Corporate tax in Ivory Coast

Summary

Corporate Income Tax Rate (%) 25 (a)
Capital Gains Tax Rate (%) 25 (b)
Branch Tax Rate (%) 25 (a)
Withholding Tax (%)
Dividends 2 / 10 / 15 (c)
Directors’ Fees and Nondeductible Expenses 12
Interest 18 (d)
Royalties from Patents, Know-how, etc. 20
Payments for Services 20 (e)
Branch Remittance Tax 7.5 (f)
Net Operating Losses (years)
Carryback 0
Carryforward 5

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 withholding tax rate is 6.75%, 8.25%, 13.5% or 16.5% in certain cases if the income is received through a bank or if the income is deposited by a holding company. The withholding rate on “lots” (exceptionally high bond discounts given only for certain specified bonds selected at random) is 25%. The withholding tax is imposed on the amount of the discount.

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 (18% if the profit is exempt from corpo­rate tax). See Section B.

Taxes on corporate income and gains

Corporate income tax. Resident companies are taxed on the ter­ritoriality 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 local-source profits if they have a permanent establishment in Côte d’Ivoire.

Tax rates. The regular corporate income tax rate is 25%.

The minimum tax is 0.5% of turnover. For oil-producing, electric­ity 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 corpora­tions are exempt from the minimum tax for their first fiscal year, and mining companies are exempt from the minimum tax during the exploration phase.

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 depend­ing 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 start-up 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.

The total gain is taxed, however, if the business is not carried on in any form by any person.

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 15 April of the year following the financial year.

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

Most companies must provide an audited financial statement to the tax authorities.

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 XOF400 million must file with their local tax center.
  • Taxpayers with turnover ranging from XOF400 million to XOF3 billion must file with the medium-sized enterprises cen­ter (CME).
  • Taxpayers with turnover exceeding XOF3 billion must file with the large corporation tax center (DGE).

Since 30 December 2015, companies must use a unified tax form to file their tax return. This tax return includes in one form all of the taxes to which the company is subject. The deadline 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: 10 April
  • Commercial companies: 15 April
  • Service companies: 20 April

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.

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). If less than a 10% interest is held, a listed com pany may exclude 90% of the dividends received while an unlisted company may exclude 50%.

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.

Determination of trading income

General. Taxable income is based on financial statements pre­pared 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 compen satory benefit, such as excessive remuneration paid to a director)
  • Subsidies
  • Corporate tax
  • Penalties

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

  • The payer proves that the payments are related to real opera­tions and that the amount of the payments is normal.
  • The amount of the payments does not exceed 5% of the turn­over and 20% of the overhead of the payer.

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

Under certain tax treaties of Côte d’Ivoire, amounts paid to non­resident 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 com­panies to other resident companies is subject to the second condi­tion mentioned above (5% of the turnover and 20% of the over­head). As a result, the non-discrimination clause provided for by certain tax treaties does not apply, and services fees and royalties paid by resident companies to 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 integra tion of related companies equivalent to a con­solidated filing position. However, a parent-subsidiary tax re­gime exempts dividends and capital gains from tax under certain conditions.

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 duties, on transfers of
Real property or businesses
1 to 10
Special tax on subcontractors of petroleum
companies; a global tax including income
tax, payroll taxes, a tax on shares, a national
solidarity tax and an insurance tax; on
Taxable turnover
5.786
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
XOF1,647,315; 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

Miscellaneous matters

Foreign-exchange controls. Exchange control regulations apply to financial transfers outside the franc zone, which is a monetary zone including France and its former overseas colonies.

Transfer pricing. Côte d’Ivoire does not have transfer-pricing regu­lations, but it has provisions addressing tax avoidance.

Treaty withholding tax rates

Côte d’Ivoire has signed a multilateral tax treaty with the other members of the West African Economic Community (Com­munaute 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. However, the Ivorian tax administration considers the above multilateral tax treaties to be still applicable, provided that reciprocity exists.

Côte d’Ivoire has signed a new treaty with the countries of the West African Economic and Monetary Union (WAEMU). This tax treaty has applied for some tax items since 2009. It is wholly ap plicable, 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
Benin 10 15 15
Burkina Faso 10 15 15
Cameroon 15 18 0
Canada 15 15 10
Central African Republic 15 18 0
Chad 15 18 0
       
Congo (Democratic Republic of the) 15 18 0
Congo (Republic of the) 15 18 0
France 15 15 10
Gabon 15 18 0
Germany 15 15 10
Italy 15 15 10
Madagascar 15 18 0
Mali 10 15 15
Mauritania 15 18 0
Niger 10 15 15
Norway 15 16 10
Rwanda 15 18 0
Senegal 10 15 15
Switzerland 15 15 10
Togo 10 15 15
United Kingdom 15 15 10
WAEMU countries 10 15 15
Non-treaty countries 2/10/15 (a) 18 (b) 20
    a) See Section B.
    b) See footnote (d) in Section A.

On 3 June 2015, Côte d’Ivoire ratified tax treaties with Morocco and Tunisia, but these treaties are not yet in force.