Senegal

Recent changes to the General Tax Code (GTC)

Recent changes to the General Tax Code (GTC)

Finance Law #2023-18 dated December 15, 2023 has added new provisions to the GTC. 

Key changes of the law are as follows :

Clarifications on the taxation of capital gains resulting from the transfer of corporate rights relating directly or indirectly to hydrocarbon mining titles in Senegal

The Finance Law has clarified the scope of article 4.II.5 of the GTC, specifying the type of transfer  (total or partial). As such, the scope of this provision is now less subject to interpretation, since the text covers all types of transfers regardless of the transmission method used.

Harmonization of the terms and conditions for offsetting or refunding excess of distribution tax, with those for CIT installments

The excess of tax distribution will be offsetted or refunded under the same conditions and following the same guarantees as those applicable to CIT installments payments.

As a reminder, this excess is offsetted on  the following fiscal years or reimbursed if the taxpayer ceases its activity or leaves Senegal or if the operation remained in deficit for two (2) consecutive fiscal years   of at least twelve (12) months each.

It may also, at the taxpayer's request, be used to pay any other direct tax or similar tax the taxpayer is also liable.

This principle is duplicable to excess of  installments relating to distribution tax.

Increase in the rate of tax on hidden remuneration

The  Finance Law FY24 increases the rate of tax on hidden remuneration  from 40% to 43%, i.e., an increase of 3%.

New conditions for filing  a country-by-country report

The Finance Law has repealed the initial provisions and put in place new conditions for filing a country-by-country report (CbCR), through the new article 31 ter of GTC.

The new article 31 ter of the GTC sets out a series of criteria for a Senegalese entity to be required to file the CbCR, and article 667 of the GTC provides the application of a fine amounting XOF 25,000,000 in case of failure. 

Also, on January 22, 2024, the Minister of Finance issued the decree #MFB/DGID 1697 dated on January 22, 2024 relating to the CbCR obligation by providing the required content of the CbCR form, the deadline and the penalties for any missing tax filing deadline. As a result, the CbCR must now be:

• filed electronically within 12 months of the end of the fiscal year ;
• specifically in the format provided by the tax authorities; 
• including the country-by-country profit breakdown of the multinational enterprise group to which the senegalese entity belongs;
• including tax and accounting data and information on the place of business of the group's companies.

Exemption for foreign digital service providers from the obligation to appoint a local fiscal representative

Article 355 of GTC required foreign service providers to appoint a local fiscal  representative to carry out tax declaration and payment formalities.

The Finance Law now introduces an exception to this obligation. The text specifies that non-resident digital platforms are not required to appoint a tax representative in Senegal for the filing and payment of online sales subject to VAT, to the extent that they are themselves required to register for the collection and payment of such VAT.

Extension of the scope of tax exemptions for alcoholic beverages and liquids

Releases for consumption and transfers of alcohol and bulk alcoholic liquids intended for use, in Senegal, in the production or sale  by a taxable person of alcoholic beverages or liquids, are now exempt from the tax on alcoholic beverages and liquids. 

To implement this exemption, the purchaser must present to the local supplier or customs authorities a certificate issued by the tax authorities certifying that he is a producer and has fulfilled his obligations to file  and pay the specific tax on alcoholic beverages and liquids.

Obligation to present a certificate for the deduction of tax on alcohol intended for use in Senegal

From now, the tax borne on alcoholic beverages intended for use, in Senegal, for the production of alcoholic beverages or liquids may only be offsetted against the tax collected on the sale of the beverages or liquids  produced, by way of presentation of a certificate from the final purchaser, indicating the nature of the product, the destination justifying the exemption of the quantities or volumes to be received free of tax, and the reference of the declaration of release for consumption.

Four copies of this certificate must be certified by the tax authorities.

Tax on alcoholic beverages and liquids: some rates and tariffs lowered

Initially set at 50%, the tax rate on locally-produced alcoholic beverages has now been increased to 25%. Similarly, the tariff  of the additional tax has been reduced, as follows:

• XOF 800 against XOF 2,000, initially  per liter of alcohol with a draw greater than 6° and less or equaling to 15°;
• XOF 3,000  against XOF 6,000, initially,  per liter of alcohol with a draw greater than 15°.

Extension of  the scope of tobacco tax

The Finance Law extended the scope of the tobacco tax, which now applies to all forms of tobacco produced or imported into Senegal, and intended to be smoked, sucked, chewed, snuffed or consumed in any way whatsoever, including electronic cigarettes, pipes and their parts, preparations for pipes, as well as shisha and electronic cigarette products and materials, etc.

Tax on bags, packaging or non-recoverable packaging

From now, the tax on bags, packaging or non-recoverable packaging will be payable only once, when acquiring packaging without contents intended to contain marketed products.

Registration fees: extension of the scope of application of the fixed duty of XOF 10,000

The Finance Law FY24 has eased the taxation of transfers of receivables  held against the State. The text provides that transfers of receivables  resulting in a transfer of ownership when the transferred debtor is the State of Senegal, a local authority or a parapublic sector entity of this State, are subject to registration fees of XOF 10,000 ( instead of 1% initially).

Stamp duties:  extension of the scope of application 

The Finance Law FY24 provides that the issuance of the Apostille certificate provided by the Hague Convention of October 05, 1961 removing the requirement of legalization for foreign public documents between the Contracting Parties, is subject to a stamp duty of XOF 2,000. 

Also, the stamp duty levied on the issuance of duplicates for ordinary and pilgrim passports has doubled. They go from: 

• XOF 20,000 to XOF 40,000 for ordinary passports; and 
• XOF 2,000 to XOF 4,000 for special pilgrim passports. 

Real estate capital gains tax: extension of  the scope of application & settlement and payment terms

The finance Law has extended the scope of the real estate capital gains tax to include indirect sales of real estate, whether registered or not, located in Senegal, as well as real estate rights, business goodwill or clients relating to property located in Senegal.

The procedures for calculating and paying the real estate capital gains tax on indirect transfers of real estate located in Senegal or rights relating to such real estate are governed by the same conditions as those applicable to rights attached to oil or mining titles.

Indeed, this tax is withheld and paid by the transferee on the amount paid to the transferor. For transferors domiciled in Senegal, the amount paid as capital gains tax, on the basis of the payment receipt, is deducted from income tax and deferred for a period of three (03) years, without being able to give rise to a refund.

Prohibition on carrying out an off site tax audit following an on-site tax audit that has already been completed

The Finance Law  FY24 reinforces taxpayers' rights, by specifying that the tax authorities are no longer entitled to carry out a remote  tax audit on tax and  duties that have already been reassessed by an on site  tax audit for a certain period, to risk the  complete voidness of the procedure.

However, during the period of the on-site audit, the company may still use the means of control provided for in articles 571, 576 and 577 of GTC.

New reporting obligation for certain entities

The Finance Law FY24 introduced a new reporting obligation for:

• certain public service delegated entities (i.e., in water and electricity sectors, operators of public utilities or port and airport facilities);
• holders of the gambling monopoly;
• operators of digital platforms;
• casinos, groups, circles and companies organizing gambling  and games of chance;
• financial institutions, members of the independent legal profession.

They must now communicate certain information they hold as client portfolio, company name, precise address of the head office, tax identification number, etc. no later than January 31 of each year or/and April 30 of each year.

Failure to comply with the reporting obligation developed in the previous section gives rise to the payment of a fine which equals to XOF 5,000,000.