Djibouti Employer of Record & Payroll
What is the main language spoken in Djibouti:
The 2 official languages in Djibouti are Arabic and French, but being a multilingual country most of the population speak Afar [±25%] and Somali [±45%]. Both of the latter languages belong to the larger Afro-Asiatic family.
English is generally spoken in education, politics and business – e.g. in tourism by hoteliers, taxi drivers and traders.
What type of employment contracts can you offer in Djibouti:
- Fixed Term
- Indefinite term
- Be in writing
- Be in the official local language and the local currency
- Include salary/compensation, benefits and termination requirements
- Have specific working terms and conditions
- Can be eligible for organizational perks and/or other benefits
- Tend to be more focused [as only one employer] and familiar with the specific business – due to e.g. ongoing company training etc.
- Probationary period is 3 months [maximum] for indefinite contracts
- Probationary period is 2 months [maximum] for fixed-term contracts
- Probationary period/s are governed by certain pre-conditions in Djibouti
- Termination during the probationary period/s generally doesn’t require notice or compensation
WHAT INCOME IS TAXABLE IN Djibouti:
Any income earned in the form of cash, wages, salary, overtime, leave pay or payment in lieu of leave, commissions, gratuity, bonus, or any amount that has benefited the employee. All income will be taxed in accordance with the law and the final payroll issued monthly.
What income is exempt from taxes in Djibouti:
Since 1949 Djibouti has been operating a free-port – ‘Djibouti Free-zone’. Apart from other incentives, foreign companies domiciled in the free-port can receive a five to ten-year tax exemption – subject to certain conditions.
For individuals: Any income earned in the form of cash, wages, salary, overtime, leave pay or payment in lieu of leave, commissions, gratuity, bonus, or any amount that has benefited the employee is taxable i.e. not exempt from taxes.
Standard working hours: Number Overtime to be paid?
- 8 hours per day and 48 hours per week for most employees.
- Longer working hours may apply to certain industries.
- Any work hours beyond the standard working hours are considered overtime.
- Overtime pay is typically 150% of the employee’s regular hourly rate for the first 2 hours of overtime worked, and 200% of the regular hourly rate for any additional hours worked beyond that.
- Overtime work should be voluntary, and employees have the right to refuse to work overtime if they choose to do so.
- Employers are required to keep accurate records of overtime worked, including the number of hours worked and the amount of overtime pay due.
Mandatory contributions?
Employee
| Contribution Type | Contribution Rate | Threshold |
|---|---|---|
|
Social Security Fund (CNaPS) |
6% |
None |
|
National Health Insurance Fund (CNAM) |
3% |
None |
|
National Pension Fund (CNAPS) |
1% |
None |
Employer
| Contribution Type | Contribution Rate | Threshold |
|---|---|---|
|
Social Security (CNaPS) |
6% |
None |
|
National Health Insurance (CNAM) |
3% |
None |
|
National Employment and Vocational Training Fund (FNEF) |
1% |
None |
Social
| Contribution Type | Employers | Employees |
|---|---|---|
|
Social Security (CNaPS) |
6% |
6% |
|
National Health Insurance (CNAM) |
3% |
3% |
|
National Employment and Vocational Training Fund (FNEF) |
1% |
N/A |
What is the Maternity and Paternity policy within Djibouti:
- Entitled to 14 weeks of paid maternity leave. Eight weeks are to be taken before the birth and six after.
- Immediately after delivery or miscarriage entitled to 3 working days leave from work.
What type of leave is allowed in Djibouti
Annual leave
Employees in Djibouti are entitled to annual leave after one year of employment. This annual leave accrues at the rate of 2 1⁄2 days per month from the first day the employee commences employment.
Sick Leave
Employees are entitled to 29 days of sick leave paid at 50% of the basic rate by social security. For any additional day beyond the 29 days, the employee receives 75% of the basic salary.
Do I need to pay a mandatory bonus annually OR is it discretionary in Djibouti:
Bonuses are not mandatory in Djibouti. If an employer decides to pay bonus/es it is at their discretion and usually based on performance and/or length of service.
What Gratuity / Severance payments do you need to provide for Djibouti:
- Employers must provide severance payments to employees when their employment is terminated.
- The amount of severance pay depends on the employee’s length of service:
- Less than one year: one month’s salary.
- One to five years: two months’ salary.
- More than five years: three months’ salary.
- Resignation by the employee does not typically require severance payment, unless it is a case of constructive dismissal.
CAN YOU GIVE FRINGE BENEFITS IN Djibouti:
Yes you can but keep in mind that Fringe Benefits will be subject to employee PAYE tax. Only benefits that cannot be converted to cash will not be subject to tax. If the employer covers some of the employees expenses i.e. mobile phone then it must be subject to PAYE tax and either the employer will cover this portion for the employee or the employee will bear the PAYE tax.
Mandatory Probation period of Djibouti:
There is no mandatory probation period in Djibouti, and it is typically agreed upon in the employment contract between one to six months, extendable by mutual agreement, with the ability for both parties to terminate the contract without notice or compensation during this time.
What are the Corporate and VAT / Sales tax rates in Djibouti:
Corporate Tax Rates: 25% [in general]
VAT / Sales Tax Rates: 10% [on most goods and services]
Public Holidays in Djibouti:
- January 1 - New Year's Day
- February 18 - Al Isra et Al Mirague
- April 22 - Eid ul-Fitr
- April 23 - Eid ul-Fitr Holiday
- May 01 - Labour Day
- June 27 - Independence Day
- June 29 - Eid Al Adha
- June 30 - Eid Al Adha Holiday
- July 19 - Awal Muharram
- September 27 - Prophet Mohammed's Birthday
- December 25 - Christmas Day
What Industries we support in Djibouti:
- Non-Governmental Organization’s (NGO) / Non- profit
- Engineering & Construction
- Government / Development Agencies
- Oil & Gas
- FMCG & Manufacturing
- Private Equality, Finance, Insurance & Banking
- Mining
- Agriculture
What Double Tax Treaties are in place in Djibouti:
Djibouti has concluded agreements on protecting investment with the Organization of Petroleum-Exporting Countries (OPEC) and on avoiding double taxation with China (2004) and Egypt (1998). The agreements with Malaysia, Switzerland and Yemen have not yet been ratified.
The information provided above is for an “informative decision” and may change at any given time without prior notice. We always suggest speaking to one of our Sales Consultants before engaging in country.
