Mixed legal system based primarily on the French Civil Code (as it existed in 1977), Islamic Religious Law (in matters of Family Law and Successions), and Customary Law.

Country overviewDjibouti flag




SE Ismael Omar Guelleh

Capital city

Djibouti – 942,333

Other major cities

Ali Sabieh – Tadjourah – Obock

Major industries

Construction and agricultural processing and shipping


Djibouti Franc


French (official), Arabic (official), Somali and Afar

Major religions

Muslim (94%), Christian (6%)

Legal information

Capital markets

No stock exchange

Current number of listed companies

There are no listed companies in Djibouti Companies Register as there is no stock exchange.

Listing rules


Regulatory body or bodies

ODPIC is in charge of Individual Merchants and Companies Registers.

Principal legislation

Commerce Code of 1 August 2012 on all types of companies.

Corporate Governance Code

Commerce Code of 1 August 2012 on all types of companies.

Takeover / merger regulations

Commerce Code of 1 August 2012 on all types of companies.

Public offers / disclosure regulation

Article  L301.1 to L347.1 of the new Commerce Code of 1 August 2012 on all types of companies.

Competition regulation

Law No. 28/AN/08/6e L dated 21 December 2008 on fair competition and consumer protection, and Decree No. 2011-030/PR/MCI dated 21 February 2011 apply.

Articles 2291-1 to 2303-15 Commercial Code 1 August 2012

Impact of regulatory regime on business
Mergers and takeovers

No limitation of mergers and acquisitions except if it is creating an abuse of dominant position.


The scope entails freedom of prices, prohibition of cartels or abuse of a dominant position, or anti-competition actions, and transparency of the market.

Corruption / transparency
Corruption Perception Index score for 2017 


Corruption Perception Index rank worldwide for 2017


Signatories to United Nations Convention Against Corruption (UNCAC)?


(UNCAC) ratified?

Yes, by Law n°96/AN/86/5eL dated 8 February 2005

Signatories to the African Union Convention on Preventing and Combatting Corruption?


Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?




Effectiveness of the court system

In practice, the length of the process depends on several factors such as: the complexity of the case; the degree of urgency; and the procedural motions raised by the opposing party. Decisions in urgent interlocutory petitions may be obtained between one day and one month after applying to the court, depending on how urgent the matter is.

For an ordinary case, proceedings last an average of one year in the first isntance, one year on appeal, and from one to three years before the Supreme Court. There are several types of interim remedies available to preserve the parties' interests, pending judgment, for example:

  • protective measures. In urgent circumstances where the collection of a debt is in jeopardy, the Presiding Judge of the Court of First Instance may authorise any creditor with a demonstrated claim that appears to be justified in principle to make an interim attachment or to register an interim charge over the debtor's business or its real property. Creditors present their petitions together with proof of their claim to obtain an order from the Presiding Judge of the Court of First Instance. They then have the interim measure implemented and lastly, have the order served on the debtor together with a writ to obtain validation of the arrest on the merits;
  • garnishment. Any creditor may request an authorisation from the court to have sums or property belonging to debtor, but in between the hands of a third party and the debtor, garnished to secure definite claim. If the creditor holds an enforceable instrument (judgment, notarised deed), the enforcement can be implemented directly through a bailiff. If the creditor does not hold an enforceable instrument, a petition must be presented to the Presiding Judge of the Court of First Instance and an authorising order obtained (on an ex parte basis). Then the creditor must serve the order to the debtor together with a writ on the merits and for validation of the arrest;
  • urgent petitions. In all urgent matters or where interim decisions on problems with enforcing an enforceable title or judgment are needed, the claimant can have the other party summonsed before the interlocutory judge without conforming to the usual time frame for a summons, on a date other than the ordinary hearing dates of the Court of First Instance.

Judges in urgent interlocutory hearings can, amongst other things, order an expert review, bar certain manifestly unlawful acts subject to a daily penalty, evict a tenant, order a sequestration, and appoint a provisional or Special Receiver for a company.


The laws covering arbitration are from 3 different sources.

  • The International Code of Arbitration of 13 February 1984 (Code): which only governs arbitration involving international commercial interests. This Code is still in effect but has never been implemented in practice because the institutions referred to in the Code have not been established (e.g. the Arbitration Appeals Commission and the International Centre for Arbitration Services).
  • Articles 1003 to 1028 of the Djibouti Civil Procedure Code: corresponding to the same provisions from the former French Civil Procedure Code, and which apply to all types of arbitration.
  • Articles L2311-1 to L2316-4 of the New Djibouti Commercial Code of 1 August 2012 (NDCC): which apply to any arbitration between merchants (domestic or international) when the seat of arbitration is in the Republic of Djibouti.

The new laws within the NDCC resolves the disadvantages of the Code since there is no reference to an Arbitration Commission, which is replaced with the Presiding Judge of the Djibouti Court of First Instance ruling as an interlocutory judge.

There are no arbitration institutions at the national level. The parties appoint ad hoc arbitrators (e.g. the President of the Port Authority and the President of the Bar etc.).

State courts will decline jurisdiction where the dispute before them is covered by a valid arbitration agreement between the parties, even if the seat of arbitration is not within the territorial jurisdiction of the Djibouti courts. Supreme Court case law is well established along these lines, but occasionally the Court of First Instance and Courts of Appeal refuse to implement arbitration agreements if they are not signed by all parties (e.g. bills of lading).

Enforcement of foreign judgements

Foreign judgements handed down abroad in civil, commercial, employment and administrative matters are only enforceable in Djibouti if they meet the following conditions:

  • the decision was issued by a body that has jurisdiction according to the relevant law for conflicts of jurisdiction that applies in the state where the decision has standing;
  • the decision applies the law applicable to the dispute according to the relevant rules on conflicts of law governing the state where the decision has standing;
  • the parties were duly summonsed, represented, or found to have failed to enter an appearance;
  • the decision does not contain any provisions that are contrary to relevant state's public policy;
  • the decision is res judicata and enforceable under the laws of the state where it was handed down; and
  • there is no "litis pendens" situation before a court in the requisite state where the matter was first referred, or an enforceable decision in the requisite state.

With the exception of issues on personal status, declarations of enforceability must be issued from the Djibouti court and handed down pursuant to an ordinary summons.

In practice, it takes a rather long time to obtain a judgement of enforceability, given the possibility of appeals to the Court of Appeal and to the Supreme Court, and considering the variety of motions that can be raised by defendants (e.g. a request for a judicatum solvi provision).

Perception of the local courts

Djibouti Courts are perceived by local populations and companies as fair. In the Free Zones (a dozen of areas without customers) and for foreign investments, there are generally arbitration clauses.
Free Zones are basically tax free zones (see Free Zones’ Code dated 17 May 2004). There are currently 13 Free Zones.


Supreme Court magistrates are appointed by the president with the advice of the Superior Council of the Magistracy or CSM. It is a 10-member body consisting of 4 judges, 3 members (non parliamentarians and judges) appointed by the president, and 3 appointed by the National Assembly president or speaker. Magistrates appointed for life with retirement at age 65.

The constitutional Council consists of 6 Magistrates, 2 appointed by the president of the republic, 2 by the president of the National Assembly, and 2 by the CSM. Magistrates are appointed for 8-year, non-renewable terms.

Structure of the court system

The courts of ordinary law are structured as a three-tier pyramid:

  • the Djibouti Tribunal de Première Instance (Court of First Instance) issues final judgments for cases involving 200,000 Djiboutian Francs or less
  • the Djibouti Court of Appeal
  • the Djibouti Supreme Court

There are separate divisions at each level of this pyramid for commercial, labour and penal cases.

There are also courts with specific subject matter of jurisdiction, as follows:

  • traditional courts for purely local disputes
  • the Tribunaux Administratif (administrative court)
  • the Tribunaux de Statut Personnel (personal status courts)
  • the Cour Criminelle (criminal court)
Enforcement of arbitral awards

The Republic of Djibouti is a party to the New York Convention, which facilitates the enforcement of foreign arbitral awards. Foreign awards must be submitted to the Court of First Instance for an enforceability decision (which can be appealed all the way to the Supreme Court).

The courts of Djibouti do not review the substance of the dispute and invalidation can be admitted only in the following cases:

  • there is no arbitration agreement or the agreement is invalid;
  • improper arbitrator appointments;
  • failure of the arbitrators to observe their terms of reference;
  • violation of the adversarial principle or rights of defence;
  • awards that conflict with international public policy; or
  • reasons for the arbitration award are not provided (Article L2315-2 of the Djibouti Commercial Code).

For domestic awards handed down in Djibouti, the enforceability decision is issued by the presiding judge of the Court of First Instance ruling on an ex parte petition, provided that:

  • the original arbitration agreement and award (or certified copies thereof) are produced; and
  • the award does not manifestly conflict with a rule of international public policy in the Republic of Djibouti.

The Order that grants the award status as an enforceable decision, or denies such status, may be appealed to the presiding judge of the Court of Appeal within two months of service of such decision. The only grounds for appeal are:

  • there is no arbitration agreement or the agreement is invalid;
  • improper arbitrator appointments;
  • violation of the adversarial principle or rights of defence; or
  • conflicts with international public policy.

An appeal against the Court of Appeal judge's decision (for violations of the law) may be brought to the Supreme Court.

Foreign investments
Foreign investment incentives

The Free Zone is governed by an autonomous legal system.

The applicable laws are: Free Zones Code dated 17 May 2004, Law No. 53/AN/04/5e L and Law No. 103/AN/05/5e L dated 10 April 2005 on Free Zone Commercial Companies.

The main tax incentives provided under the Free Zone Code are as follows:

  • corporate tax exemption for companies, with the duration of this exemption being 50 years from the creation of the free zone, which was established in 2004;
  • exemption from Customs duties, as business activity and/or equipment in the free zone is considered to be outside of Djibouti;
  • possibility to hire more foreign staff, so long as there is a commitment to train national employees and organise an eventual handover; and
  • foreign staff are not required to pay social security contributions, and the firm does not have to pay social security contributions for such staff.
Investment outside the Free Zones of Djibouti

Tax exemptions may be obtained by applying for the benefit of the Investment Code of Djibouti (Law No. 58/94 of 16 October 1994, revised successively by Law No. 143/AN/97 of 3 December 1997, Law No. 23/AN/08 of 13 December 2008 and Law No. 41/AN/08 dated 28 December 2008) (Investment Code).

The Investment Code provides two regimes for tax exemptions, Regime A and Regime B. The distinction between the two regimes is solely based on the scale of investment and the extent of the tax benefits. Investors are entitled to Regime A if they invest more than FD 5,000,000 (USD 28,248) and create a minimum of 15 permanent employments positions in Djibouti. They are entitled to Regime B if they invest more than FD 50,000,000 (USD 282,485).

For an investment of a minimum amount of DJF5,000,000 (~USD28,000), an investor shall benefit from the advantages of Regime A, which are the following tax exemptions:

  • exemption from Domestic Consumption Tax and Import Taxes for the materials necessary to the realization of its investment programs as well as the raw materials imported and used effectively during the first three years.

For a minimum amount investment of DJF50,000,000 (~USD281,000), an investor shall benefit from the advantages of Regime B, which are the following exemptions:

  • exemption from land tax for the construction of buildings during a 7 year period;
  • tax exemption on the professional benefits of licensed activities, during a maximum period of seven years;
  • exemption from Domestic Consumption Tax for raw materials, imported and used during the first fiscal years;
  • the approved investments in accordance with the provisions of the Regime B can be exempted from the tax on building permit.

Protection against the expropriation or other forms of severe infringement of property rights has been put in place in Djibouti by the Constitution of the Republic of Djibouti, promulgated on 15 September 1992, which provides that:

"The right to property is guaranteed by the Constitution. No one shall be deprived of his property except for public necessity and subject to the conditions provided for by law and to the payment of fair and prior compensation."

This principle has been reiterated in the Investment Code and further detailed in Law No. 172/AN/91/2 dated 10 October 1991 on the expropriation for public necessity. This law strictly defines the conditions under which the government is allowed to have recourse to expropriation. The decision of expropriation is subject to a very complex and long procedure supervised by judicial bodies. The amount of compensation is strictly regulated and shall be determined by a special commission. The government may not take possession of the expropriated property before the payment of compensation at least equal to the amount proposed by the commission.

The Djiboutian Government rarely has recourse to the procedure provided by Law No. 172/AN/91/2. In practice, where the state intends to expropriate a private property, it negotiates directly with the owners and the property transfers are generally made on an amicable basis.

Other favourable conditions for investment for all investors (in or out the Free Zone, with or without the benefit of the Investment Code) include:

  • freedom of transfer of money in any currency;
  • no exchange control;
  • FD having a fixed rate of change with USD for more than 50 yeaers (1 USD = 176.87 FD); and
  • not needing to have a local partner or sponsor (except within such limited fields as insurance, security and maritime providers).

Law No. 28/AN/08/6e L dated 21 December 2008 on Protection of Consumers (notably for repression of false advertising).

Law No. 143/AN/85/1e L dated 15 April 1965 on tax to be paid for public advertisements.

Decree No. 2011-0184/PR/M dated 9 October 2011 approving a management contract (lasting 10 years) between Djibouti town and a private company (ACS) for public advertisements.


Law No. 175/AN/07/5e L dated 22 April 2007 on tobacco products labelling and prohibition of advertising.

Application decree No.'s 2008-0183/PR/MS, 2008-491/PR/MS and 2008-492/PR/MS dated 24 July 2008 offer further legislative guidance.


Decree No. 2012-225/PR/MDC dated 17 October 2012 on labelling of foodstuffs.

Law No. 89/AN/10/6e L dated 17 August 2010 prohibiting any form of advertising for substitutes to Mother’s milk.


Decree No. 2012-225/PR/MDC dated 17 October 2012 on labelling of foodstuffs.

Law No. 89/AN/10/6e L dated 17 August 2010 prohibiting any form of advertising for substitutes to Mother’s milk.


Law No. 2/AN/92/2e L dated 15 September 1992 on Communication Freedom (notably used for regulating placarding).


No sale or Advertising for Alcohol in restricted area.

Payroll tax and social security

Employer has to withhold at source taxes on mensual salaries (including benefits in kind) at the following rates:

  • up to FD 30 000 - 0%
  • between FD 30 001 and FD 50 000 - 15%
  • between FD 50 001 and FD 150 000 - 18%
  • between FD 150 001 and FD 600 000 - 20%
  • above FD 600 000 - 30%

Employment income under DJF50,000 is exempt. This tax is deductible from salaries.

Social Security contributions have to be paid for all local and foreign employees working in Djibouti at the rate of 15.7% on salary and benefit in kind (with a ceiling of FD 400,000 per month approximately USD 2,260 and no ceiling for retirement contribution).

Social Security contributions are paid by the employer but 4% is deducted at source from the employees salary.

Value added tax

Value Added Tax (VAT) is applicable on imports and on provisions of services and goods on Djibouti territory at 10% standard rate.

Only companies having a turnover of more than FD 50,000,000 have to bill VAT.

There are numerous VAT exemptions (e.g. bank, insurance, real estate, newspaper, rents of house, medical expenses, education, artists, foundations, alimentary, pharmaceutical and agricultural products, part of water and electricity consumption, importer exempted for public procurement financed from aboard etc.).

0% VAT is applicable to export and international transport transactions(and other services in connection).

Stamp duty

Stamp duty is FD 1000 per page.

Registration duty is applicable (unless exempted) for the following and at the following rates:

  • incorporation of a company: from 280 USD to 2.800 USD, depending on the amount of the capital
  • mortgages and pledges: 2%
  • construction permit and anti-seismic control: 2.5%
  • leases: 2% (0% for houses)
Personal income tax

See the graduated scale mentioned in Payroll tax for employees.

For individuals having a profitable activity (commercial or non-commercial), they have to pay a professional tax of 25% on their net income (accrued or derived from Djibouti source).

No income tax is charged on world revenue.


25% for Resident Companies.

10% withholding tax is payable at source for a non-resident company.

Note: The following payments are exempt from WHT on royalties:

  • remuneration for professional training;
  • royalty payments by companies licensed under the Free Zone and the Investment Code;
  • fees for financial and insurance operations paid by resident companies specialising in financial and insurance activities.

No tax on interest (except if it is a part of the income of a company, taxable at 25%) for a resident company.

No tax on interests for non-resident company.

Real property tax

Property tax is payable by owners on existing buildings. It is payable each year between 10% and 25% of the rental value.

Transfer of land is taxed at 10%.

Transfer pricing

There are no specific transfer pricing rules in Djibouti. However, the tax authority can adjust the pricing of transactions between related parties.

Technical service fees

No tax on Technical Service Fees paid to a resident company (except if it is a part of the income of a company, it is taxable at 25%).


Losses can be carried forward for 3 years from the end of the loss-making accounting period. 

Exchange control


Capital deductions
Capital gains tax

Gains and losses are included in income tax and taxed at 25%.

Gains on land and buildings are payable on increase in value in case of sale at a rate of 5%.

Corporation Tax

Resident companies: 25% on benefit on Djibouti income only (or 1% tax on turnover).

Non-resident entities: Djiboutian entity has to withhold at source 10% on the turnover paid to non-resident entities but there are several exemptions (transport expenses, repair or rent, installation expenses, dividends, formation expenses, financial or insurance operators and services linked with operators with foreign clients).

Export processing zone

No data provided


5% tax on dividends

Thin cap regulations

There are no formal specific or general thin capitalisation (GTC) regulations in Djibouti. However, under article 30-3 of the GTC, interest paid by a company to its shareholders is deductible up to an amount computed on the basis of the average annual central bank interest rate increased by 1 percentage point. Interest paid to a majority shareholder of a joint-stock company or a limited liability company is deductible only if the loan does not exceed the capital of the company.