In this new format, we bring you the latest tax news from selected countries in French-speaking Africa.
Against a turbulent economic and political backdrop, most countries are continuing to implement strong support measures for their populations, as well as strict measures to rationalize government spending.
We hope you enjoy reading this newsletter and remain available to assist you in understanding or implementing these measures in your business.
In brief – Key points
| Benin | Clarification of taxation of provisions for loses set aside by property and casualty insurance companies. |
| Burkina Faso |
|
| Côte d'Ivoire | Cohabitation between the Additional Act no. A /SA.5/12/18 on the avoidance of double taxation with respect to taxes on income, capital and inheritance, and the prevention of fiscal fraud and evasion between ECOWAS member states and the UEMOA regulation. |
| Mauritania | Introduction of a Special Tax on Telecommunications Services (TSST) |
| Niger | Introduction of new social security contribution rates |
| DRC | Introduction of a benchmark for the taxation of expatriate remuneration under the professional tax on remuneration (IPR) and the exceptional tax on expatriate remuneration (IERE) |
BENIN
Benin's tax authorities have issued several circulars clarifying the tax situation.
1. Clarification of the requirements for consultancy firms to assist and represent taxpayers in various tax proceedings before the tax authorities.
In circular no. 0639/MEF/DC/SGM/DGI dated May 15, 2023, the Head of the Tax administration specifies that consulting firms must meet the following conditions:
- Have an appointment mandate issued by the represented taxpayer. This mandate must be registered and communicated in advance to the Administration within fifteen (15) days of the appointment.
- To provide legal, accounting and tax assistance as a company duly incorporated in the Republic of Benin.
- Be listed in the tax authorities' file of active taxpayers and be up to date with their tax obligations.
Tax officials are obliged to check that the consulting firm complies with these conditions before any information is provided.
Failure by civil servants to comply with this requirement is punishable in accordance with the general civil service regulations.
2. Clarification of taxation of provisions for loses set aside by property and casualty insurance companies.
Article 48 of the General Tax Code requires property and casualty insurance companies to pay corporate income tax at a rate of 5% on surplus provisions set aside to cover losses incurred by their customers.
In circular no. 0626/MEF/DC/SGM/DGI/DGE/DLC dated May 10, 2023, the Head of the tax administration specifies that the above obligation applies only to property and casualty insurance companies, i.e., companies providing services in the fire, accident, and miscellaneous risks sector.
Reinsurance companies are therefore excluded from the scope of this obligation.
The circular also specifies that the surpluses referred to in Article 48 of the Tax Code correspond to the positive difference between the provisions recognized in respect of the previous year and the cumulative payments made during the current year, and the provision at year-end.
Consequently, negative surpluses, leading to negative corporate income tax amounts, are not to be considered. These amounts are neither refundable nor deductible from tax due.
In addition, the circular allows reference to table D of the C10B statements provided for in article 422 of the CIMA Code to determine the real value of provisions set aside and payments made.
This table, which is to be used as a reference, details insurance company operations by year of occurrence, and in particular reserves and claims payments for the year in question.
It should be noted that the abovementioned C10B statements, which must be kept in accordance with the Insurance Code, must in principle be forwarded to the Insurance control commission and the Minister responsible for insurance by the insurance companies concerned.
BURKINA FASO
In Burkina Faso, tax news for the first half of 2023 was marked by the publication of various decrees aimed at clarifying the application of current tax laws and practices.
1. Clarification of VAT on cement sales by cement producers and importers
Since the recent adoption of Law no. 029- 2022/ALT of December 24, 2022, on the Finance Law for the 2023 financial year, sales made by cement producers and importers have been subject to Value Added Tax.
By Order no. 2023-00149/MEFP/SG/DGI of March 27, 2023, the Minister of the Economy, Finance and Planning clarified the application of VAT on cement.
The tax base (also known as the profit margin) is the difference between the selling price, including all taxes, and the cost price per ton of cement.
The selling price is estimated by the administration based on average market prices.
The cost price is made up of the cost price of purchases or imports of raw materials or products (which are destroyed or lose their quality during a single manufacturing operation) used to produce taxable cement. The value of invoices for energy used directly in production operations (electricity, fuel gas) and plant personnel labor are also considered as costs intrinsic to the cost price.
In principle, VAT paid in this way is not deductible. However, VAT-registered building and public works professionals can deduct the tax on their cement purchases, provided that their tax-registered suppliers mention the tax separately on the invoice.
In addition, professionals in the sector carrying out activities in addition to cement delivery must keep separate accounts, depending on the invoicing method.
2. Details of the composition, powers, operation, and referral procedures of the commission responsible for examining claims and settlements.
Pursuant to the provisions of articles 640 and 650 of the Tax Code, claims or requests for settlements addressed to the Head of the Tax Administration or to the Minister of the Economy, Finance and Planning must be submitted to a commission for assent.
By Order no. 2023-00148/MEFP/SG/DGI of March 27, 2023, the Minister of the Economy, Finance and Planning clarified the composition, powers, operation, and referral procedures of the commission.
In particular, the commission is responsible for:
- Examine requests submitted by taxpayers (tax transaction requests addressed to the Tax administration or the Minister, as well as claims addressed to the Tax administration).
- Hearing applicants ;
- Appreciate the proposals of the departments that examined the appeals.
- Issue a reasoned opinion on the action to be taken on any file examined.
- Produce session reports.
The composition of the commission varies according to the type of request to be examined.
It is referred to by the Tax administration or the Minister of Finance within fifteen (15) days of receipt of the taxpayer's request.
The Commission meets in session within fifteen (15) days of its referral. The duration of the session may not exceed ten (10) days.
After deliberation, the commission has three (3) days to issue its reasoned opinion. This opinion guides the position to be adopted by the Tax administration or the Minister in the reply to be sent to the taxpayer.
3. Clarification of tax accreditation requirements for non-resident companies and entities in Burkina Faso
As a reminder, since the recent adoption of Law no. 029-2022/ALT of December 24, 2022, on the Finance Law for fiscal year 2023, non-resident companies and other entities are required to designate resident representatives to fulfill their reporting and payment obligations for all taxes for which they may be liable, including VAT.
By Order no. 2023-00148/MEFP/SG/DGI of March 27, 2023, the Minister of the Economy, Finance and Planning clarified the status and terms of appointment of the accredited representative.
The following are only admitted as accredited representatives:
- Accounting firms domiciled for tax purposes in Burkina Faso and in compliance with their tax obligations.
- Legal and tax consultancy firms domiciled in Burkina Faso and in compliance with their tax obligations.
An application for an accreditation certificate must be submitted to the Tax administration. The application is processed within seven (7) working days of submission.
The replacement of the accredited representative must be declared by the non-resident company within thirty (30) days of the replacement. The accredited representative, for his part, has a period of (7) working days from termination of the agreement to report the matter to the tax authorities.
4. Clarification of the content and procedures for entering and terminating advance pricing agreements
As a reminder, since the recent adoption of Law no. 029-2022/ALT of December 24, 2022, on the Finance Law for the 2023 financial year, companies operating in Burkina Faso may request the tax authorities to enter into an advance pricing agreement (APA) on the pricing method for future transactions (not exceeding four years) with one or more companies with which they have links of dependence or control within the meaning of the tax provisions in force.
By Order no. 2023-00150/MEFP/SG/DGI of March 27, 2023, the Minister of the Economy, Finance and Planning clarified the content and procedures for entering and terminating the advance pricing agreement.
To be admissible, the request must be reasoned and justified. Prior to submitting an APA request, the Burkina Faso taxpayer requesting the approval must hold a preliminary meeting with the tax authorities to discuss the conditions under which an APA could be requested and examined, and to agree on the documents to be provided in support of the request.
The application must be submitted at least six (6) months before the start of the first financial year concerned.
In any event, the request must clearly specify the purpose of the agreement, the desired duration, and the proposed transfer pricing method, in compliance with the arm's length principle. To this end, the request must be accompanied by several supporting documents, including a detailed study of the search for independent comparable carried out for the application of the proposed transfer pricing method for each transaction.
Once the agreement has been obtained, the tax authorities will no longer be able to call into question the method used to determine the prices of the transactions covered by the agreement, for the tax years covered, unless it is shown that one of the companies concerned by the agreement:
- Has misrepresented facts, withheld information, or made errors or omissions in preparing its application.
- Has not respected the terms of the agreement or has committed fraudulent maneuvers.
5. Setting contribution rates for branches of the social security system
By Decree No. 2023-0129/PRESTRANSPM/ MFPTPS/PEFP, the President of the Transition adjusted the contribution rates for the branches of the social security system as follows:
| Payables | Former rates (Decree of May 20, 2003) | New rates (Decree of February 24, 2023) |
| Employer |
16% broken down as follows :
|
16% broken down as follows :
|
| Employees | 5.5% for the pensions branch |
5.5% for the pensions branch 14% for the pension branch for the voluntary insured. |
Click here to continue reading . . .
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
