Businesses generally adopt the form of a limited liability company (Société à Responsabilité Limitée, or SARL) or a public limited company (Société Anonyme, or SA).

However, there are other forms of business structures that can be used; namely, the simplified stock company (Société par Actions Simplifiées, or SAS), general partnership (Société en Noms Collectifs, or SNC), limited partnership (Société en Commandite Simple, or SCS) and civil partnership (Société Civile, or SC).

The main differences between these corporate forms are the liability of the shareholders and the minimum capital required for incorporation.

Liability of the Shareholders

In a SARL, an SA and an SCS, the shareholders' liability is limited to their contributions.

Partners in SNCs and SCs have unlimited liability and are indefinitely, jointly and severally liable for the company's debts.

In an SCS, there are two types of partners: those who are indefinitely, jointly and severally liable for the company's debts, known as "general partners" (commandités), and partners with limited liability, known as "limited partners" (commanditaires).

Minimum Capital

A minimum capital of XOF10 million is required for the incorporation of an SA, while there is no minimum capital requirement for other forms of companies.

A SARL, an SA and an SAS are taxed as separate legal entities.

In an SNC and an SC, the partners are taxed separately.

In an SCS, the general partners are taxed personally on their profits and the SCS is taxed on the remaining profits.

The transparent entity commonly used in this jurisdiction is the SC.

The SC is commonly used by liberal professions (lawyers, notaries, architects, etc). The use of this type of transparent entity is mainly for professional purposes, as it allows the partners to share administrative and management cost burdens of the activity, create a common network of customers and have more visibility.

The use of transparent entities by investment groups (eg, private equity and hedge funds) is very limited. They generally adopt the form of a SARL or an SA.

Even though the use of an SNC and an SCS is limited as a business vehicle, it should be noted that SNCs and SCSs can benefit from tax exemptions, especially from taxes on dividends.

The tests for determining the residence of incorporated businesses and transparent entities are the place of registration and the place of effective management.

Incorporated businesses, including businesses owned by individuals directly or through transparent entities, pay the same common tax rate of 25% (Articles 64 and 51 of the Ivorian General Tax Code).

However, a specific tax rate of 30% applies for companies in the telecommunications, information technology and communication industries.

The calculation of the taxable profits is based on the accounting profits.

The following substantial adjustments are applicable:

• taxation of any expenses that are unjustified or do not comply with tax deduction conditions;
• adjustments related to interest and royalties;
• adjustments with respect to the remunerations assigned to directors of SAs;
• adjustments of depreciations;
• deduction of exempted incomes or profits earned by the relevant corporation; and
• deduction of previous business losses.

Profits are taxed on accrual basis.

The following special incentives exist for technology investments:

• a corporate tax credit of 30% of the purchase price of a patent box or manufacturing process (Article 112 of the Ivorian General Tax Code) for SMEs (companies making turnover less than XOF1 billion);
• a corporate tax reduction of 50% of the invested amount for companies that invest at least 15% of their expenses in research and development (R&D) expenses (Article 114 bis of the Ivorian General Tax Code); and
• a corporate tax reduction may be granted to companies that wholly or partially invest their profits for the modernisation of their business, which includes technological progress or development.

The corporate tax reduction to be considered is the total amount of the investment, which should be at least XOF100 million (Article 110 of the Ivorian General Tax Code).

Other special incentives apply to specific transactions, including the following.

• An exemption from corporate tax for five years for companies that purchase a bankrupted corporation. The same tax advantage is granted for the lease-management of a bankrupted corporation (Articles 8 to 12 of the Ivorian General Tax Code).
• A tax credit for a corporation operating in domestic or industrial waste recycling, which amounts to 10% of the amount of the investment made. The tax credit is capped at 50% of the profits made during each relevant fiscal year over four consecutive years (Article 114 ter of the Ivorian General Tax Code).
• An exemption from tax on interest income (Impôt sur le Revenu des Créances, or IRC) for three years for loans granted to companies operating in the R&D industry (Article 236 quater of the Ivorian General Tax Code).
• A reduced rate of 8.25% applies to interest on loans granted for a period of at least three years by financial institutions established abroad and intended for the financing of capital goods. The same reduced rate applies to the interest on loans granted by foreign financial institutions or shareholders to local holding companies for the purpose of purchasing stakes.

The tax regulation authorises companies to carry forward losses to subsequent fiscal years. Companies are entitled to deduct a loss from their profits for a maximum period of five years following the year during which the relevant loss was made.

Also, depreciation during a loss period in a fiscal year can be carried forward to subsequent years until it is exhausted.

Finally, holding companies are permitted to offset capital gains and losses of the same kind. The net capital gain may be used to offset losses for the fiscal year, a loss carried forward from previous fiscal years and depreciation deemed forwarded. The net loss for a fiscal year is deducted only from capital gains of the same kind realised during the following five fiscal years.

The deduction of interest by local corporations is generally capped at 5% of turnover and 20% of overheads.

There are no basic rules on consolidated tax grouping provided within the Ivorian tax system. As result, no consolidation is permitted. Each separate company's losses should be suffered by the relevant company.

Corporations are taxed on capital gains from selling shares or the disposal of assets, including mergers and the partial disposal of a company.

Corporations are taxed on capital gains as follows:

• a tax on investment income from securities (IRVM) applies to capital gains arising from selling shares in other corporations, with an applicable rate of 15%;
• corporate tax applies to capital gains arising from the disposal of assets, including tangible and intangible goods; and
• a registration fee of 1% applies on the price of transfer of shares.

The following tax exemptions can apply on capital gains:

• a tax exemption from IRVM on capital gains arising from investing securities carried out through brokerage companies;
• a tax exemption from IRVM on capital gains arising from the transfer of shares conducted by a private equity company (société d’investissement à capital fixe) in which the transferred shares have been held in the company for at least three years;
• a tax exemption from IRVM on capital gains arising from the transfer of shares when such capital gains are reinvested into the purchase of other shares within 12 months; this exemption applies notwithstanding the holding period of such shares in the company;
• a tax exemption from corporate tax on capital gains from the disposal of assets if the taxpayer commits to reinvest such capital gains by financing capital goods for a local corporation within three years;
• a tax exemption from corporate tax on capital gains other than those made on stock of goods, or as a result of mergers of SAs or SARLs;
• corporate tax relief on capital gains from asset disposals at the end of a fiscal year or in the event of a partial disposal of the company; only half of such capital gains will be subject to corporate tax; and
• a reduced corporate tax rate of 12% applies on capital gains arising from the transfer of stakes by holding companies.

The following taxes may also be payable by an incorporated business on a transaction:

• IRC at a standard rate of 18% on interest on loans, including any other interest from receivables;
• a banking transaction tax, with standard rate of 10%;
• IRVM on dividends and allowances received or assigned to shareholders and directors; the applicable rate is 15% of the gross amount; and

• registration and stamp duties are payable on the lease or transfer of a tangible or intangible; the tax rate varies depending on the goods involved.

Incorporated businesses are subject to other significant taxes, which include the below.

• Incorporated businesses are subject to value-added tax (VAT) on purchases of goods and the supply of services. The standard rate is 18% of the invoiced price and the reduced rate is 9% for certain products.
• All incorporated businesses conducting a professional, civil, commercial or industrial activity are required to pay an annual tax known as “Contribution des Patentes”, which is levied at 0.5% on turnover or gross receipts and at 18.5% of the rental value of rented premises.
• Incorporated businesses leasing or owning a property pay an annual land tax at the rate of 15%.
• A special tax on equipment at the rate of 0.1% of the incorporated business' turnover.
• An annual tax on insurance contracts concluded with a foreign or local insurer on behalf of an employee. The rate ranges from 0.1 to 25% depending on the nature of the risk and the sector of activity of the company.
• Incorporated businesses are subject to wage taxes on salaries, including any further remunerations in cash or in kind paid to employees. The wage taxes owed by an employer and employees are calculated and reported by the employer to the tax authorities.

The main wage taxes payable by incorporated businesses include:

• employer’s contributions;
• a contribution for economic, social and cultural development;
• a tax for a development and professional training fund; and
• an apprenticeship tax.

The cumulative rate for wage taxes payable by an employer is 2.8% for local staff and 12% for expatriate staff.

Closely held local businesses mostly operate in a non-corporate form (eg, local family businesses and sole proprietorships).

Sometimes, closely held businesses operate under a corporate form that restricts or prohibits the free transfer of shares to third parties, as in the case of a general partnership.

The corporate rates and individual rates are the same applicable rate, which is 25% of the profits made during a fiscal year.

There are no rules to prevent individual professionals (eg, architects, engineers, consultants and accountants) from earning income at corporate rates.

There are no rules for accumulating earnings for investment purposes, including preventing closely held corporations from accumulating earnings for investment purposes.

Individuals who receive dividends from a closely held company or who make a gain are taxed in accordance with the common tax rules. There is no specific rule applicable for the taxation of individuals who receive dividends from, and gains on the sale of shares in, closely held corporations.

The following tax rules are applicable to dividends, and gains on the sale of shares, received by individuals in closely held corporations:

• IRVM at 15%; and
• general income tax (IGR); however, IGR has been suspended since 2017 and individuals are therefore not required to pay IGR until the removal of this suspension.

The rules stated in 3.4 Sales of Shares by Individuals in Closely Held Corporations apply to individuals who receive dividends from, or a gain on the sale of shares in, publicly traded corporations.

However, the IRVM applicable rate is 10% instead of 15% when dividends are paid by publicly traded corporations to individuals.

In addition, a tax exemption from IGR is granted to individuals on dividends received on shares in publicly traded corporations.

In the absence of a tax treaty, a withholding tax of 20% (effective rate) applies to the gross amount of interest, royalties and remunerations for services in accordance with Article 92 of the Ivorian General Tax Code.

IRC and IRVM on interest and dividends respectively are also withheld at source by local corporations (Article 180 of the Ivorian General Tax Code).

As tax relief, Spanish companies may be exempted from withholding tax of 20% in connection with the performance of development projects in Côte d'Ivoire. The exemption is granted only when the project to be performed falls within the debt compensation arrangements between Spain and Côte d'Ivoire.

A reduced rate of 12.5% instead of 20% applies to premiums paid to foreign reinsurance companies.

A foreign company that transfers at least 10% of its shares to local entities or individuals may benefit from a tax exemption on dividends received following such transaction.

There are no primary tax treaty countries that foreign investors use to make investments in local corporations' stock or debt.

The local tax authorities cannot challenge the use of treaty country entities by non-treaty country residents subject to the abuse of rights provisions.

Inbound investors operating through a local corporation may be faced with the following main transfer pricing issues.

Transfer Pricing Documentation

All related-party transactions should be subject to transfer pricing documentation, which shall include:

• a description of the legal and operational structure of the affiliate companies;
• details of the transaction entered into with the affiliate companies, including the nature, the amount of the transactions, the identity and the address of the involved companies; and
• a description of the transfer pricing determination methods.

A failure to report the above information to the local tax authority shall incur the rejection of all associated expenses from the deduction on the profits of the local corporation. These expenses could be subject to corporate tax without prejudice to a fine of XOF3 million, which will be increased by XOF100,000 monthly until the reporting requirement is fulfilled.

Determination of Transfer Pricing

There is no standard price based on which the transfer pricing shall be set.

Generally, local corporations are free to set the price of goods and services with their customers. However, in accordance with Article 38 of the Ivorian General Tax Code, the local tax authority may use the arm’s-length principle to review the price of the relevant goods or services. In this case, the price of the relevant goods or services will be set by comparison to the price that applies between independent corporations in a similar market.

Any indirect profit shifting raised should be incorporated in the company’s taxable profits and subject to corporate tax accordingly.

Furthermore, transfer pricing issues could be recurrent in industries in which multinational corporations commonly operate in Côte d’Ivoire, such as agricultural products (eg, cocoa, coffee and cashew nuts), mining, and oil and gas.

There are no special rules regarding related-party limited risk distribution arrangements for the sale of goods or provision of services. However, where the limited risk distribution arrangements lead to indirect profit shifting by a price increase or decrease, the transfer pricing provision may be applicable in accordance with Article 38 of the Ivorian General Tax Code.

As a result, the tax authorities can challenge the use of related-party limited risk distribution arrangements based on the above article and any applicable transfer pricing rules.

There is no significant aspect of local transfer pricing rules or enforcement that varies from OECD standards. The local transfer pricing regulations are adopted in accordance with OECD standards.

International transfer pricing dispute settlement through double tax treaties and mutual agreement procedures (MAPs) is not often implemented in this jurisdiction.

Although all treaties signed by Côte d'Ivoire provide for MAPs, they have not been implemented to date. No regulations govern or describe MAPs within this jurisdiction.

There is no compensating adjustment rule provided when transfer pricing claims are settled. But, during a transfer pricing dispute procedure, the local tax authority may authorise compensating adjustments to the taxpayers.

Basically, branches and subsidiaries of non-local companies are not taxed differently. They are subject to the same tax regime and pay taxes in proportion to their profits.

Capital gains of non-residents on the sale of stock in local corporations are taxed in Côte d'Ivoire.

However, the tax does not apply where the gain is on the shares of a non-local holding company that owns the stock of a local corporation directly.

The treaties entered into by Côte d'Ivoire do not allow the elimination of tax on capital gains from the direct transfer of shares. There is no tax applicable to a capital gain on an indirect transfer of shares.

There are no change of control provisions under the Ivorian tax regulation that could apply to the disposal of an indirect holding much higher up the overseas group.

There are no particular formulas used to determine the income of foreign-owned local affiliates. However, the deduction of expenses may be limited when the costs are paid by a foreign-owned local affiliate to its parent company or affiliate company.

Foreign-owned local affiliates are subject to the same calculation rules regarding taxable profits as local non-affiliate companies.

Payments made by local affiliates for management and administrative expenses incurred by a non-local affiliate are deductible from taxable profit. This deduction is limited to 5% of turnover excluding tax and 20% of the overheads of the local affiliate (Article 38 of the Ivorian General Tax Code). Also, the local affiliate shall provide supporting documentation showing that such expenses are actual and not exaggerated.

When a non-local affiliate is located in a low-tax jurisdiction or a non-cooperative country, the amount to be deducted must be limited to 50% of the gross amount paid, without prejudice to the above two limits.

Non-cooperative countries are those identified as such by the Ivorian administration or those on the OECD and EU lists.

The following constraints are imposed on related local borrowing for interest paid to non-local affiliates:

• the total amount made available to the local borrowing company must not exceed the share capital of the borrowing company;
• the interest paid by the local corporation for the considered fiscal year must not exceed 30% of the taxable profit;
• the interest rate must not exceed the average rate in force of the Central Bank increased by two points for the relevant fiscal year;
• the repayment of interest must be made within five years from the date of grant of the relevant loan; and
• the share capital of the borrowing company must be fully paid-up.

In addition to the above constraints, the deduction of interest between related parties is capped at 5% of turnover and 20% of the overheads of the borrowing company.

Subject to tax treaties, the foreign income of a local corporation is not exempt from corporate tax. Such income is included in the local corporation's profits and is taxed accordingly, as with other incomes.

However, income made abroad through branches, selling offices, agencies or permanent establishments of a local corporation is exempt from corporate tax.

A local corporation may be able to deduct from its taxable profit study and prospecting expenses incurred for the establishment, installation or registration of branches, liaison offices, selling offices, agencies or permanent establishments located abroad. This deduction applies only to the costs incurred for the first three years.

After three years, any expenses attributable to exempt foreign income are treated as non-deductible.

Subject to tax treaty provisions, dividends from foreign subsidiaries are taxed on their total amount received by the local corporation. Such dividends are included in the local corporation's taxable profits.

Subject to tax treaty provisions, intangibles developed by local companies used by non-local subsidiaries in their activities can potentially incur local corporate tax.

The transfer of intangibles incurs corporate tax on the royalties received by the local corporation. Royalties from foreign corporations on the use of intangibles are subject to corporate tax. Such royalties are included in the local corporation's taxable profits.

Controlled foreign corporation (CFC)-type rules have not yet been introduced in Ivorian tax regulations. As a result, there is no rule to tax the income of non-local subsidiaries earned under CFC-type rules.

There are no rules related to the substance of non-local affiliates in this jurisdiction.

Subject to the tax treaty provisions, a gain on the sale of shares in a non-local corporation is included in the taxable profits of the local corporation. Corporate tax applies on such gain, as with all taxable profits made during the relevant fiscal year.

The following overarching anti-avoidance provisions are applicable.

Anti-abuse Provisions

Transactions that conceal or disguise the actual purposes of an agreement, including a transfer of incomes or profits, may be challenged by the local tax authorities in accordance with Article 25 of the Ivorian Tax Procedure Act. The tax authorities will be entitled to question any abuse resulting from any transaction entered into by the taxpayer. The applicable penalties in connection with the abuse challenging procedure is 150% of the assessed amount.

Tax Loss Reporting Provisions

Under the Ivorian tax regulation, any reporting of an unjustified fiscal loss is subject to a fine of 25% of the total amount of the reported loss. This rule applies only when the reported loss results from fraud or an abuse as outlined above.

There is not a regular routine audit cycle. The local tax authority sets, at its discretion, the tax audit schedules for the relevant year.

Tax audits are commonly applied to multinational companies in the sectors of mining, oil and gas, import/export, telecommunications, banking and insurance.

The following BEPS recommended changes have been implemented in this jurisdiction:

• interest deduction limitation provisions (BEPS Action 4);
• transfer pricing documentation (BEPS Action 13); and
• the rules applicable to low-tax jurisdictions or non-cooperative countries.

The government is believed to be willing to implement the BEPS recommendations within this jurisdiction, as it seeks to extend the taxable basis by implementing more favourable recommendations provided by the BEPS project. However, this implementation will be based on the progress of the economy over the years.

It would be difficult for the government to implement both pillars in this jurisdiction. And the government is taking time to understand those pillars before enforcing them in this jurisdiction.

International tax has a high public profile in Côte d’Ivoire. However, the implementation of international tax standards, including the BEPS recommendations, will be made in a progressive way over the years, as the government will take time to understand the different proposals and recommendations of BEPS. Also, the government will ensure that those recommendations align with its tax policies.

Over time, the BEPS recommendations could be codified and introduced in Ivorian tax regulations.

The local government has competitive tax policy objectives, but the authors do not believe that these are sufficient to unbalance the pressures that BEPS will bring to this jurisdiction.

Côte d'Ivoire's competitive tax system is characterised by the grant of tax incentives to investments in the fields of agriculture, agro-industry, health and hotels. Other tax incentives exist, especially for SMEs and technological developments.

In addition, the government has granted state aid to some economic players in key sectors, but these are very limited in this jurisdiction. The tax exemptions and credits are also provided for SMEs, for employers promoting local employment, and for technological developments, etc.

The experience of the tax incentive rules is that the constraints and pressures resulting from state international commitments lead the government to extend the local tax basis in order to comply with the international standards.

There is no legislation provided in this jurisdiction for dealing with hybrid instruments.

The authors believe that the changes recommended by the BEPS project could be enforced in this jurisdiction by the implementation of the recommendations regarding information exchange procedures for tax purposes between tax authorities of different countries. In this case, the Ivorian government should consider collaboration and mutual administrative assistance with several foreign tax administrations or agencies for dealing with hybrid instruments.

This jurisdiction applies a territorial tax regime. Only profits made on Ivorian territory are taxable.

The interest deductibility restrictions are not tailored to that regime, because of several deduction restrictions and limitations applicable with respect to interest.

The authors believe that the interest deductibility proposals will affect people investing in this jurisdiction. Local companies that borrow from foreign entities will often be concerned with the non-deductibility of interest paid to abroad because of the interest deduction limitations. These limitations will affect people investing in this jurisdiction.

The territorial tax regime implemented within this jurisdiction does not allow the taxation of profits made outside the jurisdiction. The authors agree with the controlled foreign corporation (CFC) proposals, as they will contribute to extending the local tax basis to profits made by a CFC in a tax haven or a low-tax jurisdiction.

However, the implementation of the CFC rules or proposals within this jurisdiction could be difficult regarding the assessment of the CFC tax basis from outside Côte d'Ivoire.

Subject to the applicable Ivorian rules in respect of abuse of right, there are no double taxation convention limitation on benefit or anti-avoidance rules likely to have any impact on inbound and outbound investors.

Although some BEPS recommendations on transfer pricing have been introduced in this regime, the authors do not believe that those recommendations change things radically in this jurisdiction. The government is seeking to strengthen the rules governing transfer pricing by introducing and implementing the BEPS changes.

The taxation of profits from intellectual property (IP) is a particular source of controversy in this jurisdiction, in particular at the level of royalties deductions. The local tax authorities presume that the use of IP is a way to shift the profits of local companies to abroad. The local tax authorities ensure that there is no excessive and unjustified payment of royalties from local corporations for the use of IP. The control is higher when royalties are paid to foreign related parties, a low-tax jurisdiction or non-cooperative countries.

Difficulties exist at the pricing level on the use of an intellectual right. It is hard for the local tax authorities to assess the charged price on the use of IP, as the arm’s-length price will hardly be applicable with respect to the royalties.

This jurisdiction is favourable for transparency and country-by-country reporting provisions, which is why Côte d'Ivoire joined the BEPS project, in order to implement the transparency and country-by-country reporting provisions.

Côte d'Ivoire continues to reinforce the transparency provisions by introducing the BEPS actions on fiscal transparency. Several provisions on transparency and country-by-country reporting have been introduced in the local tax regime.

Changes have been made in relation to the taxation of transactions effected or profits generated by digital economy companies operating largely from outside this jurisdiction, and the government plans to make further changes in this regard.

Since the Financial Act for 2022, major changes have affected the digital economy sector. Foreign companies selling and providing services through online platforms are required to register such platforms with the local tax authority. They are subject to tax, in the same manner as other local companies.

These platforms could be suspended from being used within Ivorian territory if they are not registered with the local authorities.

The Ivorian government is endeavouring to set up an effective tax system in relation to digital taxation.

The government has already set forth major provisions on the taxation of digital economy businesses.

Digital services are now subject to VAT at the rate of 18%. Online advertising is also taxable, at the rate of 3% of the amount charged by the advertiser.

The government is expected to make further changes in the coming years.

Côte d'Ivoire has introduced provisions dealing with the taxation of offshore IP. Offshore IP used within Côte d'Ivoire is taxed by applying withholding tax. The tax applies at the effective rate of 20% on the amount of royalties. The reduced effective rate of 12.5% applies on reinsurance premiums.

Where the IP owner is located in a country with a double tax treaty with Côte d'Ivoire, the rules of the treaty apply. Most conventions entered into by Côte d'Ivoire provide a withholding tax rate of 10% on the gross amount of royalties.

In addition, specific tax rules apply when the royalties for the use of IP are paid to an owner in a low-tax jurisdiction or a non-cooperative country as a tax haven. In this case, 50% of the royalties paid are non-deductible from the corporate taxable profits.