Recent changes to the General Tax Code (GTC)
Recent Finance Acts have added new provisions to the GTC.
Key changes of the law are discussed below:
Introduction of a levy on insurance companies
A tax has been introduced that concerns insurance companies approved in Senegal, excluding reinsurance companies.
The rate of the tax is set at 1% of the insurance companies' turnover excluding taxes. However, for life insurance premiums, the rate is reduced to 0.5%. The tax is paid in instalments within the first 15 days following the end of each quarter of the calendar year, i.e. by 15 April, 15 July, 15 October, and 15 January at the latest.
Reverse value-added tax (VAT) on digital services provided by a foreign supplier
The Finance Act for FY23 has just established the taxation of digital services, by making digital services supplied by a foreign provider subject to reverse-charge VAT.
Local companies must collect VAT and pay it on behalf of the foreign supplier when the beneficiary of the service is an individual that is not subject to VAT.
It should be noted that failure by foreign suppliers to comply with the above obligations results in the suspension of access to their digital platforms, markets, or online marketplaces used to conduct transactions on Senegalese territory.
Introduction of a new withholding tax (WHT) on sale of hydrocarbons by non-resident entities
The Finance Act for FY23 has created a WHT on sales of hydrocarbons made in Senegal by non-domiciled persons.
The tax is equal to 0.5 Communauté financière d'Afrique (Financial Community of Africa or CFA) francs (XOF) per kilogram sold and is due by foreign companies that sell directly to local or foreign authorised importers the hydrocarbons they have in tanks built in Senegal.
The withholding is made by the oil stockholders and transferred to the competent collection office no later than the 15th day of the month following the month of the withholding. If they fail to do so, they become personally liable for payment, in particular in the event of failure to withhold or insufficient withholding, under the conditions provided for in articles 188 to 190 of the GTC.
Free export company status
The benefit of the free export company status is extended until 31 December 2024.
Joint corporate income tax (CIT) liability on sales of shares and indirect sale of mining and production sharing contract (PSC) rights by a foreign entity
In accordance with Article 31.6 of the GTC, taxes due by foreign legal entities referred to in Article 4.II.5 on capital gains are paid to the local tax administration by the transferor at the time of registration, in the month following the transfer, under the responsibility of a representative.
Otherwise, the tax is jointly due by the holder of mining or hydrocarbon rights, established in Senegal.
Designation of the entity holding the petroleum or mining right as the party liable for registration fees on the sale of these rights
Now, the registration fees applicable on the sale of petroleum or mining rights are due by the entity holding the said rights titles (instead of the beneficiary of the sale, as initially).
Exclusion of certain hospitalisation services from VAT exemption
Based on Article 361.1 of the GTC, rental of rooms and other hotel amenities/facilities provided in private hospitals no longer benefit from the VAT exemption.
Digitalisation of the VAT credit refund application
The law now provides the possibility to apply for the VAT credit refund requests electronically. The modalities must be clarified by a circular of the Tax Commissioner.