Senegal

Recent changes to the General Tax Code (GTC)

Finance Law No. 2023-18, dated 15 December 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.

Harmonisation of the terms and conditions for offsetting or refunding excess of distribution tax with those for corporate income tax (CIT) instalments

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

As a reminder, this excess is offset 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 consecutive fiscal years  of at least 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 for.

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

Increase in the rate of tax on hidden remuneration

The Finance Law increases the rate of tax on hidden remuneration from 40% to 43%.

New conditions for filing a country-by-country (CbC) report

The Finance Law has repealed the initial provisions and put in place new conditions for filing a CbC report.

Also, on 22 January 2024, the Minister of Finance issued the decree #MFB/DGID 1697, dated 22 January 2024, relating to the CbC report obligation by providing the required content of the CbC report form, the deadline, and the penalties for any missing tax filing deadline. As a result, the CbC report 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 CbC profit breakdown of the multinational enterprise (MNE) group to which the Senegalese entity belongs, and
• 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 value-added tax (VAT), to the extent that they are themselves required to register for the collection and payment of such VAT.

Real estate capital gains tax: Extension of the scope of application and 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 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 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 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 organising gambling and games of chance, and
• 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 31 January of each year or/and 30 April of each year.

Failure to comply with the reporting obligation gives rise to the payment of a 5 million Communauté financière d'Afrique (Financial Community of Africa or CFA) francs (XOF) fine.