The concepts of permanent establishment and transfer prices were included in the 2020 and 2021 finance laws, thus filling the void that has prevailed for a long time.
The 2021 finance law capped the deductibility of these costs at 5% of taxable profit before deduction of the costs in question; in the event of a deficit, this provision shall apply to the results of the last non-prescribed profit year.
Since 2020, the profits indirectly transferred to companies which are under the dependence or which have the control of companies located outside Benin, either by the increase or the reduction of the purchase or sale prices, or by any other means, are incorporated in the results recognized by the accounts for the establishment of the corporation tax due by these companies.
These benefits are determined by comparison with those that would have been realized in the absence of arm’s length or control.
These provisions also apply for the determination of the taxable profit in Benin of a legal person exercising its activity both in Benin and abroad.
For these branches, no deduction is allowed for the sums which would be, if applicable, paid or due, for other purposes than the reimbursement of costs incurred, by the permanent establishment at the head office of the legal person or at any of its offices, as royalties, fees or other similar payments, for the use of patents or other rights, or as commissions for specific services rendered or for management activity or, except a case of banking enterprise, as interest on amounts loaned to the permanent establishment.
Annual Transfer Pricing declaration (article 34.4 amended in 2020)
Since 2020, companies that are dependent on or have control of companies established outside Benin whose annual turnover excluding taxes or gross assets is greater than or equal to one billion francs are subject to an annual declaration of transfer prices before 1 May each year.
This declaration has three parts:
With this newsletter, we inform multinational companies on country-specific and international legislative documents and regulations.
If you have any questions about WTS Global or our global services, please get in touch.
We will respond to you as soon as possible.