Tax guide for contracting foreign loans in Côte d'Ivoire

 

The purpose of this article is to specify the tax regime applicable in each of the situations outlined below.

Ivorian Companies

The following articles apply to loans contracted by Ivorian firms from foreign banks.

RIT: Interest on loans paid by an Ivorian firm to a foreign bank is in principle subject to withholding tax under the receivable income tax (RIT) at the ordinary rate of 18% in Côte d’Ivoire. The application of the above rate, however, depends on the existence or not of a tax treaty between Côte d’Ivoire and the country of establishment of the foreign bank.

Lending bank established in UEMOA: With regard to the provisions of Regulation No. 08 of 2008/CM, interest on loans granted by a bank established in UEMOA to an Ivorian firm are subject to RIT in Côte d’Ivoire at the rate of 15%. The settlement and tax credit rules remain applicable in the country the bank was established in.

Countries linked to Côte d’Ivoire by tax treaty: Interests paid by Ivorian firms to foreign banks located in countries linked to Côte d’Ivoire by applicable tax treaties are subject to RIT at the rate provided by the convention when transactions are identified as taxable there.

Other countries: Loans made to Ivorian firms by foreign banks not bound by a tax treaty are subject to RIT in Côte d’Ivoire at 18% and to the bank transaction tax at 10%. The presence of a non-double taxation treaty does not affect the perception of the bank transaction tax.

Non-cooperative territories or privileged taxation: When interest is paid by an Ivorian firm to a bank in one of the countries mentioned, RIT due is increased by 25% in application of Article 193 bis of the Tax Code.

Banking Transaction Tax: According to Article 396 of the Tax Code, interest paid by a commercial enterprise to a foreign bank is liable to the Banking Transaction Tax in Côte d’Ivoire at the rate of 10% of the gross sums paid. The tax is declared and paid by the Ivorian entity on behalf of the foreign bank in application of Article 442 of the Tax Code. The Ivorian firm retains the right to deduct the banking transaction tax paid in accordance with Article 364 of the Tax Code, according to the deduction rules that apply. This tax treatment has no impact on the location of the banking establishment.

Ivorian Banks

The following articles apply to cases of loans contracted by Ivorian banking establishments from other foreign banking establishments.

Bank established in a UEMOA member country: Article 223 of the Tax Code exempts from income tax on movable capital, interest, arrears and other proceeds from loans granted to Ivorian banks and financial institutions of other UEMOA member states. Thus, interest on loans contracted by Ivorian banks from foreign banks established in the UEMOA area are exempt from the RIT. Bank established in other countries linked to Côte d’Ivoire by a tax treaty: Interest on loans granted to Ivorian banks by foreign banks located in other countries (other than those of the UEMOA) that have concluded an applicable tax treaty with Côte d’Ivoire are taxed or not according to the terms of the various tax treaties.

Bank located in a non-cooperative territory or with privileged taxation: The interest on loans granted to Ivorian banks by foreign banks located in countries with non-cooperative territory or with privileged taxation are taxed according to the previous indications. Bank established in a country not linked to Côte d’ Ivoire by a tax treaty: In the absence of an international tax treaty between the country of establishment of the foreign bank and Côte d’Ivoire, the interest on loans granted is subject to the RIT at ordinary rates of 18%.

Banking Transactions Tax: Interest on loans contracted by an Ivorian bank from a foreign bank located in UEMOA is not subject to banking transaction tax in Côte d’Ivoire when loans are intended for the professional needs of borrowing banks. This applies to banks established outside UEMOA and loans granted to Ivorian banks by the Central Bank of West African States.

OBG would like to thank EY for its contribution to THE REPORT Côte d’Ivoire 2020

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