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Benin

Country Name: Republic of Benin
Currency: West African CFA Franc (XOF)
Primary Tax Authority: Directorate General of Taxes (Direction Générale des Impôts, DGI)
Key Legislation:

  • General Tax Code
  • Value Added Tax (VAT) Law
  • Customs Code
  • Investment Code
  • Tax Procedures Law

Fiscal Authority Allocation

Centralized Fiscal System:
Benin operates a centralized tax system, with the Directorate General of Taxes (DGI) responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties.

Corporate Income Tax (CIT)

Standard Rate: 30%
Benin imposes a corporate income tax rate of 30% on resident companies and non-resident companies with a permanent establishment in the country.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on Benin-sourced income.

Exemptions and Incentives:

  • Investment Incentives: The Investment Code offers tax holidays, customs duty reductions, and VAT exemptions for companies investing in sectors such as agriculture, manufacturing, energy, and infrastructure.
  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from CIT reductions, customs duty exemptions, and VAT relief for a specified period.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 18%
Benin imposes VAT at a standard rate of 18% on most goods and services. VAT applies to both domestic production and imports.

Exemptions:
Certain essential goods and services, such as healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, allowing businesses to claim VAT refunds on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Benin applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Benin-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to XOF 1,000,000: 0%
  • XOF 1,000,001 to XOF 3,000,000: 15%
  • XOF 3,000,001 to XOF 5,000,000: 25%
  • Above XOF 5,000,001: 35%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 30% on Benin-sourced income.

Deductions and Allowances:
Taxpayers may deduct social security contributions, pension contributions, and certain personal expenses, such as healthcare costs and charitable donations from taxable income.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Benin’s social security system, which provides pensions, healthcare, and other social benefits.

  • Employer Contribution: 16% of gross salary.
  • Employee Contribution: 4% of gross salary.

Withholding Taxes

  • Dividends: 10% for residents, 15% for non-residents
  • Interest: 15% for residents, 15% for non-residents
  • Royalties: 15%
    Benin imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under Benin’s double taxation agreements (DTAs).

Transfer Pricing Rules

Benin follows the arm’s-length principle for related-party transactions. Companies must ensure that cross-border transactions between related entities are conducted at market value. Transfer pricing documentation is required for multinational companies engaged in related-party transactions.

Special Tax Regimes

  • Special Economic Zones (SEZs): Companies operating in Benin’s SEZs benefit from tax holidays, customs duty exemptions, and VAT relief. These zones are designed to attract foreign direct investment in sectors such as manufacturing, agriculture, and energy.
  • Investment Incentives: The Investment Code provides tax holidays, reduced CIT rates, and customs duty exemptions for companies investing in sectors such as renewable energy, infrastructure, and industrial processing.

Other Taxes

  • Customs Duties: Benin, as a member of the West African Economic and Monetary Union (WAEMU), applies customs duties based on the WAEMU Common External Tariff. Rates range from 5% to 20%, depending on the type of goods. Essential goods and raw materials may qualify for reduced or zero customs duties.
  • Excise Taxes: Excise taxes are levied on alcohol, tobacco, petroleum products, and luxury goods.
  • Property Tax: Local authorities impose property taxes on land and buildings based on their assessed value.

Double Taxation Agreements (DTAs)

Benin has signed several double taxation agreements (DTAs) with countries such as France, Morocco, and members of WAEMU. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Benin and other jurisdictions.

Local Taxes

Local governments in Benin may impose property taxes, business license fees, and local service levies. However, most major taxes, including CIT, PIT, and VAT, are centrally administered by the Directorate General of Taxes (DGI).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within three months following the end of the financial year. Personal income tax returns are generally due by March 31st. VAT returns are filed monthly or quarterly, depending on the size of the business.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The DGI charges interest at 1.5% per month on overdue taxes, with additional penalties for tax evasion or underreporting.

Recent Developments

Focus on Agricultural and Renewable Energy Investment:
Benin is prioritizing investment in agriculture and renewable energy projects, particularly solar and hydropower. Companies investing in these sectors benefit from tax holidays, VAT exemptions, and customs duty reductions.

Mining Sector Expansion:
Benin’s mining sector is experiencing growth, with the government offering tax incentives to companies engaged in mineral exploration and production, including CIT holidays and customs duty relief on imported equipment.

Digital Taxation Initiatives:
Benin is implementing digital tax measures aimed at improving tax compliance and broadening the tax base. The government is also introducing electronic filing systems to simplify tax reporting for businesses and individuals.

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