• For a new commercial enterprise, the planned investment must entail the creation of a new activity and not be the result of any legal amendments to an entity that has already used assets for a targeted activity and whose acquisition is included in the program that is being submitted for approval. The fiscal benefits are granted for the investment implementation and operations phases. During the implementation phase, for three years the new company will be granted customs benefits that include exemption from import duties on equipment and materials that are not produced or manufactured in Senegal and that are specifically allocated to the production or the operations of the approved program. The terms and conditions for tax exemptions for spare parts and passenger vehicles, if they are part of the approved program, and commercial vehicles will be set out in a decree. During the operational phase, companies that make investments – through company creation or expansion, – in eligible sectors in an amount equal to or higher than 100 million FCFA are eligible for tax credits equal to 40% of the investments, but not to exceed 50% of the new company’s taxable profits. Tax credits can be spread over 5 financial years starting with the year following the termination of the investment program or for 10 financial years for investments that exceed 250 million FCFA. These regimes are especially applicable to “remote services” companies, (mainly functional or real-time services, or software programs) that can be provided, used or consumed outside of the immediate production area, e.g. new companies that are eligible for the Investment Code benefits are exempt from the Contribution forfaitaire à la charge des employeurs (CFCE Flat-rate employer contribution) for 5 years. If the approved investment program creates more than 200 jobs, or if at least 90% of the jobs created are located outside the Dakar region, this exemption is extended to 8 years.
Companies that carry out investments extension programs are also exempt from the CFCE for a period of 5 years. If the approved investment program creates more than 100 additional jobs, or if at least 90% of the jobs created are located outside the Dakar region, this exemption is extended to 8 years.
AN INCENTIVIZING FISCAL SYSTEM FOR COMMERCIAL ENTERPRISES IN THE FREE ZONE
The status of Entreprise franche d’exportation (Export Free Enterprise) is granted to industrial, agricultural or remote-services enterprises established in the Senegalese customs zone if all of the goods or services they produce are for the export market. This status is also granted to enterprises that can demonstrate an export potential of at least 80% of their turnover. Such firms are exempt from: • Income tax on securities (IRVM Impôt sur le Revenu des Valeurs Mobilières) levied by the company on dividends paid; • Any tax based on the salaries paid by the company out of company funds, in particular the employers’ flat-rate contribution; • Registration and stamp duties, in particular those levied at the time of the company’s creation or the amendment of the company’s Articles of Association; • Contribution économique locale (CEL) (Local Economic Contribution i.e. property contribution and value added contribution, formerly business license tax), land taxes on built and non-built real estate, and license taxes. Lastly, for these companies, taxes are levied on 50% of the taxable profits, in other words, the corporate income tax rate is 15%. Financial transfers abroad are more strictly controlled as part of the fight against tax evasion. Payment by Senegalese companies to companies located outside of Senegal are subject to a 10% withholding tax on dividends, 16% on interest payments and 20% on fees and payments for services, except if the rates are capped in a tax treaty.
Page 68 | doingbusinessin Senegal | edition 2021
