Economic overview
The economic and financial situation of Chad and the medium-term outlook have worsened due to a series of long-lasting shocks since the onset of the Covid-19 pandemic. To underline this, a mission of the International Monetary Fund (IMF) led by Edward Gemayel who has stayed in N’Djamena from 12 January until today. The mission follows the approval by the executive committee of the IMF on 10 December 2021 of a new 36-month ECF agreement for an amount of approximately 570.75 million dollars.
In his final statement, Gemayel pointed out that Chad’s macroeconomic development has been affected by a series of adverse and persistent shocks. They include the Covid-19 pandemic, oil price volatility and a significant deterioration in oil sector production, security attacks, climate change and food insecurity.
Real GDP is estimated to contract by 1.1% in 2021, due to reduced oil production. At the same time, annual average inflation has been kept in check after climbing to 4.5 percent in 2020. “The pandemic is likely to leave lasting scars and Chad’s economy is expected to remain fragile in the near term before recovering. gradually in 2024, up to 3.6 percent, provided that adequate reforms are implemented, ”the IMF adviser said.
“The Extended Credit Facility (Ecf) agreement recently approved by the IMF Executive Committee will help alleviate significant pressures on the economy and put it on a balanced and sustainable path for green and inclusive growth, as well as reducing poverty,” reads a statement from the financial institution. The IMF recommends a thorough debt restructuring under the common G20 framework and strong donor support to restore debt sustainability and promote sustainable and inclusive growth. In this sense, the completion of the treatment of debt with public and private creditors by the end of March will be decisive.
Main sectors of industry
Over 80% of Chad’s population relies on subsistence agriculture and livestock farming for its livelihood. The crops grown and the locations of the herds are determined by the local climate. To the south is the nation’s most fertile soil, with rich yields of sorghum and millet. In the Sahel it only grows millet, and with much lower yields than in the south. On the other hand, the Sahel is an ideal pasture for herds, goats, sheep, donkeys and horses. The scattered oases in the Sahara only support dates and legumes.
Cities in Chad face serious difficulties with infrastructure; only 48% of urban residents have access to drinking water and only 2% to basic healthcare.
Before the development of the oil industry, the industry was dominated by cotton and accounted for about 80% of export profits. Cotton remains a primary export, even if exact data are not available. The rehabilitation of Cotontchad, a major cotton company weakened by the global decline in cotton prices, was financed by France, the Netherlands, the European Union and the International Bank for Reconstruction and Development (IBRD). Now the parastatal is expected to be privatized. Besides cotton, cattle and gum arabic are dominant.
Taxation for businesses in Chad
Corporate Tax
The standard rate is 35%. The tax system also provides for the application of a minimum tax on a monthly basis whose rate is equal to 1.5% of the previous month’s turnover. The payment of the tax must be made by the fifteenth day of the month following that of the turnover.
Withholding Taxes (WHT)
This can be a final payment or a down payment. Dividends and interest from investments in Chad are subject to a withholding tax during the year in which they accrue.
The tax year in Chad runs from January 1st to December 31st. Employers must submit a monthly wage withholding declaration on the income of their employees. The declaration must be sent, together with the payment of taxes, to the tax authority by the fifteenth day of the following month.
In general, taxpayers are required to make an installment payment of the tax due, calculated on the basis of a self-assessment system that is based on the previous month’s turnover. This tax installment must be paid by the fifteenth day of each month; however, individuals whose income consists solely of income from work and capital, taxed at source, are not required to pay these installments.
Resident natural persons are required to file an annual tax return by the 1st of March following the following year.
Employers must submit an annual declaration of the salaries paid to their employees by January 31 of the following year.
Married women can file their tax returns separately or jointly, aggregating their income with the income of their husbands.
Investing in Chad
The Government of Chad (GOC) is well arranged to unfamiliar speculation, particularly from North American organizations. There are open doors for foreign interest Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Information Technology; Industrial Equipment & Supplies; Information & Communication; and Services.
Since oil production started in 2003, the oil area has ruled financial movement and has been the biggest objective of unfamiliar speculation, including from U.S. organizations. Agribusiness and domesticated animals reproducing are likewise significant monetary exercises, utilizing most of the populace. The GOC has focused on agribusiness, sun oriented energy creation, gold mining, domesticated animals rearing, meat handling, and data innovation lately with an end goal to broaden the economy and reduce financial reliance on unstable worldwide energy markets.
Chad’s business and speculation environment stays challenging. Private area advancement is ruined by unfortunate vehicle framework, absence of talented work, negligible and untrustworthy power supply, frail agreement requirement, defilement, and high taxation rates on private endeavors. Incessant line terminations with adjoining nations, exacerbated by COVID-19 limitations, confound worldwide exchange. The COVID-19 pandemic stopped Chad’s humble 2019 financial recuperation following quite a while of downturn brought about by low worldwide oil costs and problematic obligation installments to Glencore. Existing IMF and World Bank programs mean to further develop administration, increment straightforwardness, and decrease inward unfulfilled obligations. Private area financing is restricted, and low GDP development obliges government venture and private area spending. Continuous pivots of key priests and enthusiastic traditions monitors present further barriers. The GOC’s revenue in keeping a stake in venture projects is a double edged blade, working with admittance to key leaders while presenting monetary and functional dangers.
In spite of these difficulties, the achievement of a few foreign interests into Chad delineates the business amazing open doors for experienced, committed, and patient financial backers. Effective financial backers regularly work with confided in nearby accomplices to explore the difficulties of working in Chad. The oil area will stamp 20 years of activities in 2023 and highlights a few conspicuous American worldwide oil organizations, including ExxonMobil