Name Official: Republic of djibouti

Capital: Djibouti

Total Area: 23,200 km²

highest point: 2010 m

Lowest Point: -175 m

Borders: Ethiopia, Somalia, Eritrea

Political System: Presidential

Head of State: HE Ismael Omar Guelleh

Time Zone: GMT + 3

Calling Code: The international code of Djibouti is the +253

Languages:

- Somali, afar, arabic

- Frensh, arabic are official languages

-English widely spoken in the tourism and business

Currency

The currency of Djibouti is Djibouti Franc (DJF). Its parity is pegged at U.S. dollar. The international credit cards are accepted and 1 USD=177.721 DJF.

Tickets: 1000DJF, 2000 DJF, 5000DJF, 10 000DJF.

Coins: 5 DJF, 10 DJF, 20 DJF, 50 DJF, 100DJF, 250DJF, 500DJF.

Office Hours

Saturday to Thusday: 07pm 30 to 14h00.

Financial instituions practice the week of six days.

During the summer and the month of Ramadan, the system of the day can be changed.

Weights and Measures: The units used are grams and meters.

Public Holidays

I. The National Investment Promotion Agency

The National Investment Promotion Agency is in the heart of social and economic system of the country since it is established in 2001. Il encourages the promotion of investment in Djibouti through a policy of flexibility in investment operations, a modern regulatory framework and procedures. As part of the investment promotion and development of knowledge of the Djiboutain territory, NIPA is responsible for putting forward the incentive environment of the Republic of Djibouti and investment opportunities.

Mission:

Our mission is to provide a full advice and support for new or existing local and foreign promoters. The National Investment Promotion Agency is a strong partner and representative of the private sector at gouvernmental level.

in its duties the National Investment Promotion Agency:

• Welcomes, informs, advises and assists promoters
• Offers the incentives and benefits provided by the Investment Code
• Gives the appropriate information on bisiness environment, regulations and lows
• Implements the government policy in the field of ecinomic and social development.

contributes to the training of promoters through seminars and training session:

• Publicizes investment opportunities of the country through information and dissemination at the local, regional and international level
• Assists local and foreign promoters in their business start up matters through the one stop Shop
• Ensures the establishment of a database of djiboutian compagnies and create a unit of commercial and Industrial Information.
• Fosters Public-Private Partnership ans partnership local and international compagnies
• Assits investors in the process of land acquisition
• Offers aftercare assistance to local and foreign investors.
• Advocates on behalf of investor the improvement and facilitation of investment procedure.

II. Regulated Activity

Djibouti business environment is liberal and any local or foreign investor can invest in the different sector of activity. However there are some regulated activities which require a specific approval issued by the ministry in charge of the targeted sector.

III. Setting Up a Company: STEPS

The Djiboutian legal environment is favorable to the businesses. You can create your company in djibouti whatever your nationality or your place of residence is.

Foreign investor does not need a djiboutian partner to start a business in Djibouti apart from the activities of tranit and insurance. The activity of handling is also only reserved for the Djiboutian.

All procedures are done within three days at the NIPA' One Stop Shop with representatives of all institutions involved in the business environment.

The most current types of companies are:

• Limited Liability Company (LLC)
• Liability Company (LC)
• Limited liability Single Member (shareholder) Company (EURL)

The Steps to Set Up Your Company:

Required information for the article of association

• Identity cards of associates
• Repartition of associates' shares
• Company's name
• Company's purpose
• Company's adress

Elaboration of company registration file

• Article of association project
• Reservation of commercial name
• Bank statement

Registration at the register of Commerce

• Registration form
• Article of association and bank statement
• Criminal record of associates and manager
• Commercial name certificate is given

Fees:

• Register of Commerce: 132 500FDJ
• Commercial name certificate: 5 000FDJ

Fiscal registration of article of association and commercial lease

• Article of association (4copies) + declaration of conformity
• Bank statement

Fees:

• Fixed part: depends of the amount of the capital of the company regardless of is its legal form
• Stamps' fees: 1000FDJ/ statute page including enclosures

Proved documents:

• Receipt of fees payment
• At the back of the document are reproduced the-registration formalities (registry no., folio no., and registration no.,), authorized signature, date of the dees and official stamps.

Sosial registration:

• Registration at the National social securitu fund (caisse Nationale de Securité Sociale)
• Free= none

To create a branch

Documents to present:

• Statutes of the parent company
• Minutes of the board of directors of the parent company
• A nominated representative or manager of the branch
• Commercial register of the parent company

Provided documents:

• The commercial register of the local branch

Commercial name certificate

IV. Start Up Cost

V. Investment Code

The Investment Code provides incentives for certain activities, depending on the investment (5 million DJF approximately 30,000$) and the number of local jobs generated by the project. The National Investment Promotion Agency is in charge of Investment Code management. One of the most salient features of the Investment Code is that it gurantes equality between domestic and foreign.

1) Exemptes activities for Regime A: 5 to 50 million DJF

• Exploitation, preparation or transformation of products of vegetable or animal origin, whatever is the origin;
• Finishing in high-sea; preparation, freezing, transformation or storage of the products of the sea;
• the mining development, the industry of treatment or formation of the mining products or metals, that they are or not extracted from the ground of the territory;
• Research, exploitation or storage of any source of energy as well refining of hydrocarbons;
• Creation, exploitation of establishments animing at the development of the tourism and the craft;
• Creation and electric, electronic, and chemical exploitation and ship-buildings industries;
• Land, sea or air transports;
• Harbor and airport activities;
• Constructio,; repair and maintenance the ships for Sea transports or of fishing;
• Manufacturing or conditioning on the spot of the products or goods for great consumption;
• Banking or credits activites to be promotes new investments as well as the activities of warranting (credit, storage);
• Concealing services, engineering, compter, data processing, telematic center server of data bases.

2) Exemptes activities for RegimeB: 5 to 50 million DJF

All the activities of the Regime A more the activities are follows

• The construction of buildings of exclusively industrial, commercial or tourist use;
• The construction of the social housing;
• Cionstruction, creation and exploitation of educational and training schools.

Supporting Documents of application for investment code incentives

Any promoters of investment projects, seeking the benefit of tax exemptions and other structural facilities granted by the Investment Code, must provide prior to any implementation this projects the following documents:

• Feasibility study of the investment project.
• Article of association, trade register, identity card of the company manager and office adress.
• Detailed list of the equipments, materials and raw material to be exonoerated.

1- Growth of companies that benefited from the investment code

The chart below shows the evolution of projects that has benefited from this exemption.

after a light showing down 2011, the number of the tax-exempt companies positively evolved , and we notice the evolution of this trend running on the last three years.

One of the conditions that companies have to fulfill is the creation of a local job according to their activities and their amount of investment. A specific skill which has not been found in the country can be done by expatriated . Those companies have a period of 18 months to start their activities and hire local jobs. The regime a corresponds to 5 years exemption and is given to the small and medium projects , whereas the regime B is attributed to bigger investment for a period of 7 years.

VI- Taxation

When you have a business in an industrial , commercial or liberal activity, you are subjected to the payment of a certain number of taxes listed below. what are the taxes applied and their rates and who can be exempted ?

The Activity and importer patent

The contribution to the activity patent is due by anyone , national or foreigner , who posses commerce , an industry or a profession not included in the exceptions indicated in the General Tax Code (ART 91 GTC)

How this patent is calculated

The patent is composed by a fixed right and a proportional right which elements of calculation are defined by the General Tax Code.

Any individual or entity engaged in an import activity has also to take an importer patent.

The value added Tax and Home consumer Tax

Any individual or entity including the companies of the Free Zone and those benefiting from the Investment Code( with turnover equal than 50.000.000 DJF) as well as community services or public entity realizing a taxable activity must pay the value Added Tax (Art 173/174 GTC).

The Home consumer Tax (TIC) is paid on the products imported and consumed in Djibouti.

How the VAT is calculated?

The Value Added Tax represents 10% of services products . The Home consumer tax depends on the nature of the product.

Who is exonerated?

The companies , which , benefit from the Investment Code exemption are subjected to the Home Consumer Tax. Those operating in the real estate sector as well as hotel industry and processsing industries are exempted.

The License

All entities or individuals who have obtained prior administrative authorization to run trade of alcoholic beverages, including officers mess, clubs, community and associations which sell those beverages exclusively to their members , is hence subject to a special contribution called "license"( Art 130 GTC)

How this license is calculated?

The tariffs of licenses are calculated based on the nature of the operations performed and location where trade is ran.

Tax on Wages and salaries (ITS)

Any individual who receiving a salary against a professional activity performed under the authority and direction of another, public or private entity or person is subjected to the payment of tax on wages and salaries. This tax is subject to deduction withheld by employer (Art3) .

How this tax is determined?

The ITS is calculated on the basis of a salary scale with a progressive rate established by the GTC.

Income Tax

The income tax is established on the profits made by individuals or entities running a commercial, industrial, handicraft, or liberal professions, excepted, exonerated ones(Art19)

How this tax is determined ?

The tax equals 25% of the annual net profits

who is exonerated?

The companies which are benefiting from Investment Code ( under the Regime B) are exonerated of this tax as well as income from property and income from assets .

The minimum flat tax ( MFT)

The MFT is due by individuals and entities running a handcraft, commercial, industrial, or other liberal profession. iis a tax on the turnover realized on the national territory and not deductible from the taxable profit. The MFT is due on the hypothesis of a deficit result. The MFT equals to 1% of the turnover and the companies benefiting from investment code are subject to this tax(Art 57GTC).

The tax on wages paid to individuals or entities not residing in Djibouti by debtor established in Djibouti

It is a tax perceived by the means of a withholding at sources on earnings paid to individuals and entities not residing in Djibouti. The taxable earning are the sums paid against services rendered and those perceived on the author rights and products of industrial, commercial property or similar activities.

how this tax is calculated?

The tax equals to 10% of the gross amount of the earning paid.

The tax on services

The sector of services providers and hotel services ( not affected by the VAT) , are solely subjected to the payment of tax on services ( Art 213 GTC). The tax is to be paid spontaneously every month .

how is calculated?

The tax equals to 10% of service provided.

The tax base equals the total of sums and advantages received and if also

Applicable to the value of the goods incorporated in the delivery of the service.

VII. OPERATIONAL COST

Subscriptions to service providers (Electricity of DJIBOUTI. National Office for Water and Sanitation and DJIBOUTI TELECOM)can also be made directly at the One Stop shop of the National Investment promotion Agency.

A.ELCTRICITY

The Electricity of Djibouti(EDD) is the public institution in charge of enrgy supply in Djibouti.Detailed and full information about fees and related services of Electricity of Djibouti can be found through the Arrete n 2016-455/PR/MEERN

How to get new connection:

Requeired documents:

Connection

• Certificate of conformity affixed2 visa department of housing and management of civil protecton
• Proof of identiy (national identity card.passport driving license. Or the legal status of the company)
• Request letter for connection

New subscription to an exisiting connection:

• Reference (no meter or old bill”spredecessor)
• Proof of identity (national identity card.passport.driving license.or legal status of the company and registration number in the register of commerce)
• Lease for the tenant
• Request letter

How to cancel?

• Requesting termination of the customer.
• Presentation of identification number.

Costs of Electricity

The Costs are available in l'Arrëté N°2016-455/PR/MERN

B. WATER

National Office for Water and Sanitation (ONEAD) is the public institution in charge of

Water supply in Djibouti. Detailed and full information about fees and related services

Of this institution can be found through the “ Arêté N° 2014-738/PR/MAEPE-RH ”.

1) How to get a subscription?

• Proof of identity (national identity card, passport or the legal status of the company)
• Invoice termination of predecessor
• Authorization from the owner (Tenant)
• Subscription Agreement (full name, home address, mailing address)

2) Advance on Consumption

3) Cost of water

The Cost are available in “Arêté N° 2014-738/PR/MAEPE-RH” .

C. TELECOMMUNICATIONS

Djibouti Telecom is the telecommunication service provider in Djibouti. Detailed and full information about fees and related service of this institution can be found through the internet website www.adjib.dj.