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Burkina Faso

Country Name: Burkina Faso
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:
Burkina Faso 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: 27.5%
Burkina Faso imposes a corporate income tax rate of 27.5% 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 Burkina Faso-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Burkina Faso’s Investment Code offers tax holidays, customs duty exemptions, and VAT relief for companies investing in priority sectors such as agriculture, mining, infrastructure, and tourism.
  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from reduced CIT rates, customs duty exemptions, and VAT relief for up to 10 years.

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

Standard Rate: 18%
Burkina Faso 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, financial services, and unprocessed agricultural products, 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:
Burkina Faso applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Burkina Faso-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to XOF 900,000: 0%
  • XOF 900,001 to XOF 2,500,000: 12.1%
  • XOF 2,500,001 to XOF 5,000,000: 25%
  • Above XOF 5,000,001: 27.5%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 25% on Burkina Faso-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 their taxable income.

Additional Mandatory Contributions

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

  • Employer Contribution: 16% of gross salary.
  • Employee Contribution: 5.5% of gross salary.

Withholding Taxes

  • Dividends: 12.5% for residents, 15% for non-residents
  • Interest: 15% for residents, 15% for non-residents
  • Royalties: 20%
    Burkina Faso imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under Burkina Faso’s double taxation agreements (DTAs).

Transfer Pricing Rules

Burkina Faso 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 companies engaged in significant related-party transactions.

Special Tax Regimes

  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from CIT reductions, customs duty exemptions, and VAT relief for up to 10 years. These zones are designed to attract foreign direct investment and promote export-oriented industries.
  • Investment Incentives: Burkina Faso’s Investment Code provides tax holidays, reduced CIT rates, and customs duty exemptions for companies investing in key sectors such as agriculture, renewable energy, and infrastructure.

Other Taxes

  • Customs Duties: Burkina Faso, 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. Raw materials and essential goods 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)

Burkina Faso 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 Burkina Faso and other jurisdictions.

Local Taxes

Local governments in Burkina Faso 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

Mining Sector Investment:
Burkina Faso’s mining sector, particularly gold, continues to attract significant foreign investment. The government provides tax incentives for mining companies, including CIT reductions, VAT exemptions, and customs duty relief for imported mining equipment.

Infrastructure and Renewable Energy Development:
The government of Burkina Faso is encouraging investment in infrastructure and renewable energy projects, particularly solar and hydropower. Tax incentives such as CIT holidays, VAT exemptions, and customs duty reductions are available to companies investing in these sectors.

Digital Taxation Initiatives:
Burkina Faso is modernizing its tax administration by introducing electronic filing systems and expanding digital tax platforms. These reforms aim to improve compliance and make tax filing more efficient for businesses.

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