The tax system in Côte d’Ivoire is based upon the legislation that existed at the time of the country’s independence in 1960. It has since undergone several amendments intended to take into account the country’s economic and social evolution and budgetary constraints. A powerful and qualified tax authority enforces taxpayers’ obligations.
The tax system is declaratory, thereby allowing each taxpayer to determine for herself the various types of taxation applicable to her. Côte d’Ivoire uses very dynamic taxation measures in order to boost investment, including the Investment Code and legislation relating to the tax-free zone of Grand Bassam. Additionally, a number of tax treaties have been signed with other countries.
The Ivorian tax system includes four tax schemes: the direct tax scheme, the simplified tax, the combined tax and the flat-rate tax scheme for small businesses. Turnover is the criterion that distinguishes each scheme. The direct tax scheme is applied to taxpayers selling goods with a turnover exceeding CFA150m (€225,000), all taxes included, and to taxpayers providing services with revenue exceeding CFA75m (€112,500), all taxes included. The simplified tax scheme is applied to turnovers between CFA50m (€75,000) and CFA150m (€225,000), all taxes included, and to taxpayers providing services with a turnover between CFA25m (€37,500) and CFA75m (€112,500).
The combined tax is applied to individual taxpayers selling goods with a turnover lower than or equal to CFA50m (€75,000), and to individual taxpayers providing service with a turnover lower than or equal to CFA25m (€37,500). The taxpayers subject to the combined tax scheme are exempted from paying the licence tax, the tax on industrial and business profits, and the value-added tax (VAT). Legal entities are excluded from the combined tax scheme.
The flat-rate tax scheme is applied to individual taxpayers selling goods or service providers with a turnover not exceeding CFA5m (€7500), all taxes included. These taxpayers are under the responsibility of municipal authorities.
Companies in Côte d’Ivoire are subject to the following main taxes and duties, which can be summarised as follows:
BIC Tax: A tax on industrial and business profits is levied on the profits of companies operating industrial or commercial activities in Côte d’Ivoire. The taxable profit refers to the net profit estimated according to the overall performance relating to operations of any kind undertaken by companies, including in particular the sale of any asset, either held for sale or to be sold at the end.
The tax rate on industrial and commercial profits stands at 20% for individual entities, at 25% for legal entities and at 30% for telecommunication companies. It is also necessary to indicate the existence of a minimum tax rate (IMF) payable when:
- The taxable income value is zero;
- The taxable income is negative; or
- The tax rate applied to the taxable income is lower than the IMF amount.
The IMF amount payable under a financial year equals 0.5% of the turnover, inclusive of all taxes, during this financial year. The minimum amount set for the IMF collection is CFA3m (€4500) and the maximum amount set for collection is CFA35m (€52,500). The rate of IMF for taxpayers under the simplified tax scheme is 2% and the minimum amount is CFA 500 000 (€763). The income tax and the IMF have to be paid immediately, via three equal payments on April 20, June 20 and September 20 of each year.
The tax on non-commercial profits is levied on profits relating to liberal professions; functions and offices occupied by persons who are not traders; and all occupations, and lucrative and profit-generating activities not included in another category of profits or incomes. The tax rate applied on non-commercial profits stands at 20% for individual entities and 25% for legal entities. The IMF is levied at 5% on gross earnings, all-inclusive of tax. The IMF is also known as the tax on non-commercial profits and should be paid, in equal amounts, on April 20, on July 20 and on October 20 at the latest, each year.
Withholding Tax on BNC: The withholding tax on BNC is a withholding tax relating to taxes on industrial and commercial profits, remunerations, sums, commissions and fees paid to individual entities holding certain positions.
Moreover, this withholding tax is levied on remunerations paid to service providers not operating activities in Côte d’Ivoire and to persons holding certain positions. In the case of persons not operating activities in Côte d’Ivoire, the tax rate stands at 20%, in the absence of a tax treaty. However in the presence of a tax treaty, the tax rate applied is the same as provided by the treaty. The fees paid to persons not engaged in commercial professions can be subject to a withholding at a rate of 7.5%. Tax on salaries and wages: Salaries and wages are taxable in Côte d’Ivoire in the following cases:
- The beneficiary is domiciled in Côte d’Ivoire while the remunerated activity is exercised outside the country or the employer is domiciled or has set up his business outside the country;
- The beneficiary is domiciled out of Côte d’Ivoire and the remunerated activity is exercised on the state territory;
- The salaries and wages concerned are cash wages and benefits in kind. The tax on salaries consists of:
- The tax on salaries and wages (IS);
- The national contribution (CN);
- The general income tax (GR) and
- The employer’s contribution (CE).
Property income tax: The property income tax is applied to built properties such as houses, workshops and factories. The property income tax is calculated on the basis of the rental value of these properties during the previous year. The rental value is the price received by the owner for his leased buildings, or if these buildings are used by the owner, the price received in case of rent.
The tax rate on property income stands at 4% of the rental value of income-generating buildings. Tax on landholding assets: The tax base relating to the property income tax is the same for the landholding assets. The tax rate on landholding assets stands at 11% of the rental value. Instalment on rental income: Companies subject to the direct tax scheme, as well as embassies and international agencies, are obliged to levy 15% on the rental amount of all leased buildings, except for buildings rented by real estate agencies, building management agents, property managers and property holding companies.
The tax on income derived from securities is applied to all profits or proceeds that are not set aside or incorporated into the capital and to all sums or values made available to associates, shareholders or unit holders and not levied on profits. The tax rate applied is variable and is set as follows:
- 10% for the dividends regularly paid by companies quoted on the regional stock exchange;
- 15% for bonds;
- 2% for all proceeds, lots and bond redemption premiums to the holders of bonds issued in Côte d’Ivoire and redeemable in at least five years;
- 15% for all taxable proceeds and sums relating to the tax on income derived from securities not already mentioned.
The rate applied on profit exempted from the tax on industrial and commercial profits or not actually subject to this tax increases from 10% to 15%.
Tax on debt proceeds: The income tax on debts is applied to the interests, arrears and all proceeds of mortgage-backed securities, be they preferential and unsecured, excluding all commercial credit operations not having the legal status of a loan. The income tax rate on debt fund proceeds amounts to 18% of the gross amount of paid interest.
Licence tax: The licence tax is applied to any individual entity or legal entity originating from Côte d’Ivoire or a foreign country, running a business, an industry or exercising a profession in Côte d’Ivoire, not included in the exemptions. The licence tax consists of a tax on the turnover and a tax on the rental value of business premises.
The tax on rental value is calculated on the basis of the rental value of offices, stores, shops, factories, workshops, sheds, depots, building sites, garages, disposal areas and other premises and sites being used for the purposes of the profession, as well as infrastructure of any kind subject to property tax. The tax on rental value is payable even when the occupied premises are granted for free. This is set at 18.5% of the rental value. This rate is lowered to 16% for premises not located in a municipal area.
Value-added tax (VAT): The supply of goods and services for remuneration by a taxable person that is acting as such, excluding paid and agribusiness activities, is subject to VAT, applied at a rate of 18% on the price of the supply of goods or services. VAT for a third party: The beneficiary of services provided by a person not having a business premises or a tax representative in Côte d'Ivoire has an obligation to submit a VAT return on behalf of this person. The VAT rate is set at 18%. Registration Fee: The registration fee is levied inter alia on leases and on sales of business as well as on companies’ memoranda of association. The registration fee base for leases, subleases and lease extensions for movable property, goodwill and buildings consists of the effective annual price taking into account the charges imposed to the lessee. The rate stands at 2.5% when the duration of the lease is limited. The rate stands at 10% for the leases of buildings under an unlimited duration.
Transfers of ownership relating to goodwill or customers for consideration are subject to a tax of 10%. This tax is levied on the sale price of goodwill, the transfer of lease right and movable objects, or else used for the purpose of funds operation, excluding new goods.
Special Equipment Tax (TSE): The TSE is levied at a rate of 0.1% on the net turnover of companies subject to the direct tax scheme. This tax is levied under the same conditions, procedures, penalties and guarantees as for the VAT.
Tax Incentives For Investment
Tax incentives to attract investments are recorded in the Investment Code under the supervision of the Investment Promotion Agency of Côte d’Ivoire (CEPICI).
I. Advantages of the Investment Code: The activities eligible to benefit from the code are: creation; extension; modernisation; reorganisation; diversification; and development. Eligible sectors include: agriculture, stock breeding and fishing; extractive industries and oil production; manufacturing industry; cultural production and industries; health; tourism; education; and other select sectors. Excluded activities are: buildings and public works; trade; transport; and financial and banking services. The Investment Code includes two tax regimes: the Tax Reporting Regime and the Investment Approval Regime.
II. Tax Reporting Regime: Any investor who requests to be subject to the regime shall file four copies of the relevant application form with the CEPICI. Conditions: The advantages provided for in the Investment Code are subordinated to:
- On-site visit of the actual implementation of the investment;
- Keeping of regular accounting records in accordance with the OHADA Accounting Law;
- Submission to a simplified or direct tax scheme;
- Compliance with environmental standards in accordance with current legislation; and
- Compliance with social, environmental and tax obligations in accordance with the current legislation. Advantages granted to the tax reporting regime: The benefits are exclusively related to the operational phase and differ by investment zone. They apply to: (I)Zone A:
- BIC or BNC tax exemption; and
- License tax and licence exemption. These two exemptions are reduced to 50% and 25% of the amounts actually payable, respectively, during the last year for the aforesaid advantages. (II)Zone B:
- BIC or BNC tax exemption;
- Licence tax and licence exemption; and
- 80% reduction on the employer's contributions, excluding the FDFP Tax. (III)Zone C:
- BIC or BNC tax exemption;
- Licence tax and licence exemption;
- 80% reduction on the employer’s contribution, excluding the FDFP Tax;
- Property tax exemption; and
- Registration fee exemption in case of a capital increase.
Duration of advantages: The accredited investors benefit from exemptions according to the investment zones for a period of eight years for Zone A, 12 years for Zone B and 15 years for Zone C. III. Investment Approval Regime: Any investor who requests to be subject to the Investment Approval Regime shall file 10 copies of the relevant application form with the CEPICI. Requirements: The requirements to be eligible for the Investment Approval Regime are identical to those of the Tax Reporting Regime. Advantages Granted to the Investment Approval Regime: The granted benefits differ according to the thresholds of investment and the place where the investment project is implemented. Approved companies benefit from the following advantages in each of the investment zones: 50% reduction in Customs duties payable on equipment and materials and the first batch of spare parts, representing an amount below CFA 1bn (€1.5m); and a 40% reduction in Customs duties payable on equipment and materials and the first batch of spare parts for an amount of CFA1bn (€1.5m) or greater.
Special Provisions For Small And Medium-Sized Enterprises (SMES):
SMEs with an amount of investments equal to at least CFA70m (€105,000) or exceeding CFA200m (€300,000) are eligible for the Investment Approval Regime. Duration of benefits:
- Zone A: Seven years;
- Zone B: 11 years; and
- Zone C: 15 years. Moreover, the approved SMEs benefit from the following additional advantages;
- Registration fee exemption for all deeds subject to registration;
- Land necessary for the implementation of investment projects is provided by the state; and
- Payment at preferential rates of utilities bills, such as water and electricity, and of new technology services, subject to an investment in a raw material processing unit.
Tax-Free Zone Advantages
The Zone Franche de la Biotechnologie et des Technologies de l’ Information (ZBTIC) is subject to specific rules. Any business covered by this zone benefits from a certain number of tax, Customs and social advantages, considered as an exemption from ordinary law. Companies under the ZBTIC regime are exempted from the taxes paid by the employer on wages and salaries received by their staff. Currencies/Transfers: The Ivorian government shall ensure the free transfer of the funds made available by businesses under the ZBTIC regime in the event of discontinuance of business and after the full payment of all kinds of debts incurred in Côte d’Ivoire. Company Taxation: A business subject to the Tax Free Zone Regime is exempted from all taxes and duties during its activities. However, any business under the Tax Free Zone Regime is subject to a final withholding tax and royalty in compensation for these tax exemptions. Final withholding tax is payable on the gross annual turnover and amounts to:
- 0% during the initial five years, and 1% starting from the sixth year for user companies; and
- 0% during the first 15 years and 1% starting from the 16th year for the Agency of Promotion and Operation (EPE).
The royalty is payable on the gross annual turnover and amounts to 2.5% for user companies at the beginning of operation. At this point, the forecast turnover mentioned in the approval documents is taken into account. It must be specified that this royalty could be subject to an adjustment at fiscal year-end, on the basis of the actual turnover achieved.
The royalty is divided amongst the EPE, the Municipal Council, village communities and the General Council or the District of the Free Zone. Any business subject to the Tax-Free Zone benefits from a tax reduction regarding the recruitment of Ivorian nationals. This reduction consists of an abatement of 20% on the final withholding tax base if the business employs a quota of Ivorian nationals representing 75% of its staff, as covered under the tax credit for new investment.
This reduction is also applied to investments in the construction and/or extension of buildings for professional use, associated with the recruitment of Ivorian nationals with at least a 50% quota of potential staff. Production factors such as water, power, telephone, fuel and lubricants, as well as services provided for businesses subject to the Tax-Free Zone Regime, are charged inclusive of tax. Customs regime: Businesses subject to the Tax-Free Zone Regime shall report their import-export operations in accordance with the applicable Customs procedures of the ZBTIC. These businesses are exempted from import duties and taxes.
The only restriction applied to the transactions in goods and services of businesses subject to the Tax-Free Zone Regime is related to the respect of good moral standards, public order, public safety, hygiene standards and compliance with international conventions on the protection of patents, trademarks, copyrights or reproduction rights and intellectual property rights. Land and Building Property: The lands in the Free Zone can be either the property of an individual entity or a legal entity governed by private law, subject to the respect of the applicable laws' provisions concerning land and land property matters.
Côte d’Ivoire has signed tax treaties with 13 countries/organisations: Belgium, Canada, CEAO, France, Germany, Italy, Lebanon, Norway, OCAM, Switzerland, Tunisia, the UEMOA and the UK.
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