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Dakar GMT
EY
22, rue Ramez Bourgi
B.P. 2085
Dakar Senegal
Principal Tax Contacts
Alexis Moutome
Olga Akakpovi
A. At a glance
+221 (33) 849-2222
Fax: +221 (33) 823-8032
+221 (33) 849-2232
Email: alexis.moutome@sn.ey.com
+221 (33) 849-2213
Email: olga.akakpovi@sn.ey.com
(a) If the company does not derive a taxable profit in a given year, the minimum tax applies. The minimum tax equals 0.5% of the turnover for the preceding tax year. For example, the minimum tax payable in 2020 is determined based on the annual turnover of 2019. The minimum tax may not be more than XOF5 million. Under the 2020 Finance Law No. 2019-17 dated 20 December 2019, new companies not registered with the tax directorate in charge for large-size companies are not subject to the payment of the minimum tax during their first three years of activities, while large-size companies are only exempted for one year.
(b) In certain circumstances the tax is deferred or reduced (see Section B).
(c) See Section B for special rules applicable to certain dividends. See Section C for a list of nondeductible expenses.
(d) This rate may be modified by a tax treaty. See Section B.
(e) The 6% rate applies to interest on long-term (that is, a duration of at least five years) bonds. The 8% rate applies to bank interest. The 13% rate applies to interest on short-term bonds. The 20% rate applies to interest on deposit receipts. The 16% rate applies to other interest payments.
(f) This tax applies to technical assistance fees and other types of remuneration paid to nonresident companies and nonresident individuals that do not have a permanent establishment in Senegal. The tax is calculated by applying a rate of 25% to a base of 80% of the remuneration that is paid (that is, an effective withholding tax rate is 20%).
B. Taxes on corporate income and gains
Corporate income tax. Senegalese companies are taxed on the basis of the territoriality principle. As a result, companies carrying on a trade or business outside Senegal are not taxed in Senegal
Participation exemption. A parent company may exclude from its tax base for corporate income tax purposes 95% of the gross dividends received from a subsidiary if all of the following conditions are met:
• The parent company and the subsidiary are either joint stock companies or limited liability companies.
• The parent company has its registered office in Senegal and is subject to corporate income tax.
• The parent company holds at least 10% of the shares of the subsidiary.
• The shares of the subsidiary are subscribed to or allocated when the subsidiary is created, and they are registered in the name of the parent company or, alternatively, the parent company commits to holding the shares for two consecutive years in registered form. The letter containing such commitment must be annexed to the corporate income tax return.
The above participation exemption regime is extended to Senegalese holding companies incorporated in the form of joint stock companies or limited liability companies meeting the conditions mentioned above.
Tax depreciation. Land and intangible assets, such as goodwill, are not depreciable for tax purposes. Other fixed assets may be depreciated. The straight-line method is generally allowed. The following are some of the applicable straight-line rates.
In certain circumstances, plant and machinery as well as other assets may be depreciated using the declining-balance method or an accelerated method.
Relief for tax losses. Losses may be carried forward three years; losses attributable to depreciation (deferred deemed amortization, which is amortization of assets reported during a loss year) may be carried forward indefinitely. Losses may not be carried back.
Groups of companies. No fiscal integration system equivalent to tax consolidation or fiscal unity exists in Senegal.
D. Other significant taxes
The following table summarizes other significant taxes.
Nature of tax
LEC based on the value added in the year preceding the tax year 1 Registration duties, on transfers of real property or businesses 1 to 5
Land tax, on capital gains resulting from sales or transfers of immovable properties 10/15
Payroll tax paid by the employer with respect to both Senegalese and foreign employees 3
Social security contributions
Paid monthly by the employer on each employee’s monthly gross salary, up to XOF63,000 1/3/5
Regular pension, paid monthly on each employee’s monthly gross salary, up to XOF432,000; paid by
Additional pension, paid monthly on an executive’s monthly gross salary, up to XOF1,296,000; paid by
E. Miscellaneous matters
Foreign-exchange controls. Exchange-control regulations exist in Senegal for financial transfers outside the West African Economic and Monetary Union (WAEMU). The exchange-control regulations are contained in the WAEMU Regulation No. 09/2010 CM, together with its appendices and the Central Bank of West African States (La Banque Centrale des Etats de l’Afrique de l’Ouest, or BCEAO) application decrees.
Transfer pricing. The Senegalese tax law contains specific transferpricing documentation requirements. Transactions between associated enterprises must be documented. Such documentation must include at a minimum a description of the terms of the transactions, the entities involved, a functional analysis and a detailed description of the chosen methodology to determine the applied transfer prices. The documentation must establish how transfer prices were determined and whether the terms of the intercompany transactions would have been adopted if the parties were unrelated. Overall, in accordance with Ministerial Order No. 25840 of 1 August 2023 on the content of transfer-pricing documentation, this transfer-pricing documentation must include a Master File as well as a Local File. In practice, companies establish their transfer pricing documentation in accordance with the Organisation for Economic Co-operation and Development (OECD) Guidelines.
If such information is not available on request in an audit or a litigation, the tax authorities may assess the taxable income based on information at their disposal. The concerned companies do not have to automatically file the transfer-pricing documentation. They must make it available to the National Directorate of Taxes and Domains (Direction Générale des Impôts et Domaines), which is empowered to request such documentation within the framework of an account examination procedure (field audit of the company). Failure to provide such documentation triggers a penalty of 0.5% of the value of transactions for which supporting
F. Treaty withholding tax rates
Senegal has entered into a multilateral tax treaty with the other Member States of the WAEMU, which are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger and Togo (this tax treaty took effect on 1 January 2010) and has also entered into a multilateral tax treaty with the other Member States of the Economic Community of West African States (ECOWAS), which are Benin, Cape Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Nigeria, Sierra Leone and Togo (this tax treaty took effect on 1 January 2022). Senegal has entered into bilateral tax treaties with Belgium, Canada, the Czech Republic, France, Iran, Italy, Kuwait, Lebanon, Luxembourg, Malaysia, Mauritania, Morocco, Norway, Portugal, Qatar, Spain, Taiwan, Tunisia, Türkiye, the United Arab Emirates and the United Kingdom.
The Senegal-Mauritius double tax treaty has been denounced by the Senegalese government, and its provisions are no longer applicable.
In addition, on 10 May 2022, Senegal ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS), which entered into force on 1 September 2022.
The rates reflect the lower of the treaty rate and the rate under domestic tax law.
United Arab Emirates 5 5 5
United Kingdom 5/8/10 (d) 10 6/10 (c)
Non-treaty jurisdictions 10 6/8/13/16/20 (e) 20
(a) The 20% rate applies to interest on deposit receipts. The 16% rate applies to other interest payments.
(b) The 5% rate applies if the beneficial owner of the dividends is a company that holds at least 20% of the share capital of the distributing company. The 10% rate applies to other dividends.
(c) The 6% rate applies to royalties paid for the use of industrial, commercial and scientific equipment. The 10% rate applies to other royalties.
(d) The 5% rate applies if the real beneficiary of the dividends is a company that holds at least 25% of the share capital of the distributing company. Under the United Kingdom treaty, the 8% rate applies if the beneficiary is a pension fund located in the other state. The 10% rate applies to other dividends.
(e) For details, see footnote (e) to Section A.
(f) The 5% rate applies if the beneficial owner is a company (other than a partnership) that holds directly at least 25% of the capital of the company paying the dividend. The 10% rate applies to other dividends.
(g) The 5% rate applies if the beneficial owner is a company (other than a partnership) that holds directly at least 10% of the capital of the company paying the dividend. The 10% rate applies to other dividends.
(h) The 5% rate applies if the beneficial owner is a company (other than a partnership) that holds directly at least 20% of the capital of the company paying the dividend. The 10% rate applies to other dividends.
(i) See the first paragraph of this section.