Benin: Summary of tax news regarding VAT deduction and refunds

The adjustments contained in the new regulations are part of a VAT reform process and aim to a) improve the tax liquidity of businesses, particularly in input-intensive sectors; b) reduce bottlenecks in the system for refunding VAT credits accumulated by certain businesses; c) modernize the tax framework to bring Benin's practices closer to international standards. 

Provisions relating to the right to deduct VAT

They concern the extension of VAT deductibility on certain inputs.

The new legislation authorizes the deduction of VAT on:

• Fuel used to operate tanks;
• Gas used as fuel;
• Diesel, oils, and greases intended for industrial and construction machinery and public works.

These expenses, when incurred in the course of professional activity, are now eligible for deduction of the VAT paid on purchase.

Cap on deductions for certain companies

For companies in the construction and public works sector, and certain industries, the new regulations cap   the deduction of VAT incurred on these purchases at 90% of the amount shown on the invoice. This limitation aims to regulate the tax benefit while partially reducing costs for sectors that consume energy and raw materials.

Relaxation of rules governing VAT credit refunds or adjustments

The new regulations relax the conditions for filing VAT credit refund claims. Exceptionally, they allow companies that were unable to file refund claims at the end of a two-month period in a given year to submit them by April 30 of the following fiscal year at the latest. This new measure is intended to reduce the risk of foreclosure and adapt the procedure to the constraints faced by businesses.