The New Regulation Provided by Law no. 2018-10 Amending the Senegalese Tax Law on Transfer Pricing

In Senegal, transfer pricing was laconically regulated by Law no. 2012-31 of 31 December 2012. On 30 March 2018, the lawmakers amended it with Law 2018-10, which provides the major evolutions noted in the field of international taxation through “BEPS” (Base Erosion and Profits Shifting) which aims to provide the States with the most effective mechanisms of international taxation.

The main measures provided for in this Senegalese Law on Transfer Pricing relate, among other things, to the transfer pricing summary declaration and the country-by-country reporting.

The Transfer Pricing Summary Declaration

This documentation justifying the pricing policy is supposed to contain legal, economic, fiscal, accounting and methodological information regarding the methods of determining and validating transfer pricing.

Transfer Pricing Summary Declaration Filing Conditions

Any company established in Senegal that is dependent on foreign affiliated companies within the meaning of Article 17 of the Senegalese general tax code shall file the transfer pricing declaration provided that one of the following conditions is fulfilled:

• It has an annual turnover exclusive of taxes or a gross asset of at least XOF 5,000,000,000; or
• At the end of the financial year, it holds, directly or indirectly, more than half of the capital share or voting rights of a company established or incorporated in Senegal or abroad with an annual turnover exclusive of taxes or gross assets of at least XOF 5,000,000,000; or
• More than half of its share capital or voting rights, at the end of the financial year, directly or indirectly, are held by a company having an annual turnover exclusive of taxes or a gross asset of at least XOF 5,000,000,000.

Content of Transfer Pricing Summary Declaration

This annual declaration relating to the operations carried out during the previous year aims to provide the tax administration with two types of information, namely:

• General information on the group of affiliated companies: general information on the activity carried out and the transfer pricing policy, etc.
• Specific information regarding the reporting company: changes during the year, details of transactions and clarification request from the Tax Authorities, etc.

This declaration shall be filed by 30 April at the latest.

Failure to subscribe to this declaration is punishable by a significant tax fine.

Country-by-Country Report

This declaration, which is different from the one described above, shall be filed by the companies that meet the criteria provided in Article 31 of the general tax code, namely:

• Multinationals established in Senegal that achieve an annual consolidated turnover exclusive of taxes equal to or over XOF 491,000,000,000 in the year preceding that for which the declaration relates and which establish consolidated accounts, which hold or control companies or branches outside Senegal that are not owned by Senegalese or foreign companies subject to country-by-country reporting requirements;
• Companies established in Senegal and that belong to a foreign multinational meeting the criteria set forth in the abovementioned new Article 31 of the Senegalese tax code, when they have been designated by the group for this purpose, or when they cannot prove that another entity (either Senegalese or foreign) has been designated for this purpose.
• This applies in particular to Senegalese subsidiaries of multinationals established in a State that has not provided the country-by-country report in its domestic legislation.In this case, two possibilities are offered:
  • The Senegalese subsidiary of the foreign multinational company sends to the Senegalese tax authorities a country-by-country report on the group as a whole; or
  • Another affiliate of the group, established in a country that has introduced the country-by-country reporting, has been designated to transmit country-by-country information for the entire group.

This last declaration must be filed electronically in the 12 months following the closing date of the group’s financial year.

Failure to subscribe to this declaration is more heavily sanctioned than failure to file the transfer pricing summary declaration.