Côte D'Ivoire VAT, GST, and Sales Tax Guide

Côte D’Ivoire (Ivory Coast)

Abidjan GMT

EY

5, Avenue Marchand, Plateau Abidjan, Ivory Coast

Indirect tax contacts

Cathérine Niamke +225 27 20 30 60 50 catherine.belinda@ci.ey.com

Eric Nguessan +225 27 20 30 60 50 eric.nguessan@ci.ey.com

Louis marc Allali +225 27 20 30 60 50 louis-marc.allali@ci.ey.com

A. At a glance

Name of the tax

Local name

Value-added tax (VAT)

Taxe sur la valeur ajoutée (TVA)

Date introduced 1960

Trading bloc membership West African Economic and Monetary Union (WAEMU)

Economic Community of West African States (ECOWAS)

Administered by Ivory Coast Tax Administration/Direction Générale des impôts (DGI) (www.dgi.gouv.ci)

VAT rates

Standard 18% Reduced 9%

Other Zero-rated (0%) and exempt

VAT number format

Tax ID number -7 digits, 1 letter

Monthly (normal tax regime); Quarterly (simplified tax regime) Thresholds

VAT return periods

Registration XOF200 million

Recovery of VAT by non-established businesses No

B. Scope of the tax

VAT applies to the following transactions:

• The supply of goods or services made in Ivory Coast (IC) by a taxable person

• The importation of goods.

For VAT purposes, the territory of IC includes land territory, continental shelf, territorial waters and the exclusive economic zone.

C. Who is liable

A taxable person is any business entity or individual that makes taxable supplies of goods or services or importation of goods in the course of a business in IC.

Individuals or entities are only allowed to register for VAT (and subsequently charge VAT on their supplies) when their annual turnover of any tax included is more than XOF200 million.

Exemption from registration. The VAT law in IC does not contain any provision for exemption from registration.

Voluntary registration. According to Section 348 of the General Tax Code (GTC), it is possible for a nontaxable business to register for VAT on a voluntary basis.

Voluntary registration only applies to the following types of taxable persons:

• Producers of coconut, plants and flowers, bananas and pineapples, when their annual all tax turnover exceeds XOF100 million

• Owners of bare buildings for commercial or industrial use

• Public transport companies for persons or goods when they are subject to normal tax regime

Voluntary registration is irrevocable and takes effect from the first day of the month following the day in which it is performed.

Group registration. Group VAT registration is not allowed in IC.

Non-established businesses. A “non-established business” is a business that has no permanent establishment in the territory of IC. When a non-established business conducts taxable operations in IC, these operations are treated as taxable thereon. The tax is paid by the representative, who acting on behalf of the nonresident entity or by the purchaser or beneficiary of the service, is solidly responsible for the payment.

Tax representatives. As mentioned above, non-established businesses should nominate a tax representative for VAT purposes in IC. In case of default (nonpayment of VAT due within the legal deadline), the beneficiary of the services and the non-established business are jointly liable for the payment of the VAT due.

Reverse charge. The reverse-charge mechanism is applicable to the following:

• Whenever a non-established entity fails to nominate a VAT representative

• When a taxable person acquires any provision of services from non-established entities

Domestic reverse charge. There are no domestic reverse charges in IC.

Digital economy. Any taxable person who supplies goods or services digitally (i.e., via the internet) to another taxable person (business-to-business (B2B)) or ordinary consumer (business-toconsumer (B2C)) is required to issue a standardized electronic invoice. However, at the time of preparing this chapter, in practice, electronic invoicing is not yet allowed, as the decree that explains the process and the conditions has not yet been published.

Nonresidents that provide electronically supplied services don’t need to register for VAT in IC. In IC, the VAT relating to services provided by a nonresident is paid by the beneficiary of the services (see the Non-established businesses subsection above).

There are no other specific e-commerce rules for imported goods in IC.

Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in IC.

Registration procedures. All IC businesses or foreign entities that have a head office or other establishment in IC must be registered before starting their activities. The submission should be made to the head of the tax authorities.

Deregistration. There is no procedure for VAT deregistration.

Changes to VAT registration details. When there is a change in a taxable person’s VAT registration details, the taxable person must inform tax administration within 10 days following the change, by submitting a new certificate of VAT registration to the tax authorities, with the updated details.

D. Rates

The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.

The VAT rates are:

• Standard rate: 18%

• Reduced rate: 9%

• Zero-rate: 0%

The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for a reduced rate, the zero rate or an exemption.

Examples of goods and services taxable at 0%

• Exports of goods and services, such as: Services provided for the direct needs of maritime commercial vessels, vessels used for industrial activity on the high seas, and rescue and assistance vessels at sea Sales operations of gear and fishing net, as well as the search of all items and products intended for boats engaged in professional maritime fishing

Examples of goods and services taxable at 9%

• Milk (excluding yogurts and any other dairy products)

• Infant milk and composite food preparations intended for infants

• 100% durum semolina-based pasta

• Solar energy production equipment

• Petroleum products

Examples of exempt supplies of goods and services

• Book sales and book-making work

• Sales of newspapers and periodicals

• Sales of medicines and pharmaceuticals, as well as materials and petrochemicals

• Sales of natural food products for consumption in IC, with the exception of luxury rice and meat imported outside ECOWAS

• Teaching activity excluding incidental operations such as sales of goods, housing supplies and food in boarding schools

• Sales of bread, cereal flours and cereals for the manufacture of these flours

• Fish freezing operations

Option to tax for exempt supplies. The option to tax exempt supplies is not available in IC.

E. Time of supply

The time when VAT becomes due is called the “time of supply.” According to the Ivorian Tax Code, the tax requirement varies depending on whether it is a supply of goods or services. The basic time of supply for goods is when goods are delivered. The basic time of supply for ser vices is when the price of services was fully or partially settled.

Deposits and prepayments. The time of supply rule for deposits and prepayments varies for sup plies of goods and services. For supplies of goods, the time of supply for deposits and advanced payments is when the goods are delivered. For services, the time of supply is the date on which the price or a part of the price is paid to the service provider.

Continuous supplies of services. The time of supply for continuous supplies of services based on agreements foreseeing successive payments is when the price or a part of the price is paid to the service provider.

Goods sent on approval for sale or return. The time of supply for supplies of goods sent on approv al for sale or return is when the goods are delivered. If the goods are returned to the seller or not sold, the seller can record a provision or debit as an expense.

Reverse-charge services. The time of supply for supplies of reverse-charge services is when the price or part of price are paid.

Leased assets. Since leasing agreements are also considered a continuous supply of services, the time of supply occurs at the time of each payment.

Imported goods. The time of supply for the importation of goods is the moment at which the goods enter customs.

F. Recovery of VAT by taxable persons

A taxable person may recover input tax incurred with the acquisition of goods and services deemed indispensable for the maintenance of the business. A taxable person generally recovers input tax by deducting it from output tax charged on the supplies of goods or services carried out, as well as tax paid on the import of goods.

Input tax includes tax charged on goods and services supplied, tax paid on import of goods and tax self-assessed on reverse-charge services.

To deduct input tax, goods and services must meet the following conditions:

• Be acquired for the needs of the company

• Is subject to VAT on all or only part of their transactions

• Borne VAT from the supplier or import

• Not be excluded from the right to deduction

• The VAT deductible must be on a supporting document (it can be an invoice, if it is a purchase or service; a customs document, if it is an import)

• VAT must be deducted within 12 months (this period begins to run from the billing date)

• VAT deductible must be mentioned on the statements of deductible taxes

• The time limit for a taxable person to reclaim input tax in IC is three years. The reclaiming of input tax from a previous period can be requested over the last three years, plus the year of submission of the request.

Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for taxable purposes (for example, goods acquired for private use or services used for making exempt supplies).

Examples of items for which input tax is nondeductible

• Buildings other than:

Buildings and premises for industrial and similar use

Administrative and commercial buildings

• Vehicles other than: Internal means of handling, special vehicles

Touring vehicles with a horsepower of not more than 12 horsepower and two-wheeled vehi cles whose purchase price does not exceed XOF3 million excluding taxes

Commercial vehicles, regardless of their payload

Vehicles acquired by transport companies that have exercised the option provided for in Article 348 of the General Tax Code and that are used for the public transport of persons and goods

• Furniture objects

• Banking operations carried out in a personal capacity on behalf of the directors of the company

• Services relating to excluded goods: rental, maintenance and repair of equipment, premises, objects or vehicles that are not deductible

• Hotel and restaurant expenses, excluding the supply of meals on oil platforms

• Representation expenses

• Fuel costs for vehicles, other than those used for the public transport of persons and goods by the transport companies that have made the option provided for by Article 148 of the GTC

• Repair and maintenance services of executive vehicles of oil companies, the guarding of their homes, as well as the various services provided to consultants used by oil companies

• Tax on purchases, works or services greater than XOF250,000 and paid in cash

Examples of items for which input tax is deductible (if related to a taxable business use)

If a taxable person meets the definition of a taxable supply, then that supply can have input tax claimed, unless it is specifically stated as a supply that an input cannot be claimed, see above.

Partial exemption. If a taxable person makes both exempt and taxable supplies, it may not recover input tax in full. This situation is referred to as “partial exemption.” The GTC provides one method to recover VAT when a taxable person makes both exempt and taxable supplies. According to this method, VAT is only deductible under a percentage.

Approval from the tax authorities is not required to use the partial exemption standard method in IC. Special methods are not allowed in IC.

Capital goods. No special input tax recovery rules apply to input tax incurred on capital goods. Normal input tax recovery rules apply (as outlined above).

Refunds. If the amount of input tax recoverable in a monthly period exceeds the amount of output tax payable in that period, the taxable person has an input tax credit that will be carried forward to the next taxable periods.

A refund may also be requested in these limited cases:

• Export and related operations

• Discontinuance of business

• Investments by industrials companies subject to VAT

• Lease operations

• Investments by commercial enterprises under the investment approval program

• Acquisitions of investment property or the right to deduction for a value of more than XOF40 mil lion, including all taxes

• Transactions subject to the reduced-rate tax

• Operations granted a conventional exemption, as well as those carried out with members of diplomatic and related missions, in accordance with the rules of reciprocity

Pre-registration costs. Input tax incurred on pre-registration costs in IC is not recoverable.

Bad debts. Output tax accounted for on supplies that do not get paid by the recipient (i.e., bad debts) cannot be recovered in IC. Taxable persons cannot deduct the amount of VAT related to bad debts disclosed in its accounting records, as well as unrecoverable debts resulting from the

enforcement and insolvency process. The tax is neither refundable (if the taxable person has already declared the tax in advance), nor deductible.

Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in IC.

G. Recovery of VAT by non-established businesses

Input tax incurred by non-established businesses in IC is not recoverable.

H. Invoicing

VAT invoices. Taxable persons must generally provide a standardized invoice for all taxable supplies made.

Credit notes. A VAT credit note may not be issued to reduce the VAT charged and claimed on a supply (e.g., return of the goods or a discount). A credit note is usually issued in case of rebates given after the time of supply.

Electronic invoicing. Electronic invoicing is mandatory in IC for certain taxable persons. Any tax able person who supplies goods or services electronically for B2B and B2C supplies is required to issue a standardized electronic invoice. However, at the time of preparing this chapter, in prac tice, electronic invoicing is not yet allowed, as the decree that explains the process and the condi tions has not yet been published. As such, currently no taxable persons in IC may issue invoices electronically.

Simplified VAT invoices. Certain taxable persons may issue nonstandard invoices. These include the following sectors:

• Water, electricity and telephone utility dealers for concession-covered activities, excluding services in areas open to competition

• Multiray sales companies whose retail operations result in the issuance of tickets or cash receipts

• Pharmacies

• Utility dealers responsible for identification

• Airline companies

• Oil companies benefiting from the production-sharing contract provisions

• Service stations only for their fuel sales operations

• Post offices

• Banks

• Insurance companies

• Transportation service dealers for their operations covered by the concession

• Non-utility transport companies that have not opted for their VAT liability

• Taxable persons that do not have professional IC facilities

• Gambling utilities for sales-to-end customers, excluding those made to resellers

• Licensed telephone companies

Self-billing. Taxable persons with turnover greater than XOF3 billion can request the tax authori ties to print its own invoices but these invoices must contain all the requirements for a full VAT invoice.

Proof of exports. Proofs of exports will be necessary to identify chain transactions, incoterms used and zero-rating for export. The origin and destination of products if sold or purchased are key drivers for taxability and hence should be passed as data elements. Examples of documentation accepted include airway bills, bills of lading and international transport documentation, custom returns.

Foreign currency supplies. In case the invoice is issued in a foreign currency, the total VAT amount should be in the domestic currency, which is the West African CFA franc (XOF). It is also recom mended to mention the currency exchange in the invoice.

Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons in IC. As such, full VAT invoices are required.

Records. Records that must be held in the IC for VAT purposes include invoices, accounting documents, legal documents, etc.

There is no provision in the Ivory Coast VAT law outlining where records must be held. However, in practice, VAT books and records must be held within the country and made available upon request of the tax authorities.

Record retention period. All invoices or equivalent documents must be kept by the taxable person for six years.

Electronic archiving. Backup copies of the invoices or equivalent documents can be archived on all support media (i.e., paper and electronically). However, records must be available to the tax authorities upon request, in paper format only.

I. Returns and payment

Periodic returns. VAT returns must be submitted monthly for taxable persons under the normal regime. The normal regime applies to taxable persons whose annual turnover, including all taxes, exceeds XOF500 million.

VAT returns must be submitted quarterly for taxable persons under the simplified tax regime. The simplified regime applies to taxable persons with annual turnover, including all taxes, of between XOF200 million and XOF500 million.

VAT returns must be filed together with full payment of VAT. The VAT return and payment of VAT is due by the following dates:

• By the 10th of the following month for industrial, oil and mining companies

• By 15th of the following month for commercial companies

• By 20th of the following month for providers

Periodic payments. Payment of VAT is due by the same deadline for filing (as outlined above).

Taxable persons whose annual turnover is greater than XOF200 million are required to pay the VAT due by bank transfer or automatic debit. Taxable persons whose annual turnover is less than XOF200 million have the option to pay the VAT due by cash, check or mobile money.

Electronic filing. Electronic filing is available in IC, but not mandatory. However, taxable persons with a turnover of greater than XOF150 million are required to file their VAT returns electroni cally. Taxable persons with a turnover of less than XOF150 million have the option to file their VAT returns by paper or electronically.

Payments on account. Payments on account are not required in IC.

Special schemes. No special schemes are available in IC.

Annual returns. Annual returns are not required in IC.

Supplementary filings. Deductions statement. All taxable persons must include on the VAT return a statement detailing the deductions made. This statement must highlight the delivery of goods and the services provided, as follows:

• Name and the supplier’s taxable persons account number

• Amount of the deductible tax paid by the customer

• With regard to imports, the state must highlight: — Consumption declaration number — References to the release issued by Customs — Amount of VAT mentioned on the release

Correcting errors in previous returns. Taxable persons can correct errors in previous returns under the following conditions:

• Any error of this kind has not been found by the tax authorities during the last three years

• The taxable person is not subject to a tax assessment related to such errors

• The taxable person has not received a notice of tax assessment from the tax authorities

Subject to the above conditions, a taxable person can correct errors in previous returns by writing to the tax authorities, providing detail of the errors and previously filed returns. Then the tax authorities will review the corrections, and where it agrees with the corrections, the taxable per son must then immediately pay any VAT due from the corrections and a late interest charge (10% of the tax due). However, the taxable person is not charged any additional penalties.

Digital tax administration. There are no transactional reporting requirements in IC.

J. Penalties

Penalties for late registration. A delay in VAT registration is punishable by a fine of XOF1 million.

Penalties for late payment and filings. Whenever a taxable person fails to submit a VAT return after the legal deadline, the late interest is 10% of the tax due. In addition to the penalty, interest accrues at a rate of 1% of the amount due for each additional month or fraction of a month of delay.

Penalties for errors. Whenever the tax administration finds errors in filed VAT returns, the taxable person must pay, in addition to the late interest charge outlined above, increases of the following:

• 30% if the amount of duties corresponding to inadequacies, inaccuracies or omissions does not exceed one quarter of the duties actually owed

• 60% if this amount is more than a quarter of the fees real due

Failure to notify or late notification to the tax authorities of changes to a taxable person’s VAT registration details may result in a penalty of XOF100,000. For further details, please see the subsection above Changes to VAT registration details

Penalties for fraud. Any inaccuracies or omissions in a declaration or deed containing informa tion to be withheld for the assessment or settlement of the tax, shall give rise to the application of a surcharge of 150% in the event of fraudulent practices.

Personal liability for company officers. Company directors can be held personally liable for errors and omissions in VAT declarations. In this case, the penalties are a fine between XOF500,000 and XOF30 million and/or imprisonment between one month to two years.

Statute of limitations. The statute of limitations in IC is three or six years. The time limit that the tax authorities can go back to review returns and identify errors and impose penalties is three years for input tax and six years for output tax. There is no time limit for taxable persons to voluntarily correct errors in previous VAT returns. But the corrections should not be made during a tax audit. Please note that corrections to input tax must be made within 12 months of invoicing.