Access to Markets - Djibouti

Access to markets

Any person regardless of their nationality or place of residence can set up their company in the Republic of Djibouti.

The foreign investor does not need a Djiboutian partner to start a business in Djibouti except for certain regulated activities which require approval from the relevant ministry to be authorized to operate. The handling sector is exclusively reserved for nationals and transit companies must be majority owned by nationals.

The freedom to invest and to undertake an economic activity is guaranteed throughout the territory of Djibouti by the Investment Code to any natural or legal person, of Djiboutian or foreign nationality. No joint venture obligation with a national is foreseen for foreign investments in the country. Equality before the law is guaranteed between local and foreign investors.

In Djibouti for the moment, female entrepreneurs do not benefit from any advantages or tax exemptions compared to men. They have the same rights and carry out the same procedures for setting up a business.

Djiboutian women are very active in the areas of retail trade,

Regulated Professions

Regulated activities must require approval from the relevant ministry to be authorized to operate on national territory. These activities or sectors of activity are presented in the table below:

In order to encourage private initiative, the Djiboutian government has set up a favorable legal and regulatory environment, through a unique investment code. In addition to this device, there is also a free zone with its advantages.


1. The Investment Code

Promulgated by Law No. 58/AN/94/3rd L of October 16, 1994, Djibouti's investment code offers tax and non-tax benefits to investors, both foreign and national.
Djibouti does not impose any Joint-venture operation with a national to invest;

business legislation establishes legal equality between local and foreign investors; any investor can freely repatriate their profits without restrictions, etc.

1.1. Tax advantages

For an investment of a minimum amount of 5,000,000 DJF (~ 28,000 US$), an investor will benefit from the advantages of Regime A, namely the following tax exemptions:

Exemption from Domestic Consumption Tax (TIC) on the materials and equipment needed to carry out the investment program as well as raw materials imported and actually used during the first three financial years by the approved company.
For an investment of a minimum amount of 50,000,000 DJF (approximately 281,000 USD),

• an investor will benefit from the advantages of Regime B, namely the following tax exemptions:
  1. Exemption from land tax for the construction of buildings for a period of 7 years;
  2. Exemption from tax on professional profits resulting from approved activities, up to a maximum of seven years;
  3. Exemption from the TIC for raw materials imported and used during the first years;
  4. Investments approved under the provisions of Regime B may be exempt from building permit tax.
  
  
  1.2. The sectors of activity concerned
  
  Only investments and companies whose purpose is the following activities can benefit from the advantages of Regime A and B:
  
  1. the exploitation, preparation or processing of products of plant or animal origin, whatever their origin;
  2. offshore and deep-sea fishing, preparation, freezing, processing or storage of seafood products;
  3. mining, the industry processing or forming mining products or metals, whether or not they are extracted from the soil of the territory;
  4. research exploitation or storage of any source of energy as well as the refining of hydrocarbons;
  the creation and operation of establishments aimed at the development of tourism and crafts; the creation, operation of electrical, electronic, chemical and naval industries; land, sea or air transport;
  5. port and airport activities;
  the construction, repair and maintenance of maritime transport or fishing vessels;
  6. the manufacture or on-site packaging of consumer products or goods;
  7. banking or credit activities likely to promote new investments as well as warrantage activities (warehousing credit);
  8. consultancy services, engineering, computer data processing, telematic database server center.
  
  
  2. The Free Zone Regime
  
  
  2.1. Free zone companies
  
  With the creation of the Free Zone, two new categories of legal persons under Djiboutian private law were established in the Republic of Djibouti:
  
  the sole proprietorship with limited liability of Zone Franche also called Free Zone Establishment and bearing the English acronym FZE;
  the Free Zone Limited Liability Company named; also Free Zone Compagnie and bearing the English acronym FZCO.
  They are governed by the Law on the Code of Free Zones, the Free Zone Regulations and by the provisions of Law No. 103/AN/04/5emeL on free zone commercial companies.
  

2.2. The Tax Regime in the Free Zone

Companies and individual operators operating in the free zone are not subject to any direct or indirect tax or taxation, including income tax, except in terms of VAT where free zone entities are subject to the provisions of the general code of taxes.

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