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Togo

Country Name: Togolese Republic (Togo)
Currency: West African CFA Franc (XOF)
Primary Tax Authority: Togolese Revenue Authority (Office Togolais des Recettes, OTR)
Key Legislation:

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

Fiscal Authority Allocation

Centralized Fiscal System:
Togo operates a centralized tax system. The Togolese Revenue Authority (OTR) is 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%
Togo imposes a corporate income tax rate of 27% on the taxable income of 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 Togo-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Under the Investment Code, Togo offers tax holidays, customs duty reductions, and VAT exemptions to companies investing in key sectors such as agriculture, manufacturing, tourism, and renewable energy.
  • Free Trade Zones: Companies operating in Togo’s free trade zones benefit from tax exemptions, reduced CIT rates, and VAT exemptions on imported raw materials and capital equipment.

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

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

Reduced Rates:
Certain goods and services, such as water, pharmaceuticals, and basic food products, may be subject to reduced VAT rates of 10% or 5%.

Exemptions:
Certain goods and services, including healthcare, education, and financial services, are VAT-exempt. Exports are zero-rated, meaning businesses can claim refunds on VAT paid on inputs used in producing export goods.

Personal Income Tax (PIT)

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

Resident Tax Rates for 2023 (Annual Income):

  • Up to XOF 900,000: 0%
  • XOF 900,001 to XOF 2,000,000: 10%
  • XOF 2,000,001 to XOF 3,000,000: 20%
  • Above XOF 3,000,001: 30%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 25% on Togo-sourced income.

Deductions and Allowances:
Taxpayers may deduct social security contributions, pension contributions, and other personal allowances such as medical expenses and charitable donations.

Additional Mandatory Contributions

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

  • Employer Contribution: 17.5% of gross salary.
  • Employee Contribution: 4% of gross salary.

Withholding Taxes

  • Dividends: 10% for residents, 15% for non-residents
  • Interest: 15% for residents, 18% for non-residents
  • Royalties: 20%
    Togo imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under Togo’s double taxation agreements (DTAs).

Transfer Pricing Rules

Togo 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 engaging in significant cross-border transactions.

Special Tax Regimes

  • Free Trade Zones: Companies operating in Togo’s free trade zones benefit from CIT holidays, customs duty reductions, and VAT exemptions for up to 10 years. These zones are designed to promote export-oriented industries and attract foreign direct investment.
  • Investment Incentives: Togo’s Investment Code offers tax holidays, customs duty exemptions, and reduced VAT rates for companies investing in priority sectors such as agriculture, infrastructure, and renewable energy.

Other Taxes

  • Customs Duties: Togo, as a member of the West African Economic and Monetary Union (WAEMU), applies customs duties based on the WAEMU Common External Tariff. Rates vary 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, fuel, and luxury goods.
  • Property Tax: Property tax is levied by local authorities on land and buildings, based on their assessed value.

Double Taxation Agreements (DTAs)

Togo has signed several double taxation agreements (DTAs) with countries including France, Belgium, and other WAEMU member states. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Togo and other jurisdictions.

Local Taxes

Local authorities in Togo may impose property taxes, business license fees, and local service levies. However, most significant taxes, including CIT, PIT, and VAT, are centrally administered by the Togolese Revenue Authority (OTR).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within four 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 OTR charges interest at 1% per month on overdue taxes, with additional penalties for tax evasion or underreporting of income.

Recent Developments

Infrastructure Development Initiatives:
Togo is actively promoting investment in infrastructure projects, including transportation, energy, and telecommunications. The government offers tax incentives, including CIT holidays, customs duty reductions, and VAT exemptions for companies involved in infrastructure development.

Renewable Energy Focus:
Togo is prioritizing investments in renewable energy, particularly solar and wind energy. Companies investing in renewable energy infrastructure can benefit from CIT holidays, VAT exemptions, and customs duty reductions on imported energy equipment.

Digital Economy:
The government of Togo is exploring ways to tax digital platforms and online transactions. Efforts to modernize tax administration are ongoing, including the introduction of electronic filing systems to improve compliance and transparency.

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