THE TAXATION OF SENEGALESE COMPANIES
The corporation tax (IS) in Senegal is at the rate of 30%. In the event of a deficit exercise, the IS is substituted for a minimum tax called Minimum Flat Tax on Companies (MFIs). The MFI is determined according to the turnover of the exercise and can in no case be less than 500,000 CFA, nor more than 5,000,000 CFA.
When the IS is lower than the MFI, the taxpayer pays the amount of the MFI.
The IS applies to profits made during a financial year corresponding to the calendar year, that is, from 1 January to 31 December.
Value added tax
The Value Added Tax (VAT) is applicable on the delivery of goods made in Senegal. Also subject to VAT are the provision of services when the debtor is established in Senegal, the services are used or rendered in Senegal or abroad and when the services are used or rendered in Senegal.
The VAT rate is 18%. There is a reduced rate of 10%, but only applicable to hotel and restaurant services provided by approved establishments.
On the other hand, certain transactions are expressly exempted from VAT. These include goods and services in the field of health, education, banking and insurance / reinsurance / co-insurance which are subject to specific taxation. Direct exports of goods are also exempt from VAT when the exporter issues such goods outside Senegalese territory.
Are excluded from VAT are the telecommunications services rendered by a telecommunication operator established in Senegal on behalf of a natural or legal person approved outside Senegal.
The contribution of patents (licences)
Companies with an industrial or commercial activity are subject to the license. This contribution includes: a fixed fee, determined according to the activity of the company or the turnover and a proportional right, which applies on the rental value of the business premises.
This rental value includes that of industrial equipment in the case of an industrial establishment.
The land tax on built properties
The built-up property tax (CFPB) is established on behalf of the owners of buildings, industrial installations permanently attached to the ground or forming part of a building, of installations considered to be buildings, of land used for industrial projects (for example a construction site).
The rental value of industrial establishments takes into account industrial equipment fixed to buildings excluding mobile equipment. This rental value is determined as in the case of a license.
The CFPB is calculated on the rental value of taxable goods. The rate of the CFPB is 5% carried, when it comes to factories or similar industrial establishments, to 7.5%.
It should be noted that new constructions, reconstructions and additions to reconstruction are subject to the land tax only from the 6th year following the year of completion. This exemption does not apply to industrial or commercial land, which is taxable from 1 January of the year following the assignment.
The law provides for a number of acts that must be compulsorily registered. This study can not exhaustively cover all the acts concerned. We will therefore limit ourselves to mentioning the most significant acts that are:
- Lease contracts subject to registration at a rate of 2% of the annual rent plus charges imposed on the lessee. The renewal of the lease must also be registered at the same rate.
- Vehicle transfers, subject to a transfer duty of 1% for new vehicles and 3% for used vehicles.
- Disposals of buildings, subject to registration fees at the rate of 10%, to which should be added the rights of publicity land at the rate of 1%, as well as the expenses of the notary.
- Transfers of goodwill of commercial property, subject to registration fees at the rate of 10% on the components of the business (tangible and intangible assets), 1% for receivables and 1% for inventories.
- Disposals of shares, bonds and shares of commercial companies, subject to a 1% transfer tax. This right is liquidated on the market value of the goods or on the stipulated price if it is not lower than the market value.
A withholding tax on the amounts paid to foreign service providers (legal persons or natural persons) of 20% must be made out of the amounts paid to foreign service providers that do not have a facility in Senegal, for services rendered or used in Senegal. The existence of a tax treaty may exclude the application of this withholding tax or reduce its rate.
A withholding tax of 5% (under certain conditions) must be made on the remuneration paid to natural persons residing in Senegal and to legal entities and groups that have not opted for a tax liability on companies and also residing in Senegal, for services rendered or used in Senegal.
For natural persons, they must be taxed according to the tax regime of the Single Global Contribution (UGC). Are also concerned, sums paid as rents paid to natural persons or cashed on their behalf by real estate agencies, property managers and real estate companies. This is a 5% withholding tax that is not mandatory when the monthly rent is less than CFA 150,000.
The employer must make a salary deduction. The amount of this deduction is determined according to a progressive scale established by the tax authorities. In addition to this deduction, the employer must pay a payroll tax of 3% applicable on the payroll.
A withholding tax is applicable on movable capital income. This is, on the one hand, withholding tax on the interest on receivables at the rate of 16%, except where there is a tax treaty exempting such a deduction or reducing the rate. When a Senegalese bank pays the interest, it applies a withholding tax of 8% instead of 16%.
Withholding tax must be paid to the registrar within 15 days of the month following the month in which the interest is paid.
It is, on the other hand, the withholding tax on dividends distributed at a rate of 10%. This withholding must be liquidated each year after the distribution and no later than 20 July. However, this withholding is preceded by a 50% deposit payable during the fiscal year, in the first 20 days of January of each year.
Reporting obligations related to financial statements
The financial statements and the tax return must be filed by April 30 of each year.
Salaries must be reported annually - all amounts paid in respect of employees' work, including benefits in kind or money - as well as amounts paid for services rendered - all amounts paid as rent, fees, commissions to a foreign or local service provider and exceeding CFA 300,000 per year for the same beneficiary.
The Single Global Contribution
The Single Global Contribution (SGC or CGU in French) is a synthetic tax, comprising the following six taxes: income tax based on industrial and commercial profits; tax of the minimum tax; contribution of patents; value added tax ; flat-rate contribution to employers.
The CGU allows individual entrepreneurs to fulfil their tax obligations at once and definitively.
It is subject to natural persons, whose annual turnover, including all duties and taxes, does not exceed CFA 50 million when they carry out goods or services delivery operations.
It does not apply to natural persons whose activity falls within the category of non-commercial profits and to natural persons carrying out sales, rental of buildings or property management operations.
Taxpayers subject to the single global contribution are not allowed to charge value added tax to their customers.
The amount of the CGU is determined based on the turnover from January 1 to December 31 of the previous year.