Burkina Faso: New regime for taxation of services, intangible goods, transfer of mining research permits and interests on loans

New regime for services taxation

From January 2018, the general rule for the territoriality of services is based on the place of their execution instead of their place of consumption. The exception applies when the service is executed in a foreign country but used or consumed in Burkina Faso. This is to comply with the VAT regulation implemented by the West Africa Economic and Monetary Union.

Services rendered or executed in Burkina but used outside the country are treated as export services and may entitle the supplier to claim for VAT refund if he is delivering export services at 100%. Practically speaking, it is probable that the tax authorities will issue an administrative guidance to request the provision of a residence certificate of the customer, justifying the foreign domiciliation of the customer when the service is executed in Burkina and considered as consumed or used in a foreign country.

Telecommunications services are no longer delivery of goods

Providing services of telecommunications is now treated as services while in the past it was treated as delivery of goods. Therefore, the fiscal management of cross-border telecoms transactions should be treated differently than when they were considered as delivery of goods.

Delivery of intangible goods by non-residents treated as importations of goods

Due to the previous weakness of the legislation, importations of intangibles were somehow avoiding VAT. Now it is clearly established that any delivery of intangible goods by a non-resident supplier is an importation of goods.

However, while the tangible imported goods are assessed to VAT by Customs Revenue Service, intangible imported goods VAT must be self-assessed and declared by the resident customer.

Extension of exemption from VAT to mining research permits versus taxation of interests

Before the adoption of the new unique tax code, only mining exploitation permits avoided VAT when submitted to registration fees. From now, this exemption also covers mining research permits. And this should be good news for mining operators and investors.

Conversely, interest on loans granted to local legal entities by entities other than banks and financial institutions are now liable for VAT. In the past, such interest was exempted since it was liable to stocks and securities income tax. Now, both VAT and stocks and securities income tax are applicable.