The Gambia’s 2025 national budget introduces a series of fiscal revenue reforms designed to modernize the country’s tax system, which is to expand the tax base and ensure equity in its fiscal policies. This detailed analysis explores key changes, including revised personal income tax thresholds, expanded withholding taxes, rental income tax, and groundbreaking measures targeting the digital economy and non-resident suppliers. These measures mark a significant shift or improvement from the provisions under the Income and Value Added Tax (IVAT) Act of 2012 and build on the 2025 fiscal framework.

The government projects a 23% increase in tax revenue in 2025 compared to 2024, with enhanced enforcement and compliance measures playing a central role. These changes are expected to improve fairness, streamline tax administration, and reduce the tax burden on low-income earners, paving the way for fiscal sustainability and economic growth. The changes are effective from 1 January 2025.

Summary of Key Fiscal Revenue Measures in Gambia’s 2025 Budget

1. Withholding Taxes

The 2025 budget broadens the scope of withholding taxes:

If an entity retains the services of a supplier, consultant, contractor, and subcontractor in carrying out works or supplies labour or goods, to provide services, shall withhold tax on gross payments using the following rates.

• 10% on payments to non-resident contractors.
• 5% on payments to resident contractors for public works contracted with the Government of The Gambia
• 8% on payments for other goods and services outside of the two mentioned above.

Comparison:

• The prior application had primarily focused on narrower withholding tax categories, such as professional services and supply of certain goods and services as per Section 89, sub-section 3 of the IVAT Act 2012, which was predominantly used for the application on local suppliers or contractors at the rates of 10%.

Impact: These measures improve compliance, particularly for cross-border transactions, while ensuring that contractors and suppliers contribute their fair share, and it also eases the application of non-resident contractors.

2. Personal Income Tax

The personal income tax structure has been revised to increase the personal allowance or tax-free amount to reduce the tax burden on low-income earners:

• The tax-free threshold has been raised to D36,000 per annum (from D24,000), a whopping 50%.
• The threshold changes have increased personal allowance or tax-free amount per month by D1,000 and the increase in the bands gives the high earners to be progressively taxed with the higher rates.
• Progressive rates from 5% to 25% remain unchanged but apply to higher income brackets.

2025 PAYE TAX THRESHOLD

Comparison:

A person earning D10,000 per month in 2024 will see a tax savings of D250 per month (2.5%) in 2025 based on the revised free threshold. On the other hand, such savings or increased thresholds also mean reduced PAYE tax revenue for the government.

3. Rental Income Tax

A formalized system for taxing rental income for government departments or agencies, local authorities, diplomatic missions, international organizations, established institutions, or persons categorized as large taxpayers occupying a property used for either commercial or residential purposes shall withhold tax. These entities shall withhold tax on any rental payment to landlords as foll

• 15% on commercial-use properties
• 8% for residential-use properties

Comparison:

• The 2012 IVAT Act taxed rental income but lacked a structured withholding tax mechanism by tenants.

Impact: This reform captures a significant portion of previously uncollected revenue while formalizing the rental property market, especially for government institutions and international organizations, etc.

4. Taxation of Digital and Non-Resident Suppliers

For the first time, non-resident suppliers of goods and services in the digital space are required to:

• Register for tax in The Gambia, which includes having a Tax Identification Number (TIN).
• Include taxes in their invoices.
• Comply with local tax laws.
• Non-resident Suppliers may appoint a representative to ensure compliance

Comparison:

• The 2012 IVAT Act did not account for digital services or cross-border transactions.

Impact: By targeting the growing digital economy and cross-border services, this measure ensures that international businesses operating in The Gambia contribute to the local economy.

However, as this is a newly introduced reform, it will be intriguing to observe how the Gambia Revenue Authority enforces and monitors the taxation of digital services. Global corporations such as Facebook, Google, Shein, QuickBooks, Temu, AliExpress, and Microsoft, among others, are actively providing services to Gambian consumers and businesses online. The successful implementation of this measure will depend on the GRA’s ability to adapt regulatory frameworks, ensure compliance, and address the unique challenges posed by cross-border digital transactions.

5. Air Ticket Sales:

A withholding tax of 1% is applicable on all air ticket purchases.

6. Corporate Income Tax Deduction

Companies or businesses that invest in youth and sports development will qualify for deductions when calculating corporate income tax on expenses related to sporting activities. This initiative is designed to encourage and promote youth and sports development nationwide.

However, to ensure this benefit is utilized for its intended purpose, it will be essential to establish a clear definition of allowable expenditures and outline the specific documentation or reporting requirements. Such clarity will help prevent misuse and ensure that the incentive effectively supports its goal of fostering sports and youth-related initiatives.

7. Excise and Duty Tax Reforms

• Export duty at D5 per kilo shall be paid on all scrap metals.
• With the approval of the Director of Agriculture and Minister for Finance, animal feed and agricultural equipment shall be exempted from duty if they are used solely for poultry farming and agricultural purposes.
• Central government entities are exempt from paying all taxes and fees on motor vehicle purchases or imports. This exemption does not apply to government agencies and public enterprises.

Conclusion

The above items are not the exhaustive list of the fiscal measures pronounced in the 2025 budget speech. These revenue reforms represent a significant evolution from the Income and Value Added Tax Act of 2012; by addressing inefficiencies, expanding the tax base, and introducing modern digital tools, these measures aim to increase revenue, promote equity, and ensure fiscal sustainability.