Group taxation is not permitted in Senegal.
The transfer pricing regulations globally correspond to the OECD requirements standards (i.e. identifying related-party transactions, choosing the suitable transfer pricing method, and preparing documentation to support the selection of such method).
Companies with an annual turnover or amount of gross assets of at least XOF 5 billion are required to make available documentation upon a tax audit. This applies when the company directly or indirectly owns more than 50% of the share capital or more than 50% of the voting rights in another company.
An annual transfer pricing tax return shall also be provided with CIT filing (by April 30). This is a kind of simplified transfer pricing documentation, which includes information such as the description of the related companies and activities performed, group transfer pricing policy, intra-group flows, etc.
Country-by-country (CbC) reporting
Companies with group revenues exceeding XOF 491 billion must file a CbC report showing the allocation of revenues, profits, and taxes paid. The company shall prepare consolidated financial statements, and own directly or indirectly one or more legal entities located in Senegal.
The filing must be done electronically. The deadline is 12 months after the end of the fiscal year to which the CbC report relates.
Automatic exchange of the CbC report will take place between the Senegalese tax administration and other tax authorities of the jurisdictions in which the group operates and which have concluded a tax treaty providing such exchange with Senegal.
There are no specific rules regarding thin capitalisation in Senegal. Nonetheless, the following tax and legal rules should be known:
- From a legal point of view (corporate law), the net assets must be equal to at least half of the share capital of the company. In case the net assets are lower than this threshold, the situation should be regularised by any lawful means within a period of 2 years following the financial year it has appeared. Otherwise, any third party could request the closing of the entity before the courts.
- The deductibility of interest paid to a shareholder upon a loan or an advance in general is limited to a maximum rate calculated on the Central Bank legal interest rate (currently fixed at 3.5%) plus 3 points, calculated on the amount of the share capital (see Interest expenses in the Deductions section for more information). Portions exceeding this limit are not deductible for CIT purpose.
Controlled foreign companies (CFCs)
There are no provisions in Senegal for CFCs.