Côte D'Ivoire Corporate Tax Guide

Côte D’Ivoire (Ivory Coast)

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A. At a glance

(a) For details concerning the minimum tax, see Section B. (b) See Section B. (c) For details concerning these rates, see Section B. (d) The standard rate of interest withholding tax is 18%. Several exceptions to this rate exist. The withholding tax rate ranges from 1% to 16.5%, depending on the maturity of a deposit account. For a current account, the withholding tax rate is reduced to 16.5% for companies and 13.5% for individuals. The withholding tax rate on interest is reduced to 8.25% for companies and to 6.75% for individuals if the interest is paid on loans to holding companies from foreign financial institutions or on loans from shareholders of holding companies to finance the acquisition or subscription of securities.

(e) This withholding tax applies to payments by resident companies for services rendered by nonresidents who do not maintain a professional office in Côte d’Ivoire. For premiums paid to nonresident reinsurance companies, the rate is 12.5%.

(f) On one-half of the before-tax profit. See Section B.

B. Taxes on corporate income and gains

Corporate income tax. Resident companies are taxed on the ter ritoriality principle. As a result, companies carrying on a trade or business outside Côte d’Ivoire are not taxed in Côte d’Ivoire on the related profits. Resident companies are those registered in Côte d’Ivoire, regardless of the nationality of the shareholders or where they are managed and controlled. Foreign companies with activities in Côte d’Ivoire are subject to corporate tax on localsource profits if they have a permanent establishment in Côte d’Ivoire.

Tax rates. The 2021 Finance Law introduced two new tax regimes and revised the thresholds for the three existing tax regimes. The following are the five tax regimes and their thresholds:

• Municipal tax regime: companies whose turnover, with all taxes included, is less than XOF5 million

• Entrepreneurial tax regime: companies whose turnover, with all taxes included, is at least XOF5 million but less than XOF50 million

• Microenterprise tax regime: companies whose turnover, with all taxes included, is at least XOF50 million but less than XOF200 million

• Simplified tax regime: companies whose turnover, with all taxes included, is at least XOF200 million but less than XOF500 million

• Normal tax regime: companies whose turnover, with all taxes included, is XOF500 million or more

The regular corporate income tax rate is 25%.

The minimum tax is 0.5% of turnover. For oil-producing, electric ity and water-producing companies, the rate is reduced to 0.1%. The rate is reduced to 0.15% for banks and financial companies and for insurance companies. The minimum tax may not be less than XOF3 million or more than XOF35 million. New corpora tions are exempt from the minimum tax for their first fiscal year,

and mining companies are exempt from the corporate income tax and the minimum tax during the exploration phase.

The 2020 Finance Law suspended the payment of the minimum tax for all taxpayers until 31 December 2020.

The 2021 Finance Law did not renew this suspension of the mini mum tax. As a result, the minimum tax is again due.

The 2021 Finance Law introduced a new condition for minimum tax payments. Consequently, the minimum tax is now due in one of the following cases:

• The amount of corporate income tax is lower than minimum tax.

• The cumulative amount of taxes and duties due for a fiscal year, excluding third-party taxes, is lower than the maximum amount of microenterprise tax determined on the basis of the turnover realized under the microenterprise tax regime. In this case, the minimum tax due by taxpayer is increased by the difference between the cumulative amount of taxes due for the fiscal year and the maximum amount of tax under the microenterprise tax regime.

According to the tax administration analysis of the 2022 Finance Law, the maximum amount of microenterprise tax is XOF8 mil lion for companies under the simplified tax regime and XOF9.6 million for companies under the normal tax regime.

Profits realized in Côte d’Ivoire by branches of foreign companies are deemed to be distributed and therefore are subject to a branch withholding tax on one-half of the before-tax profit at a rate of 15% (effective rate of 7.5%).

Corporations may apply for various categories of priority status and corresponding tax exemptions. Priority status varies depend ing on the nature of the project and the level of investments. Corporate tax reductions and temporary tax exemptions are granted to new industrial businesses for investments in industrial buildings and building sites, land for development, and industrial and agricultural establishments.

Capital gains. Capital gains are taxed at the regular corporate rate. The tax, however, can be deferred if the proceeds are used to acquire new fixed assets in Côte d’Ivoire within three years or in the event of a merger (or other acquisition).

If the business is totally or partially transferred or discontinued, only one-half of the net capital gain is taxed if the event occurs less than five years after the startup or purchase of the business, and only one-third of the gain is taxed if the event occurs five years or more after the business is begun or purchased.

Capital gains derived by holding companies are exempt or are taxed at a rate of 12% if certain conditions are satisfied.

Administration. The financial year is from 1 January to 31 December. Corporate financial statements and corporate results must be filed by the following dates:

• Companies that should have their accounts certified: 30 June of the year following the financial year

• Other companies: 30 May of the year following the financial year

Companies must pay corporate income tax in three equal install ments, which are due on 15 April, 15 June and 15 September of the year following the financial year.

The tax center with which taxpayers must file tax returns depends on the company’s turnover. The following are the relevant rules:

• Taxpayers with annual turnover below XOF200 million must file with their local tax center.

• Taxpayers with turnover ranging from XOF200 million to XOF3 billion must file with the medium-sized enterprises cen ter (CME).

• Taxpayers with turnover exceeding XOF3 billion must file with the large corporation tax center (DGE).

Companies must use a unified tax form to file their tax return and pay their taxes electronically. This tax return includes in one form all of the taxes to which the company is subject. The dead line to file the unified tax return for companies reporting to the CME or DGE depends on the company’s industry. The following are the deadlines:

• Manufacturing, oil and mining companies: 10th day of each month

• Commercial companies: 15th day of each month

• Service companies: 20th day of each month

Late payments are subject to a penalty of 5% for the first month, plus 0.5% for each additional month or part of a month.

Late submissions of financial statements are subject to a penalty of XOF1 million plus XOF100,000 for each month or part of a month of the delay.

If the lateness of a submission exceeds three months, the penalty is XOF2 million plus XOF200,000 for each month or part of a month of the delay.

Late submissions of corporate results are subject to the following penalties:

• XOF3 million plus XOF300,000 for each month or part of a month of the delay, for companies reporting to the DGE

• XOF1 million plus XOF100,000 for each month or part of a month of the delay, for companies reporting to the CME

• XOF500,000 plus XOF50,000 for each additional month or part of a month of delay, for companies reporting to their local tax centers

Dividends. Dividends paid by listed companies out of profits taxed at the 25% corporate tax rate are subject to a 10% withholding tax. A 15% withholding tax is imposed on dividends paid by other companies out of profits taxed at the 25% corporate tax rate. A special withholding tax rate of 2% applies to certain types of bonds issued in Côte d’Ivoire.

A parent company may exclude up to 95% of dividends received from a 10%-owned subsidiary (regime of holding companies and subsidiaries). A listed company may exclude 90% of the divi dends received, while an unlisted company may exclude 50%.

The amount of withholding tax due is increased by 25% if the beneficiary of the dividends is established in a noncooperative or low-tax jurisdiction.

Foreign tax relief. In general, foreign tax credits are not allowed; income subject to foreign tax that is not exempt from tax in Côte d’Ivoire under the territoriality principle is taxable, net of the foreign tax. However, a tax treaty may provide for a tax credit.

C. Determination of trading income

General. Taxable income is based on financial statements pre pared according to the Accounting System of the Organization for African Business Law Harmonization. Business expenses are generally deductible unless specifically excluded by law. The following expenses are not deductible:

• Gifts (except those granted to certain associations engaged in social, sporting, scientific or cultural development)

• Most liberalities (payments that do not produce a compensatory benefit, such as excessive remuneration paid to a director)

• Subsidies

• Cash payments exceeding XOF250,000 (exception for salary expense)

• Corporate tax

• Penalties

Services fees and royalties paid by Ivorian companies to nonresident parent companies are deductible if the following condi tions are satisfied:

• The payer proves that the payments are related to real opera tions and that the amount of the payments is normal.

• The amount of the payments does not exceed 5% of the turn over and 20% of the overhead of the payer.

If a nonresident is established in a noncooperative or low-tax jurisdiction, the deduction is capped at 50% of the gross amount paid, without prejudice to the double limit mentioned above in the second bullet in the preceding paragraph.

Payments to related resident companies are also subject to the same two conditions mentioned above.

Under certain tax treaties of Côte d’Ivoire, amounts paid to non resident companies are deductible for tax purposes based on the same conditions as those applicable to payments to resident companies. Even if such treaties apply, the payer must satisfy the two conditions mentioned above in order to deduct the payments.

The deduction of services fees and royalties paid by resident com panies to other related resident companies is subject to the sec ond condition mentioned above (5% of the turnover and 20% of the overhead). As a result, the nondiscrimination clause provided for by certain tax treaties does not apply, and services fees and royalties paid by resident companies to related nonresident companies are deductible under the conditions mentioned above.

Inventories. Inventory is normally valued at the lower of cost or market value. Cost must be determined on a weighted average cost price method. A first-in, first-out (FIFO) basis is also generally acceptable.

Provisions. In determining accounting profit, companies must establish certain provisions, such as a provision for a risk of loss or for certain expenses. These provisions are normally deductible

for tax purposes if they provide for clearly specified losses or expenses that are probably going to occur and if they appear in the financial statements and in a specific statement in the tax return.

Capital allowances. Land and intangible assets, such as goodwill, are not depreciable for tax purposes. Other fixed assets may be depreciated using the straight-line method at the following rates.

Asset Rate (%)

Buildings 5

Light construction 10

Loud machinery 10

Stationary machinery 20

Fixtures 10

Office and home chattels 10

Office equipment 20 to 25

Motor vehicles 33.33

Other specified vehicles and engines 20 to 25 Computers and software 20 to 50

Relief for tax losses. Losses may be carried forward five years. Losses attributable to depreciation may be carried forward indefinitely. Losses may not be carried back.

Groups of companies. The law does not contain any provision for the fiscal integration of related companies equivalent to a con solidated filing position. However, a parent-subsidiary tax re gime exempts dividends and capital gains from tax under certain conditions.

D. Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)

Value-added tax (VAT), on goods and services sold in Côte d’Ivoire 18 Turnover tax (tax on banking operations), on interest paid to and services rendered by banks and financial companies 10

Special tax on equipment; based on turnover; applicable to all companies 0.1 Business activity tax (patente), based on the turnover and the rental value of tangible assets Various Withholding tax, on amounts invoiced by importers, producers and sellers to persons subject to commercial or agriculture tax (entitles the buyer to a credit against withholding tax or VAT payable on its sales) Various Registration duty on transfers of real property 4 Registration duty of transfers of businesses 10 Special tax on subcontractors of petroleum companies; a global tax, including payroll taxes and withholding tax on dividends; imposed on taxable turnover For companies in phase of exploration 6 For companies in phase of exploitation 2.17

Nature of tax Rate (%)

Payroll tax, paid by employers on salaries of Employees from Côte d’Ivoire 2.8 Expatriates 12 Social security contributions Retirement, on monthly salaries up to XOF2,700,000; paid by Employer 7.7 Employee 6.3

Family allowances, on monthly salaries up to XOF70,000; paid by employer 5.75 Industrial injuries, on monthly salaries up to XOF70,000; paid by employer 2 to 5

E. Miscellaneous matters

Foreign-exchange controls. Exchange control regulations apply to financial transfers outside the franc zone, which is a monetary zone including Comoros, France, Monaco, the member states of the West African Economic and Monetary Union (WAEMU) and the member states of the Economic Community of Central African States.

Transfer pricing. Taxpayers must file annually the following transfer-pricing documentation:

• An annual transfer pricing return reconciling cross-border intragroup transactions

• A Country-by-Country Report (CbCR), if, among other conditions, the aggregate annual turnover of the taxpayer is XOF491,967,750,000 or more

A failure to submit the annual transfer-pricing return or the sub mission of an incomplete statement results in the rejection of the deductibility of the sums paid for corporate income tax purposes. Under the 2021 Finance Law, this failure is also punishable by a flat rate fine of XOF3 million per omission or mistake together with a fine of XOF100,000 per month of delay.

The failure to submit a CbCR results in a fine of XOF5 million. The submission of an incomplete statement or a statement with mistakes is punishable by a flat fine of XOF2 million.

Thin-capitalization rules. Côte d’Ivoire has the following thincapitalization rules regarding loans by shareholders and related parties to local entities:

• The sums of money made available by all shareholders should not exceed the amount of the share capital.

• The interest paid to the shareholders should not exceed 30% of the profit before corporate income tax and before deduction of such interest, and depreciation and provisions.

• The interest rate should not exceed the rate of the central bank advances, increased by 2 percentage points.

• The loan should be repaid within five years following the grant ing of the loan. In addition, the local entity should not go into liquidation during this five-year period.

• The share capital of the local entity should be entirely paid up.

Under the 2021 Finance Law, for a loan between two Ivorian companies, in addition to the conditions listed above, the interest

paid must also respect the double limit of 20% of overhead and 5% of turnover, excluding taxes.

F. Treaty withholding tax rates

Côte d’Ivoire has signed a multilateral tax treaty with the other members of the West African Economic Community (Communauté Economique de l’Afrique de l’Ouest, or CEAO), which are Burkina Faso, Mali, Mauritania, Niger and Senegal.

The country also signed a multilateral tax treaty in the framework of the Common African and Mauritian Organization (Organisation Commune Africaine et Mauricienne, or OCAM). This treaty was also signed by Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo (Democratic Republic of), Congo (Republic of), Gabon, Madagascar, Mauritius, Niger, Rwanda, Senegal and Togo.

The two international organizations mentioned above have been dissolved.

Côte d’Ivoire has signed a treaty with the member states of the WAEMU. This tax treaty has applied for some tax items since 2009. It is wholly applicable, effective from 1 January 2010. The members of WAEMU are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Dividends Interest Royalties

% % %

Belgium 15 16 10

Canada 15 15 10

France 15 15 10

Germany 15 15 10 Italy 15 15 10 Morocco 10 10 10

Norway 15 16 10

Portugal 10 10 5 Switzerland 15 15 10 Tunisia 10 10 10

United Kingdom 15 15 10

WAEMU countries 10 15 15

Non-treaty jurisdictions 2/10/15 (a) 18 (b) 20

(a) See Section B.

(b) See footnote (d) in Section A.

On 26 February 2016, Côte d’Ivoire signed a tax treaty with Turkey, but this treaty is not yet in force.

On 21 March 2019, Côte d’Ivoire signed a tax treaty with the United Arab Emirates, but this treaty is not yet in force.