Somalia taxes resident persons on worldwide income and non-residents on Somalia-source income under the Income Tax Act 2025 (ITA 2025, effective May 11, 2025), administered under a tiered corporate structure: USD 150 flat for annual sales under USD 10,000, 1.5% of sales between USD 10,000 and USD 50,000, and 15% of taxable profit above USD 50,000, while non-resident corporations pay a flat 18%.
The tax year is the calendar year, 1 January to 31 December, per Income Tax Regulation (No. 0141, 2025); salaried employers withhold personal income tax monthly and remit by the 15th of the following month, consistent with a recently overhauled (May 2025) tax administration framework still developing procedurally in some respects.
A flat USD 150 for annual sales under USD 10,000; 1.5% of sales between USD 10,000 and USD 50,000; and 15% of taxable profit for sales above USD 50,000 (Large and Medium Taxpayers). Non-resident corporations pay a flat 18% rate. Tax is charged on taxable profit (sales less legitimate business expenses), not on gross sales, except at the lowest tier.
0% on the first USD 1,200, 6% on the next band up to USD 6,000, 12% up to USD 18,000, and 18% on income above USD 18,000. Non-resident individuals pay a flat 18% rate; resident individuals under age 18 pay a flat 20% rate. Employers withhold PIT monthly from salaried employees using equivalent monthly bands (0% up to USD 100/month, 6% up to USD 500, 12% up to USD 1,500, 18% above that), and remit by the 15th of the following month - no deductions are allowed against salaried employment income.
5% sales tax (reduced from a prior 10% rate around 2025-2026 per Ministry of Finance and Planning data).
Per Article 77 of the ITA 2025, an individual is resident in Somalia for a year of assessment if any of the following applies: they have a permanent home in Somalia; they are a Somali citizen (unless they have a permanent home outside Somalia available for the whole year); they are present in Somalia for 183 days or more (aggregate) in any 12-month period commencing or ending during the year; or they are a Federal or State Government employee posted abroad. A corporation is resident if incorporated, formed, or established in Somalia, or if its effective management is in Somalia at any time during the year. Resident persons are taxed on worldwide income from employment, business, and investment; non-residents are taxed on Somalia-source income, plus the worldwide income of any Somali permanent establishment (a fixed place of business maintained for 90+ days in any 12-month period).
A non-resident is taxed on Somalia-source income plus the worldwide income of any Somalia permanent establishment, defined under the ITA 2025 as a fixed place of business maintained for 90 days or more in any 12-month period, per Article 77 described elsewhere on this page; a non-resident corporation with such a PE is taxed at the flat 18% non-resident corporate rate on the income attributable to that establishment.
No CFC-style attribution provision exists in Somalia's Income Tax Act 2025 (ITA 2025), which superseded the prior Revenue Act 2016. Consistent with the finding already confirmed elsewhere on this page: Somalia's tax base is built around a small number of enumerated levies (rental income tax, goods and services tax, payroll tax, non-resident withholding tax, road tax, business profit tax, and capital gains tax) rather than a broader international anti-avoidance framework, with no CFC-style mechanism among them.
No statutory thin capitalization ratio is identified in the ITA 2025 provisions reviewed.
Somalia classifies entities under the ITA 2025 rather than offering an elective check-the-box system, and no ATAD2-style anti-hybrid mismatch regime addressing double-deduction or deduction-without-inclusion outcomes has been identified, consistent with no CFC-style attribution provision existing in Somalia's tax legislation, as described elsewhere on this page; Somalia's tax base is built around a small number of enumerated levies rather than a broader international anti-avoidance framework.
No domestic FBAR-equivalent regime requires Somali residents to separately disclose foreign financial accounts, and Somalia is not currently a CRS participating jurisdiction, so it does not automatically exchange financial account information with foreign tax authorities under the OECD's Common Reporting Standard. US persons remain independently subject to FinCEN Form 114 (FBAR) and potentially Form 8938 regardless of Somalia's own rules.
A dedicated participation exemption regime for dividends or capital gains from a qualifying subsidiary is not identified in the ITA 2025 provisions reviewed; confirm current treatment directly with Somalia's Ministry of Finance and Planning before relying on this page.
No comprehensive double tax agreement network was identified for Somalia, including after checking the Ministry of Finance Income Tax Manual directly, which does not reference any treaty network, as described elsewhere on this page; given the very recent (May 2025) overhaul of the domestic tax system under the ITA 2025, this is a genuinely evolving area of Somali tax policy, and a foreign tax credit mechanism should be confirmed directly with Somalia's tax administration rather than assumed available.
No comprehensive double tax agreement network was identified for Somalia, including after checking the Ministry of Finance Income Tax Manual directly, which does not reference any treaty network. Given the very recent (May 2025) overhaul of the domestic tax system under the ITA 2025, this is a genuinely evolving area of Somali tax policy rather than a settled zero - treat it as likely to develop further.