Inventory is generally stated at the lower of cost or market value. Last in first out (LIFO) and first in first out (FIFO) are permitted. Book and tax conformity is required.
Capital gains derived from the transfer of assets are subject to the 30% CIT. There is no basket system. Sales of stocks by a non-resident are liable to the 30% CIT, subject to the application of a DTT.
If a parent company domiciled in Senegal owns 10% of the subsidiary (main condition for the application of the parent-subsidiary corporation special taxation status), a 95% reduction on the dividends received is applicable for CIT purposes.
If these conditions are not met, dividends received by a company are subject to CIT as follows:
- 40% of the dividends are added back to the taxable profit.
- The company benefits from a tax credit upon the CIT equal to 40% of the tax on distributions withheld (at the general WHT rate of 10%).
Stock dividends are unusual in Senegal. However, this kind of distribution would be taxable at the general WHT rate of 10% on the basis of its real value.
Article 105 of the GTC provides a list of interests that are not subject to CIT. For instance, the following are not subject to CIT:
- Interest on sovereign debt.
- Interest on deposit accounts opened at the Housing Bank of Senegal (Banque de l’Habitat du Senegal).
- Interest on loans granted by the Central Bank.
There are no specific provisions for royalty income. In general and in case of foreign payment, they are subject to 20% WHT (subject to a DTT that can limit or exempt the WHT), and in any case to 18% reverse VAT.
In general, profits generated in Senegal are taxed under Senegal’s income tax law. Profits generated outside Senegal and constituting a PE in the relevant country are not taxed in Senegal. A DTT can provide different rules.