts of the aforementioned laws.

The Right of Arbitration is now generally governed by the Civil Procedure Code of Djibouti instituted by Law No. 004/AN/18/8th L of April 12, 2018 - Articles L.710-1 to L.733 -13 of the new code of civil procedure of Djibouti. This code took over from the Djiboutian Code of International Arbitration instituted by Law No. 79/AN/84/1ère L, largely supplementing it by defining all the general and technical aspects necessary for a harmonious implementation of the arbitration and its decisions.

In Djibouti, the courts are generally in favour of arbitration. When there is an arbitration clause in a contract, a local court will declare that it is not competent to deal with the case and will invite the parties to go to arbitration. The President of the Court of First Instance of Djibouti may grant interim measures notwithstanding the existence of an arbitration clause.

The state courts will decline their jurisdiction when the dispute before them is the subject of a valid arbitration agreement between the parties, even if the seat of the arbitration does not come under the territorial jurisdiction of the Djiboutian courts. The jurisprudence of the Supreme Court is well established in this sense, but it happens that the Court of First Instance and the Courts of Appeal refuse to apply arbitration agreements if they are not signed by all the parties (bills of lading by example).

Indeed, before the referral of the case to the arbitrator, and in exceptional circumstances, thereafter, in cases where the urgency of the interim and conservatory measures requested would not allow the arbitrator to take a decision in time, the parties may request such measures (including provisional seizures on the property of a debtor located in Djibouti on the date of the request) should be taken by the competent judicial authority.

The courts of Djibouti generally recognise domestic arbitral awards on the condition that they have been rendered in accordance with the applicable rules. However, the arbitral award maybe the subject of an action for annulment before a competent local court if:

a) The award was made in the absence of an arbitration agreement or on a null or expired agreement;

b) The arbitral tribunal has been irregularly constituted or the sole arbitrator irregularly appointed;

c) The arbitral tribunal has ruled without complying with the mission entrusted to it;

d) The principle of contradiction has not been respected or where the rights of the defence have been infringed;

e) The relief awarded is contrary to international public policy; or

f) The arbitration award is not reasoned.

Enforcement of foreign judgements

The Republic of Djibouti is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

In order to be enforceable in Djibouti, foreign judgments and foreign arbitral awards must be granted an exequatur order from the Court of First Instance of Djibouti. The exequatur is granted by the President of the Djibouti Court of First Instance on receipt of a petition made in accordance with the following conditions:

the foreign judgment or arbitral award, was rendered by a competent court in accordance with the rules on conflicts of laws, as accepted in Djibouti.

the foreign judgment or the arbitral award has the force of res judicata and is enforceable in the jurisdiction where it was rendered; and

• the parties have been duly convened, represented or declared in default; and the judgment does not contravene public order within the meaning of Djiboutian law and is not contrary to any decision of Djiboutian justice having res judicata authority.

A party wishing to obtain an exequatur order must submit to the President of the Djibouti Court of First Instance a copy of a certified French translation of the foreign judgment or, in the case of arbitration, a copy of the certified French translation of the arbitral award and the arbitration agreement.

Perception of the local courts

Djibouti Courts are perceived by local populations and companies as fair. In the Free Zones (a dozen of areas without customers) and for foreign investments, there are generally arbitration clauses.
Free Zones are basically tax free zones (see Free Zones’ Code dated 17 May 2004). There are currently 13 Free Zones.

Judiciary

Supreme Court magistrates are appointed by the president with the advice of the Superior Council of the Magistracy or CSM. It is a 10-member body consisting of 4 judges, 3 members (non parliamentarians and judges) appointed by the president, and 3 appointed by the National Assembly president or speaker. Magistrates appointed for life with retirement at age 65.

The constitutional Council consists of 6 Magistrates, 2 appointed by the president of the republic, 2 by the president of the National Assembly, and 2 by the CSM. Magistrates are appointed for 8-year, non-renewable terms.

Structure of the court system

The judicial organization of Djibouti includes a single jurisdictional order with a double degree of jurisdiction. This structure coexists with customary law justice and Charian justice.

1. Customary justice
   She deals with minor disputes in civil matters (neighborhood disputes or disputes relating to residential rents). The customary courts are presided over by civil administrators and are located in the chief towns of the districts (four interior districts) as well as in the districts of the capital. The influence of this justice tends to decrease and only the customary court of the city of Djibouti functions.
   In parallel with the customary justice instituted by the texts, customary justice is rendered by the okal (tribal notables), chiefs of clans and districts, for the settlement of disputes in civil and criminal matters.
2. Charian justice
   It applies Islamic law and is rendered by the cadis (wise men), distributed in the chief towns of the districts and in the districts of the capital.
   The grand cadi of Djibouti is also a judge of appeal. Charian justice had exclusive jurisdiction for people of the Muslim faith only, in matters of succession, celebration of marriage, divorce, alimony and child custody.The law of June 30, 2003 in family matters replaced the Sharia courts with a personal status court of first instance, whose headquarters are in Djibouti-ville and whose jurisdiction extends to the entire national territory. In addition, the law created a personal status appeals chamber within the Djibouti Court of Appeal.Article 6 of the 2003 law provides that "The personal status court of first instance has jurisdiction to rule in the first instance on all disputes relating to marriage, filiation, divorce, custody of children, alimony and all other matters relating to personal status. The court is also competent in matters of inheritance, debts, residential leases, and in matters of civil and commercial matters when the amount of the dispute does not exceed 5,000,000 Djibouti Francs
3. State justice (common law jurisdiction)
   The rules governing the jurisdictional organization are codified in constant law and consolidated in the code of civil procedure instituted by law n° 004/AN/18/8ème L of April 12, 2018.
   The said code has reinforced and reaffirmed the uniqueness of the order of jurisdictions with a double degree of jurisdiction which includes:

First degree:
a)    The Court of First Instance (Jurisdiction of common law); It has jurisdiction over the entire territory of the Republic of Djibouti. It is made up of specialized chambers which rule with a single judge: civil chamber, commercial chamber, social chamber and correctional chamber.
b)    The Personal Status Court (Special Jurisdiction - Sharian Law - Personal Law, Family Law and Inheritance Law)

Second degree:
a)    The Court of Appeal (second degree court) hears appeals brought against the judgments of the court of first instance. It is organized into specialized chambers: Civil Chamber, Commercial Chamber, Social Chamber, Indictment Chamber (responsible for the control of the investigating judges) and the Criminal Court (competent in matters of criminal offences).
b)    Administrative tribunal which was created by the law of July 19, 2009 - competent in administrative litigation matters and instituted in the same judicial jurisdiction as that of the Court of Appeal. Appeals against its decisions are made to the administrative chamber of the Supreme Court.

Court of Cassation: This is not a third-degree court -

The Supreme Court is the Court of Cassation, responsible for ensuring compliance with the rules of law. Its chairman is appointed by the President of the Republic.

The Code of Civil Procedure instituted by Law No. 004/AN/18/8th L of 12 April 2018 took up major principles of procedural law, such as the right to a fair trial, the right to quality justice, the right of action and right of execution. Progress in implementing the code to date includes the introduction of simplified procedures for the settlement of small claims. The High Court of Justice is a special jurisdiction established by the Constitution of September 15, 1992. It is composed of members appointed by the National Assembly. The High Court of Justice is competent to try the President of the Republic and the ministers impeached by the National Assembly, on account of acts qualified as high treason or attack on honor and offenses committed in the exercise of their functions.

The Republic of Djibouti is a party to the New York Convention, which facilitates the enforcement of foreign arbitral awards. Foreign awards must be submitted to the Court of First Instance for an enforceability decision (which can be appealed all the way to the Supreme Court).

The courts of Djibouti do not review the substance of the dispute and invalidation can be admitted only in the following cases:

a)    The award was made in the absence of an arbitration agreement or on a null or expired agreement.

b)    The arbitral tribunal has been irregularly constituted or the sole arbitrator irregularly appointed.

c)    The arbitral tribunal has ruled without complying with the mission entrusted to it.

d)    The principle of contradiction has not been respected or where the rights of the defence have been infringed.

e)    e) The relief awarded is contrary to international public policy; or

f)    The arbitration award is not reasoned.

As specified above, the Republic of Djibouti is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
So, to make it enforceable in Djibouti, an arbitral award must be the subject of an exequatur order which will be issued on request by the President of the Court of First Instance of Djibouti. The exequatur is granted by the President of the Court of First Instance of Djibouti on request and subject to fulfilling the legal conditions below:

• An arbitration award has been rendered by a competent court in accordance with the rules of conflict of laws, as accepted in Djibouti;
• An arbitration award has the force of res judicata and is enforceable in the jurisdiction where it was rendered; and
• The parties have been duly summoned, represented or declared in default; and an arbitration award does not contravene public order within the meaning of Djiboutian law and is not contrary to any Djiboutian court decision having the force of res judicata.

The party wishing to obtain an exequatur order must submit to the President of the Court of First Instance of Djibouti a copy of the certified French translation of the arbitration award and the arbitration agreement.
An appeal against the Court of Appeal judge's decision (for violations of the law) may be brought to the Supreme Court.

Different Foreign Investment Regimes

Investment code regime

The general legal framework for investment in Djibouti is characterized by numerous texts of laws and decrees drawn up and adopted at various periods in the country's history. This scattering over time partly explains the varying levels of clarity and quality of these texts. Djibouti's Investment Code was adopted in 1984 and was subject to major revisions in 1994. The Code contains a broad definition of the term "investment" and establishes total freedom of enterprise, regardless of the legal form of the company and the source of its financing. This openness is reiterated, albeit nuanced, in the part concerning general legal guarantees. It is stipulated that the State recognizes the freedom of investment for any natural or legal person of Djiboutian or foreign nationality, subject to the legal and regulatory provisions governing their activities (Article 37 of the Investment Code).

The Code applies to all investors and its content concerns the titles relating to fundamental and general legal guarantees and the titles relating to the conditions of application of tax exemptions and their method of allocation. In practice, the Code is perceived as being above all a tool for managing tax exemptions.
The tax benefits target a dozen business sectors that meet the minimum investment requirements of regimes A and B of the Code. Regime A companies are subject to a simple investment declaration, while Regime B companies, for which the minimum requirements are higher, are subject to an approval regime.

The Code does not sufficiently address the other topics generally included in a modern code, particularly in terms of the treatment and protection of investments or the obligations of foreign investors vis-à-vis the country.
The age of the Investment Code explains its lack of conformity with international best practices. Moreover, it is also obsolete as a reference document because several articles relating to tax incentives have been modified by finance laws, without an official consolidated version being adopted. But currently, the government is putting in place a new modern investment code adapted to the requirements of globalization, facilitating and securing foreign investment in Djibouti.

The Investment Code in force remains to this day the 1994 code, which prescribes incentives linked to two regimes, A and B. As underlined above, investors apply for these incentives with the ANPI. The approval process takes between six and 12 months. In the meantime, some investors may benefit from a temporary exemption certificate. However, most have to pay their own taxes and claim a refund afterwards, which often proves difficult.
Regime A is intended for the following sectors of activity: agri-food; the fishing sector; the mining and chemical sectors; energy sectors; establishments linked to tourism and crafts; transport and logistics; the banking sector and the service sector such as consulting and IT activities.

Investments of at least five million FDJ and accompanied by the creation of permanent jobs are eligible. The exact number of jobs created is not specified in the Code but specified at 30 according to a decree of 2011. Despite this clarification, many investors consider that the State has, until now, been listening to difficulties they encounter in their efforts to honor this obligation.
The pre-amendment version of the Code provides the following tax benefits to companies approved under regime A during the first five fiscal years:

a.    exemptions from the license contribution (these same companies remain subject to the importer license except for imports necessary for investments);

b.    exemptions from the TIC, in particular on raw materials imported and used during the first five financial years;

c.    exemptions from import taxes for the materials needed to carry out their investment programs.

Are concerned by the advantages of regime B construction companies in the industrial, commercial, tourist and social fields whose investments reach at least 50 million FDJ. Beneficiary companies are obliged to create permanent jobs. Subcontractors can also benefit from it and their files are handled on a case-by-case basis.
The Investment Code provides that companies approved under regime B should initially be completely exempt from licensing, income tax and ICT on imported materials for a maximum period of 10 years. Companies with a capital of DJF 30 million or more (approximately $170,000) benefit from specific advantages under regime B but do not have access to all the advantages listed because their capital does not meet the minimum required. Changes also occurred following the 2009 finance law. In addition, the 2008 amending budget added a new article noted “article 20 bis” to the Investment Code. This article stipulates that goods admitted exempt from duties and taxes under regime A or B are subject to the levy of a parafiscal contribution of 3% on imports on the customs value (article 12 of the Investment Code) .
National and foreign companies can benefit from the advantages of the Investment Code according to two regimes:

Regime A: investments of at least 5 million DJF (and creation of a "minimum number of permanent jobs"): Companies benefiting from Regime A are exempt from the TIC on the materials necessary for the realization of their investment projects, excluding petroleum products. The sectors eligible for regime A are listed in article 9 of the Investment Code and cover a very large part of the activities. These include agricultural exploitation and processing activities, activities related to deep-sea fishing, energy production, port activities, land, air and maritime transport, and numerous services.

Regime B: investments of at least 50 million DJF (and creation of a "minimum number of permanent
jobs"): Companies benefiting from the advantages of Regime B are exempt from the TIC on imported materials for 7 years. They may also be exempt from tax on professional profits for a maximum of 7 years, as well as from contribution on built properties for at least 7 years after the construction of approved buildings. Lastly, exemptions are provided in certain cases for registration fees, state fees and building permit taxes (art. 21 to 24).
Investments "presenting a particular economic or social interest under the terms of Article 9" (art. 15), i.e. the sectors selected for regime A, are eligible, provided that an investment of at least 50 million DJF is made. Investments of more than 5 million DJF are also eligible for regime B for the construction of buildings for exclusively industrial, commercial or tourist use, as well as the construction, creation, and operation of educational and training establishments. (Art. 15a).
There are two other entry portals for investors in Djibouti. The first is intended for foreign investors who are not affected by the tax incentives of the Investment Code. They can go directly to the services responsible for the formalities related to the creation of companies according to the provisions of the Commercial Code.
The other is intended for investors wishing to settle in a free zone. The Free Zones Code establishes a system of total openness to export-oriented investors. The free zones also welcome companies that work in the service of the military bases present on Djiboutian territory. Investors wishing to set up in a free zone must contact the Ports and Free Zones Authority (APZF).

Free Zone Regime

The Free Zones Code establishes that companies are exempt from all duties and taxes inherent in national legislation, except for goods imported into the territory of Djibouti (Article 35 Free Zone Code). However, the General Tax Code provides that employees in free zones are now subject to tax on wages and salaries (ITS). This decision is corroborated by the Commercial Code of August 2012 (article L.310-31 of the Commercial Code). The Commercial Code specifies the exemptions from which companies in the free zone benefit, in particular for a renewable period of 50 years, except in terms of ITS and VAT for which the provisions of the CGI prevail. It should however be noted that not having a clear legal status, the APZF does not publish activity reports. It is therefore difficult to have consolidated information on all the free zones in order to derive a complete profile. Tax exemptions for free zones are initially valid for a renewable period of 50 years (article 32 of the France Zone Code).
Almost the entire economy benefits from various tax incentives, making exemptions a norm rather than an exception.
In addition, the administrative burden and the multiplicity of tax incentives make it difficult to assess their effectiveness. Moreover, the differences in treatment between the sectors despite their equivalence as priority sectors in the Government's rhetoric testify to a lack of coherence in the implementation of public policy. However, there are no specific tax incentives to support regional development objectives.
The country's legal system does not have a discriminatory policy against foreign investment and frequently negotiates extended tax breaks and other incentives to attract larger investments.

Foreign investment incentives

There are various tax incentives put in place to stimulate investment.

Investment code

Minimum investment required:
minimum investment amount : 5.000.000DJFj (~ 28 000 US$) to benefit from the regim A.

REGIM A: Exemption from domestic consumption tax (TIC) on the materials and equipment necessary for the realization of the investment program as well as imported raw materials and those used effectively during the first three years by the approved company

minimum investment amount : 50.000.000 DJFj (~ 281 000 US$) to benefit from the regim B
REGIM B:

• Exemption from land tax for construction of buildings for a period of 7 years;
• Exemption from tax on business profits resulting from the approved activities, subject to a maximum of seven years;
• Exemption from domestic consumption tax for raw materials imported and used in the first years;
• Authorized investments pursuant to provisions of Plan B may be exempt from the tax on building permits

Free Zone

"Free Zone," although the term only applied to the port, Djibouti now levies customs duties on most commodities. The 42 acre Djibouti Free Zone has been operational since 2004 and can house up to 100 companies. In July 2012, the government approved a new 57 hectares free zone (Jabanaas Free Zone) just outside of the capital.

Minimum investment required:
Conditions: the company has to export at least 80% of its production. The benefits of this regime remain valid for a period of 25 years and can be renewed.
The companies and operators individual operating in free zones are not subject to any direct or indirect tax or taxation including income tax, except in respect of VAT. For VAT purpose the entities of the free zone are subject to the provisions of the General Code taxes.

Goods imported or manufactured in the free zone are exempt from all customs and tax liability, unless they are imported into the customs territory of the Republic of Djibouti. Thus, the flow in the local market of goods from the free zone is subject to the payment of duties and taxes due on importation.
This tax exemption is granted for a period of up to fifty years, which run from the date of issuance of the free zone license.

Advertising

Law No. 28/AN/08/6e L dated 21 December 2008 on Protection of Consumers (notably for repression of false advertising).

Law No. 143/AN/85/1e L dated 15 April 1965 on tax to be paid for public advertisements.

Decree No. 2011-0184/PR/M dated 9 October 2011 approving a management contract (lasting 10 years) between Djibouti town and a private company (ACS) for public advertisements.

Tobacco

Law No. 175/AN/07/5e L dated 22 April 2007 on tobacco products labelling and prohibition of advertising.

Application decree No.'s 2008-0183/PR/MS, 2008-491/PR/MS and 2008-492/PR/MS dated 24 July 2008 offer further legislative guidance.

Food

Decree No. 2012-225/PR/MDC dated 17 October 2012 on labelling of foodstuffs.

Law No. 89/AN/10/6e L dated 17 August 2010 prohibiting any form of advertising for substitutes to Mother’s milk.

Press

Law No. 2/AN/92/2e L dated 15 September 1992 on Communication Freedom (notably used for regulating placarding).

Alcohol

No sale or Advertising for Alcohol in restricted area.

According to the General Tax Code of Djibouti, an entity that intends to do business in Djibouti is subject to the payment of the following duties and taxes.

Income tax

Business income

Companies domiciled in Djibouti are subject to corporate tax on their worldwide income, whilst nonresident companies are in general subject to tax on income derived within the country.

Private corporations and personal companies, as well as public companies and limited companies, pay a flat tax of 25% of annual net profit. The companies which benefit from the Investment Code are exonerated of this tax as well as income from property and income from assets.

• Minimum tax

Minimum tax is due from loss-making companies or whose income tax is less than the minimum tax due. The Minimum tax is not deductible from taxable profits (Art.57 of the general tax code of Djibouti).

The minimum flat tax is due by individuals and entities running a handicraft, commercial, industrial or other liberal profession. It is a tax on the turnover realized on the national territory and not deductible from the taxable profit. The Minimum tax is equal to 1% of turnover and the companies benefiting from the Investment code are subject to this tax (Art 57 of the general tax code of Djibouti). The minimum amount to be paid is 120 000 DJF.

• Rates

 Individual tax

 Land contribution on built estates

It is levied on the annual rental value from the sixth year following the year in which the building was completed.  The rates are:

• From 0 to 1 120 000 DJF : 10%
• From 1 120 001 DJF to 3 840 000 DJF : 18%
• Above 3 840 001 DJF : 25%.

Transfer pricing and thin capitalisation rules

There are no special transfer pricing rules in Djibouti . However, the tax authority is allowed to levy tax on any enterprise in Djibouti that has carried out artificial transactions or appeared to have transferred profit to a related entity located abroad. A transaction may be considered artificial where it does not appear to have been carried out at arm’s length.

In practice, the transactions between a company and other related entities, must be justified and substantiated with relevant supporting documents to ensure they are not fictitious transactions. The tax authority may also require a demonstration that the services are necessary for the Djibouti company’s operations. Djibouti has also no thin capitalisation rules.

Value added tax (VAT)

Shall be subject to value added tax (VAT) transactions made in Djibouti by physical or leal persons, under an economic activity other than employee, Art.171.The new rate is 10% since the financial law of 2015. The 0% is applicable to the exportation activity.

Registration and stamp duty

Registration taxes are levied on acts under private signature, public civil, judicial acts, verbal leases, transfer inter vivos or deaths, acts of companies, except the acts that interest the public administration, the embassy.

The rates are :

proportional fee : 5% and 10 %

Flat fee : 2000 , 4000 , 6000 DJF Progressive right ( as set in the table in the registration code ).

Registration duty is applicable (unless exempted) for the following and at the following rates:

• incorporation of a company: from 280 USD to 2.800 USD, depending on the amount of the capital;
• mortgages and pledges: 2%
• construction permit and anti-seismic control: 2.5%
• leases: 2% (0% for houses)
  

Stamp duty is levied on all papers for the civil, legal, all written documents, formulas , except the document of the public administration The rate is : 1000 DJF by sheet.

Other taxes applicable in Djibouti

Any company, whether domestic or foreign, which carries on a trade, business or profession not included in the list of exemption set out in the GTC or any others particular text exemption is liable to business licence duty It is a local tax that should be paid by any person engaged in trade or business in Djibouti.
Exception some activities: i.e. fishing, activities of the States and certain public establishments, - the company under Investment Code.

The rate is composed of a fixed and a variable duty. Fixed rates as per a table and variable as per rental value of the property( stores, shops, factories, workshops, warehouses, sheds, yards and other premises used for the performance of taxable professions, including any kind of facilities) Art106 and Art.111 of the general tax code of Djibouti.

Double tax treaties (DTT)

No Double tax treaty signed by Djibouti at the moment. Only bilateral agreement with the United States.

Exchange control

No

In Djibouti there is free movement of money and capital. Dividends out of revenue and capital on disinvestment may be remitted. It is just needed to justify it by showing of the nature and validity of the transaction. In practice, the transfer of capital is handled by the primary banks. Since the sector was liberalised, banks do not need authorisation from the central bank to transfer funds abroad. There are no exceptions to this freedom.