CHAD Law and Practice Contributed by: Claudy Monja and Felana Ranaivoson, John W Ffooks & Co
ery of a bill of sale in relation to an aircraft or engine registered in Chad. 1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale The transfer of title to an aircraft while the aircraft is located in Chad is subject to the payment of fees of XAF5,000 (approximately USD9). The authors are not aware of any taxes payable for executing and/or delivering a bill of sale or consum - mating the sale of the ownership interest in an entity that owns an aircraft or engine, including where title to such aircraft or engine is transferred while it is (i) over international waters; or (ii) in transit to/from Chad. The authors are not aware of any types of operating/ wet/finance leases or leases concerning only engines or parts that are not permissible nor recognised. 2.1.2 Application of Foreign Laws It is permitted for a lease involving a domestic party or an asset in Chad to be governed by a foreign law. 2.1.3 Restrictions Concerning Payments in US Dollars As long as it is established in the lease agreement, there are no material restrictions imposed on domestic lessees making rent payments to foreign lessors in US dollars. 2.1.4 Exchange Controls The Ministry of Finance is in charge of foreign exchange control approval in Chad. All Chadian banks must report all the foreign exchange operations of their cli - ents (including the lessee) to the Ministry of Finance. In practice, a bank will require from its client all infor - mation the bank deems relevant for a specific foreign exchange operation. Upon receipt of this information from its client, the bank will liaise with the Ministry of Finance to request an authorisation (if necessary) or to file a declaration. However, the payment of rents is normally considered as current operations ( opera- 2. Aircraft and Engine Leasing 2.1 Overview 2.1.1 Non-Permissible Leases
tions courantes ) as opposed to capital transactions ( transactions en capital ), and therefore no approval should be required. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease The leasing of an aircraft to an entity in Chad is sub - ject to the payment of a registration tax of 3% of the annual value of the lease. The administrative fees of registration of the aircraft lease with the ADAC should lead to the payment of a fee amounting to XAF50,000 (approximately USD89). 2.1.6 Licensing/Qualification of Lessors A lessor does not need to be licensed or otherwise qualified in Chad to do business with a domestic les - see. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law There is no requirement for mandatory terms to be in a lease governed by English or New York law. That said, any lease registered with the ADAC should at least contain the following information: • identification of the lessor and the lessee; • the signature of the lessor and the lessee or their legal representatives; • identification of the aircraft (ie, brand and model, registration number and serial number); and • effective date and term of the lease. 2.2.2 Tax and Withholding Gross-Up Provisions Any payment under the lease is subject to an 18% withholding tax. Tax “gross-up” is a common practice when it comes to the lease of an aircraft and the authors do not fore - see any reason why a tax gross-up clause would not be effective. 2.2.3 Parts Installed or Replaced After a Lease’s Execution The parties can agree in their contract that the lease may cover parts that are installed or replaced on an aircraft or engine after its execution. For the sake of
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