Companies that take over firms in difficulty are temporarily exempt from taxes on income, under industrial and commercial profits. The Investment Law does not supersede this exemption.
Conditions
Relative to the legal forms of the takeover, it may consist of a total or partial acquisition of intangible business assets, a merger or acquisition of a line of business – which is necessarily the case when the entity taking over was especially created for that purpose – or of an acquisition of shares or equity capital, which can only be used when the company taking over already existed.
The firm being taken over must have a negative net position during at least the last three financial closings before the acquisition. The firm taking over is subject to the following conditions:
• Subject to a real tax regime;
• Must pursue activities or a line of business related to the company being acquired for at least six years after the takeover;
• Profits made must be regularly declared, within a legal timeline; and
• A separate account must be held for the acquired activity or autonomous line of business. When the takeover is engendered by a specially created company, those holding directly or indirectly more than 50% of the capital of the firm in difficulty during the last two years may not hold more than 10% of the capital of the new entity.
Authorisation
An authorisation provided by the director-general for taxes is necessary for the exemption to be granted. The applicant must submit to the director-general a dossier with three copies of the request for exemption, which includes:
• An extract of the commerce registry;
• A copy of a tax registration certificate;
• Documents regarding the takeover, such as a presentation of the restructuring plan, deeds of conveyance or transfer or a list of assets acquired;
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• A copy of the registry form as employer, provided by the National Social Security Fund, with regards to the company making the acquisition;
• Documents regarding the company being taken over, including the three last financial statements and operating accounts, a list of shareholders and dates of acquisition of the shares in the company being taken over; and
• Other documents regarding the company taking over, such as a general presentation, its status, list of directors, main shareholder and associates, and their shares.
Period & Longevity
The new entity is exempt from taxes on income, under industrial and commercial profits, as well taxes on revenues generated through the acquired activity, until the fourth financial year closing after the takeover. The exemption is total (100%) during the first two financial years, and thereafter reduced to 75% and 50% of the taxes on income payable for the third and fourth financial years closing, respectively, after the takeover.
The date of the takeover of the company in difficulty is that of the transfer date of assets to the new entity by the acquired firm.
Forfeiture
The exemption benefits are forfeited if within the first six years of activity, the activity or the line of business is interrupted. In case of forfeiture of the benefit, the exempted taxes on income, under industrial and commercial profits, becomes payable. The remainder comes from the penalties under the Livre (Book) on tax procedures.
End Of Works
There is also a general requirement that investors inform the Investment Promotion Agency of Côte d’Ivoire of the conclusion of works within 30 days. In case of a failure to notify, the duration of incentives is fixed by the agreement.
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