Senegal: VAT changes 2018

On March 30, 2018 the Senegalese legislator adopted Law no. 2018-10 amending certain provisions of the Senegalese Tax Code.

This reform covers several taxes including the business tax, the transfer price regulations, VAT and other taxes.

With regard to VAT, the major changes are related to the definition of the delivery of goods, transactions subject to VAT by option, goods and services exempt from VAT, “Précompte” (withholding) VAT, the suspension of VAT regime and the VAT refund.

1. Definition of “delivery of goods”

The new Article 352.1 of the amended Senegalese Tax Code defines the “delivery of property” as the transfer of the power to dispose of tangible goods as the owner. The former provision referred only to goods without specifying whether they were tangible or intangible goods. Law 2018-10 amending the Senegalese Tax Code limits the definition of the delivery of goods only to tangible goods.

2. Transactions subject to VAT by option

Sales of fishery products were subject to VAT by option under Article 353.1 of the Senegalese Tax Code. With the reform of March 2018, this option is no longer possible.

3. Goods and services exempt from VAT

Paragraph 16 of Article 361 of the Senegalese Tax Code provided exemption only for the international transport of passengers from or to destinations abroad.

The 2018 reform adds to this exemption services directly related to international transport of passengers from or to destinations abroad.

In addition, paragraph 25 of the same article provided exemption of deliveries and services performed for the benefit of the holders of licenses seeking mineral or petroleum substances for the period of validity of their licenses and their renewals.

The new Article 361.25 of the Senegalese Tax Code now exempts from VAT the subcontractors of the holders of research licenses for mineral or petroleum substances accredited as such.

Other exemptions regarding VAT are provided in this same law no. 2018-10, in particular under points 26, 27 and 28 of Article 361.

These new exemptions are relating to:

• Until December 31, 2021, deliveries and imports of agricultural equipment and services, the list of which will be fixed by joint order of the Minister of Finance and the Minister in charge of Agriculture. The accredited beneficiaries of investment programs for equipment or agricultural installations issued after January 1, 2013 and which have given rise to a suspension of VATx are legally entitled to the exemption provided for by the Senegalese Tax Code (Article 361.26);
• Deliveries of equipment intended for the production of renewable energies, the list of which will be fixed by joint decree of the Minister in charge of Renewable Energies and the Minister in charge of Finances as well as the deliveries of renewable energies by their producers (Article 361.27).
• Interest and fees on loans granted to the state (Article 361.28).

4. “Précompte” (withholding) of VAT

The new Article 372.3.f extends until December 31, 2019 the “précompte” of VAT to be operated by customers for transactions covered by any contract paid by public institutions, national companies and the operators or concessionaires of public services, notably concerning water, electricity and the telephone, carried out by taxpayers holding a NINEA (fiscal identification number).

Without this amendment, this regime shall no longer apply from January 2017.

5. Regime of suspension of VAT

The new Article 373.1 includes the importations within the scope of the regime of the suspension of VAT for taxpayers benefiting from an authorization in the Investment Code.

The former provision covered only sales, deliveries and services carried out with clients benefiting from an authorization in the Investment Code.

The VAT suspension regime provided for agricultural equipment is converted into a direct exemption in compliance with Article 361.26.

The regime of suspension of VAT under a lease or Islamic financing contract is repealed.

6. VAT refund

Law no. 2018-10 of March 30, 2018 amending certain provisions of the Senegalese Tax Code provided in Article 390.1 for the refund of the VAT credit for the consumption of energy by agricultural producers until 2021, except for premium fuel.