Equatorial Guinea Payroll Outsourcing and PEO/GEO Services Leader Publishes Payroll & HR Insights for Equatorial Guinea
Mercans, a leading Equatorial Guinea payroll outsourcing, PEO/GEO, employee leasing, recruitment and BPO services provider, has published its most recent Payroll & HR Insights for Equatorial Guinea. These insights provide an invaluable overview of the information every Payroll & HR specialist should know before setting up their HR and payroll functions in Equatorial Guinea or signing up with a payroll outsourcing or PEO/GEO services provider. Mercans’ summary of labor laws, tax and social security regulations in Equatorial Guinea allow you to navigate the local complexities and avoid pitfalls.
Mercans’ Equatorial Guinea Payroll Outsourcing Solutions
While this summary will serve you as a great guide, you should still get in touch with Mercans’ Equatorial Guinea payroll outsourcing, compliance, PEO/GEO and BPO specialists for a free consultation on setting up fully compliant payroll and HR functions. Better yet, outsource your payroll and HR activities in Equatorial Guinea to Mercans and our Equatorial Guinea payroll outsourcing experts will ensure that your employees will always be paid on time and in accordance with the Equatorial Guinea regulations.
Mercans’ Equatorial Guinea payroll outsourcing solutions are unique and revolutionary:
- Mercans is not an aggregator – your Equatorial Guinea payroll outsourcing services will be delivered by Mercans’ dedicated Equatorial Guinea payroll outsourcing team. No middlemen or subcontractors will ever see your confidential data.
- We use our proprietary Equatorial Guinea payroll outsourcing software platform, that has been specifically designed to handle the complexities and requirements of Equatorial Guinea labor regulations.
- Your data is always be secure with Mercans – Mercans is the only Equatorial Guinea payroll outsourcing provider with ISO 9001, 20000 and 27001 certifications; has passed SOC 1 and 2 (both Type 1 and 2) audits; is GDPR compliant and has successfully completed OWASP Type 3.0 penetration tests.
- Mercans’ Equatorial Guinea payroll outsourcing software platform can be easily integrated with any global HRMS systems; i.e. Workday, SAP, SuccessFactors, Oracle, Dynamics, etc.
- Mercans’ Equatorial Guinea payroll outsourcing fees are transparent and competitive – you will save 30-50% over the service fees of any other comparative Equatorial Guinea payroll outsourcing provider.
Mercans’ Equatorial Guinea PEO/GEO Services
If you are already too busy to deal with another country or do not have a local legal entity in Equatorial Guinea and need to hire staff there, then Mercans’ PEO/GEO services in Equatorial Guinea are the right solution for you. We will employ the staff on your behalf in Equatorial Guinea and will ensure the full compliance with the local regulations throughout the hire-to-retire cycle in Equatorial Guinea. Mercans’ recruitment and immigration specialists will even help you to find the right staff and complete their immigration process in the matter of days.
Mercans does not use any subcontractor’s to deliver Equatorial Guinea PEO/GEO Services. This ensures that your employees receive the highest quality support in Equatorial Guinea and our service fees are unbeatable.
Equatorial Guinea – Focus on Economic Diversification.
Equatorial Guinea has been one of the fastest growing economies in Africa in the past decade. After the discovery of large oil reserves in the 1990s, Equatorial Guinea became the third-largest producer of oil in Sub-Saharan Africa, after Nigeria and Angola. More recently, substantial gas reserves have also been discovered. However, the country macroeconomic and fiscal situation has deteriorated following the oil price drop.
The government’s development agenda, the National Economic Development Plan, Horizon 2020, which targets economic diversification and poverty reduction.
The first phase of Horizon 2020 focused on infrastructure development was concluded in 2012. The second phase will focus on economic diversification, targeting strategic new sectors such as fisheries, agriculture, tourism and finance.
As the country moves into the second phase of the National Development Plan, the government is planning to redirect public investment from infrastructure towards the development of new economic sectors.
Equatorial Guinea’s strong reliance on oil (90% of export earnings) keeps pulling the economy into recession.
In 2019 the economy was still in recession, reaching -6.1% in 2019, from a previous -5.8%. According to the updated IMF forecasts from 14th April 2020, the recession is expected to ease (-5.5%) despite the outbreak of the COVID-19 pandemic; the GDP growth will pick up to 2.3% in 2021, subject to the post-pandemic global economic recovery.
There is an acute youth unemployment problem. From 2010 to 2020, between 25 000 and 49 000 young people will enter the labor market each year. Job creation is limited however because of the small size of the non-oil sector.
Exploitation of oil and gas deposits, beginning in the 1990s, has driven economic growth in Equatorial Guinea; a recent rebasing of GDP resulted in an upward revision of the size of the economy by approximately 30%. Forestry and farming are minor components of GDP. Although pre-independence Equatorial Guinea counted on cocoa production for hard currency earnings, the neglect of the rural economy since independence has diminished the potential for agriculture-led growth. Subsistence farming is the dominant form of livelihood. Declining revenue from hydrocarbon production, high levels of infrastructure expenditures, lack of economic diversification, and corruption have pushed the economy into decline in recent years and limited improvements in the general population’s living conditions. Equatorial Guinea’s real GDP growth has been weak in recent years, averaging -0.5% per year from 2010 to 2014, because of a declining hydrocarbon sector. Inflation remained very low in 2016, down from an average of 4% in 2014.
As a middle-income country, Equatorial Guinea is now ineligible for most low-income World Bank and the IMF funding. The government has been widely criticized for its lack of transparency and misuse of oil revenues and has attempted to address this issue by working toward compliance with the Extractive Industries Transparency Initiative. US foreign assistance to Equatorial Guinea is limited in part because of US restrictions pursuant to the Trafficking Victims Protection Act.
Equatorial Guinea hosted two economic diversification symposia in 2014 that focused on attracting investment in five sectors: agriculture and animal ranching, fishing, mining and petrochemicals, tourism, and financial services. Undeveloped mineral resources include gold, zinc, diamonds, columbite-tantalite, and other base metals. In 2017 Equatorial Guinea signed a preliminary agreement with Ghana to sell liquefied natural gas (LNG); as oil production wanes, the government believes LNG could provide a boost to revenues, but it will require large investments and long lead times to develop.
The principal business entity types are public and private limited liability company, partnership and branch of a foreign corporation.
35% of the share capital of any company set up in Equatorial Guinea (EG) must be held by a Equatorial Guinea citizen or companies belonging to EG citizens. At least three EG-citizen partners are required and one-third of the board of directors must be EG citizens, with EG citizens involved in the management of the company.
A working week in Equatorial Guinea is generally 40 hours long, subject to maximum of 48 hours per week, from Sunday through Thursday. The following conditions apply to working hours, in accordance with the labor law in Equatorial Guinea:
- The duration of work cannot exceed eight hours per day and forty-eight hours per week if working during the day.
- It is considered a working shift the time during which the worker is available to the employer. Breaks and lunch time are also considered as working hours, when the worker cannot leave at that time the place of work.
- Daytime shift is that accomplished between 6am and 6pm, the night between 6pm and 6am and mixed includes daytime hours and a minimum of three- night hours, if more than three hours are exceeded it will be consider night.
- The conditions 1 to 3 are not applicable to persons holding managerial positions; people employed in domestic service, or perform function which by their nature are not subject to the fixed working hours;
- When working in a team, its duration may extend beyond the limits set on paragraph 1, provided that the average working hours calculated for a period of three weeks or shorter, not exceeding eight hours a day and no more than forty-eight a week.
- Persons under eighteen years can only workday shift not to exceed six hours a day. They must be given the opportunity to have adequate breaks, eat and comply with their educational obligations, or professional development.
The Tax Year in Equatorial Guinea is from 1st January to 31st December.
The corporate income tax (CIT) in Equatorial Guinea must be paid by any resident entity.
Taxable profit is determined by deducting from gross income all expenses tied to the performance of taxable activities in Equatorial Guinea. In principle, all expenses are deductible, but the Tax Code provides deductibility rules for some of them.
Resident companies are subject to CIT in Equatorial Guinea on their worldwide income (even if, in practice, it is tolerated for CIT only to be applied to income related to activities carried out in Equatorial Guinea). Non-resident entities are subject to a 15% WHT on gross income derived from sources in Equatorial Guinea. Non-resident individuals are subject to 20% WHT on gross income derived from sources in Equatorial Guinea. For mobilization, demobilization, and transportation services, the WHT rate is 5%.
This amount cannot be lower than XAF 800,000(even if the entity does not have any revenue) the MIT paid can be totally or partially deducted from the CIT liability,
The penalty for lack of payment or payment in arrears of MIT equals to 50% of the amount that should have been paid.
The following will be treated as deductible expenses overheard of any type, staff expenses relating to the premises and material and furniture, miscellaneous and special expenses, insurance premiums, gifts, donation and subsides.
As a rule, the following conditions must be met:
- The expense must incurred in the interest of the company
- The expense must represent a diminution
- The expense must be related to the fiscal year during which it was incurred
- The expense must be justified.
Furthermore, the tax code states special deducibility conditions for some expenses.
A legal entity that operates in Equatorial Guinea more than three months within a calendar year, or more than six months within two consecutive calendar years, and performing an economic activity or providing paid services in the country is considered as a resident for taxation purposes.
The notion of residence applies equally to any kind of activity (even if there is some specificity in the oil and gas sector).
The notion of ‘permanent establishment’ is not defined in Equatorial Guinea’s Tax Code. Authorities mainly refer to the notion of residence as defined above.
Equatorial Guinea tax residents are taxed on worldwide income, whereas non-residents are only taxed on their Equatorial Guinea-source income.
A person is considered an Equatorial Guinea tax resident if they remain in Equatorial Guinea more than three months within a calendar year or a total of six months within two calendar years.
All employment related income is considered taxable income, including the following:
- Basic salary.
- Bonuses, indemnities, and allowances.
- Expenses refunding.
- Contributions in kind.
Benefits in kind are taxable to the following extent:
- Housing: 15% of salary.
- Household: 5% of salary.
- Water and electricity: 5% of salary.
- Company vehicle: 5% of salary.
- Food: 20% of salary (with a maximum of XAF 150,000 per person/per year).
A deduction of 20% or the real cost for professional expenses is available (up to XAF 1 million per year).
The National Institute of Social Security contributions INSESO and Work Protection Fund (WPF) contributions are treated as pre-tax deductions.
Personal Income Tax os calculated in accordance with the progressive tax scale is withheld monthly by the employer and then refunded to the Public Treasury during the first 15 days of the month following the month of payment of the salaries.
According to the provisions of the tax code, personal income tax liability shall be withheld each month by the employer and paid to the public treasury within the first 15 days of the month of following the payment of the salaries.
However, in practice, the employer shall declare personal income tax liability on salaries and wages within the first 15 days of the month following the month of payment of the salaries and the must pay said tax within the 15 days following the date when the tax liquidation is provided to the taxpayer.
Penalties for lack of payment or late payment of the PIT liability equal to 25% of the amount due plus 10% per month in arrears.
Social insurance and taxes are paid on total wages.
There is no foreign tax credit in Equatorial Guinea.
An individual is considered a tax resident of Equatorial Guinea, if they reside in Equatorial Guinea more than three months during a calendar year or a total of six months within two calendar years, one is considered as resident.
Employers contribute 1% of gross salary to the Work Protection Fund (Fondo de Protección al Trabajo in Spanish) and 21.5% to the National Institute of Social Security (INSESO for its Spanish acronym) on a monthly basis.
Employees contribute 0.5% of net salary to the Work Protection Fund and 4.5% to the INSESO on a monthly basis.
Both contributions are declared and paid by the company. Social insurance and taxes are paid on total wages.
Contributions of INSESO include:
- Employer – 21.5% of the base salary.
- Employee – 4.5% of the base salary.
Employer withholds employees’ contributions and declares them along with its own contributions within the first days of the month following the month of the payment of the salaries
Penalties for non-payment or late payment of INSESO contribution equals to 20% of the amount due.
Both employer and employees must pay their contributions to the WPF based on the following contribution rates:
- Employer – 1% of gross salary
- Employee – 0.5% of net salary
Since it is impossible to calculate a contribution based on the net salary amount, the administrative practice is to calculate and pay both contributions based on the base salaries.
WPF contributions are withheld by employers, who declare the withholding to the Minster of Labor and Social Security within the first 15 days of the month following the month of payment the salaries.
Penalties for non-payment or late payment of WPF equal to 20% of the amount due.
- Monthly contributions should be made to the Tax Authority within 15 days of the following month.
- Monthly contributions for social security (INSESO) payments should be made within 15 days of the following month.
- WPF contributions are withheld by employers, who declare the withholding to the Minster of Labor and Social Security within the first 15 days of the month following the month of payment the salaries.
The governing law of all employment issues in Equatorial Guinea is EG Labor Law (the law #2/1990). Where the law is silent, the Equatorial Guinea Employment Policy (the law #6/1999) can be used as a reference. For employment matters, the Equatorial Guinea Social Security Law and INSESO Regulatory Grant (Social Security Series number 3, 2001) also govern benefits and other rules of the workplace.
Company policies and procedures can also be established; however, they must follow national laws.
In Equatorial Guinea there are two type of Employment contracts:
- Limited or fix term contracts which are contracts for a specified duration with specific commencement and completion dates;
- Unlimited contracts where the employee continues to work for the employer from a specific date until such time as the employment contract is terminated by either party after giving prior notice.
The government recommends that employees are issues employment contracts for defined periods.
Professionals and support staff employed for a project with a foreign company can be hired under a contract for specific services, for a period that may exceed the contract term of the foreign company.
The information required by law to be specified in an employment contract is listed below:
- Nature of the contract (limited or unlimited).
- Nature of the work.
- Duration of the contract (for fixed term contracts).
- The location of employment.
- Wages/remuneration payable.
- Date of the employment contract.
- Date of commencement of the employment contract
Employment agreements must meet the following from and acceptance requirements:
- The Ministry of Labor provides standard employment contract templates.
- Employees must sign all copies of the contract on the last page and initial each page as proof of acceptance of all clauses, this includes local and expat staff.
- A copy of the contract must be filed with the Ministry of Labor for information and registration within 15 calendar days of its conclusion.
- An executed copy of the employment agreements must be delivered to the employees within three working day from the submission of the contracts to the Ministry of Labor.
- One copy is archived with the employees’ personnel records.
- If the employer wishes to extend or terminate an employment contract of a local or expatriate staff in Equatorial Guinea, it must notify the employee verbally and in writing, at least one month prior to the expiration date of the contract
- In case of an extension of the agreement, the employee must receive and sign a new contract. A contract can also be modified by a letter from the employer, this letter should contain the new date of expiration of the contract and it should note that it is a modification to the original employment contract. This notification must also include the references to any changes of the contract terms and conditions, if applicable.
The standard probation period is 90 days.
Employment with any company in Equatorial Guinea is voluntarily and employees are free to resign at will at any time, with or without cause. Similarly, the employer may terminate the employment in accordance with article 81 of the National Labor Law. The employer does not have the authority to make any oral arrangement with an employee contrary to the foregoing.
In accordance with the provisions of Article 54 of Equatorial Guinea Labor Law, employees are entitled to a month’s vacation for each full year of employment. Employee can carry over the unused vacation to the following year. Employee can choose to be paid for the accumulated vacation days in lieu of taking the leave.
Paid maternity leave is available six (6) weeks prior to birth and up to six (6) weeks after the birth, or, in the event of medical complications, until a competent health authority deems return to work is appropriate. Additional leave may be approved depending on the circumstances. Approval of Maternity Leave must be sought by submitting the appropriate leave of absence form to the supervisor and then Human Resources Department.
There is no Paternity Leave in Equatorial Guinea.
Companies must ensure that local employees observe the official calendar of holidays ordered by Government. Employees who work on holidays will receive a fee equal to 250% of its normal rate for that day. The local employees working on a national holiday will receive one and half times its normal rate, which will add to its normal rate for that day. The local employees who work overtime receive 25% more on their normal rate in relation to hours worked, which will add to its normal rate for that day.
In the case of a death of an employee, for whatever reason, the company will pay two additional weeks of salary, in addition to the salary the employee had already accumulated, plus all appropriate severance benefits to a beneficiary designated by the employee.
Upon completion of his contract of employment, the employee is entitled to 45 days of salary per each full year worked or the proportional equivalent of 3.75 days per month worked.
In the case of a death of a relative of the first degree of the employee (i.e. father, mother, brother, sister, son, daughter), the employee can take up to two weeks of leave with pay.
The EG Labor Law provides 2 calendar days of paid leave when an employee changes his or her normal residence. For employees with more than one year of service, the company reserves the right to seek justification of the move and sets a limit of no more than one move per 3 years of service.
After completing a year of service, local employees are eligible to receive the following bonuses:
- National Independence Day Bonus – 15 days of salary (half month monthly salary) to be paid before 12 October each year.
- Christmas Bonus – Employees receive 15 days salary (half month monthly salary) payable before 24 December each year.
Employees who have not completed one year of service at the time of previous payments made will receive an amount prorated on the monthly salary in accordance with the number of months worked.
In general, expats staffs working a 14/14 or 28/28 rotation receive a total of 26 weeks off work in any 12 months period and therefore the taking of additional time off for annual vacation or public holidays is not operationally practical. Employees in this situation are compensated with an additional payment in lieu.
The Ministry of Labor is currently setting new standards for the repatriation of expatriates. At present moment, at the end of the contract the employer is responsible for the repatriation expenses of the employee to the place of recruitment or to any other place which the two parties have agreed upon. If the employee obtains employment with another employer in Equatorial Guinea, then the new employer is responsible for repatriation expenses at the end of his service.
Except for the United States’ citizens, all foreign employees are required to apply for a visa to enter the territory of Equatorial Guinea and obtain their work and residency upon arrival to Equatorial Guinea. These permits are valid for one year and it are renewable. A work permit for an expatriate employee will not be issued by the Ministry of Labor unless a formal written labor contract is filed with the Ministry. Work permits are sometimes difficult to obtain and the process might take from few weeks to few months. Residency documents are issued by the Ministry of National Security.
Equatorial Guinea PEO/GEO Services
React quickly to the market demands and deploy staff anywhere in the world in just days: this is Mercans’ global employee outsourcing and employee leasing services. Mercans PEO/GEO and employee leasing services in Equatorial Guinea provide you agility, increase your competitiveness and are easy to implement. There is no need for you to worry about setting up a local company, recruiting and payrolling staff. Enjoy the security of Mercans’ guaranteed compliance with the regulations in Equatorial Guinea. Mobilize any number of resources quickly— and focus on building your business while we take care of the rest.
Equatorial Guinea Talent Acquisition & Recruitment
Get access to a large pool of global and local talent in Equatorial Guinea, reduce time-to-hire, and improve hire quality all in one. Our Mesaar recruitment suite uses innovative matching and psychometric assessment tools to identify the best candidates for your business at record speed. Our consultants have extensive experience placing candidates across industries and organizational levels, and we have led executive searches and outsourcing mobilization projects for large multinationals involving thousands of candidates in Equatorial Guinea and other parts of the world.
Equatorial Guinea HR Advisory
Tap into the experience of our seasoned HR advisory team in Equatorial Guinea. Their expertise ranges from HR policies and procedures, salary benchmark studies, and HR due diligence to sophisticated HR transformation projects. Get a speedy and precise needs analysis, and have us design, implement, and monitor the execution of any project—carried out by subject-matter experts who understand your needs, and who know what it takes for your business to stay ahead of the competition.
Equatorial Guinea BPO Services
Make your business thrive and concentrate on the essentials and let Mercans’ business process outsourcing services minimize your administrative and overhead costs. Fully outsource your back-office functions to a team of HR, finance, accounting, immigration, and administration specialists. Our BPO team will take care of it all while you have the time and freedom you need to nurture your business.
Download PDF: Equatorial Guinea Payroll & HR Country Guide 2020