Benin has a source-based taxation system in terms of which residents are subject to tax on profits from a source in Benin, as well as foreign-sourced passive income, whereas non-residents are subject to tax only on their Benin-sourced income.
Benin tax law does not define the concept of residence, but specifies the types of companies and legal persons subject to corporate income tax.
corporate tax rate
Resident companies and permanent establishments of foreign companies are subject to corporate income tax at the rate of 30%.
Industrial and mining companies are taxed at a rate of 25%, whereas a rate of between 35% and 45% applies to petroleum companies.
An alternative minimum tax of 0.5% on annual turnover is levied on industrial companies and 0.75% on other companies, with a minimum amount of CFCA200 000.
|capital gains tax (“CGT”)|
Capital gains are included in ordinary taxable income and subject to corporate income tax at the standard rate of 30%.
withholding tax (“WHT”) rates
WHT rate (%)
|branch profits|| N/A||15% on 90% of after-tax profits|
|dividends|| 15% (10% for joint stock companies, 7% for listed companies, 5% by IFZ companies)||15% (10% for joint stock companies, 7% for listed companies, 5% from IFZ companies)|
0% / 3% / 6% on interest from bonds
0% / 3% / 6% on interest from bonds
|royalties|| N/A||12% |
|management, consulting and technical service fees|| 1% / 5%||12% |
| || |
double tax agreements (“DTAs”)
DTAs are in force with France, Kuwait, Norway and UEMOA or WAEMU (including Burkina Faso, Guinea-Bissau, Ivory Coast, Mali, Niger, Senegal and Togo).
|losses||Losses may be carried forward for a period of three years and depreciation may be carried forward indefinitely.|
In terms of the Benin’s transfer pricing rules, transactions entered into between related parties, must be entered into on an arm’s length basis.
|thin capitalisation||There are no specified thin capitalisation rules applicable in Benin. However, interest paid by a company to its shareholders is deductible based on a maximum interest rate equal to the Central Bank of West African States interest rate plus three percentage points.|
|employee taxes||The income tax rates applicable to resident individuals, effective 1 July 2011, are:|
|annual chargeable income (FCFA)||tax rate |
|up to 50,000||0%|
|50,001 – 130,000||10%|
|130,001 - 280,000||15%|
|280,001 - 530,000||20%|
Both employers and employees must make monthly social security contributions to the CNSS.
The employer contribution rates are:
- family allowance: 9%;
- work injury: 1% – 4% depending on injury; and
- retirement: 6.4%.
- The employee contribution rate is 3.6% of total monthly remuneration.
A payroll levy is payable by employers at a rate of 4%.
Newly incorporated companies are exempt from payroll tax during the first year of activity.
|stamp duty |
Stamp duty is levied on all contracts, agreements and documents subject to registration duty in Benin.
A fixed stamp duty of CFCA6 000 is due on the transfer of shares, which does not involve the takeover of a company.
The transfer of shares which results in the takeover of a company and the transfer of immovable property are subject to a transfer tax at the rate of 8%.
|taxable supplies ||VAT is levied on the supply of goods and services rendered or used in or imported into Benin.|
|registration threshold||All companies that purchase goods for resale or carry on industrial, commercial, non-commercial, artisanal or professional activities are subject to VAT and must register for VAT purposes.|
|reverse VAT on imported services|
Resident companies are required to account for output VAT in respect of imported services rendered by non-resident companies where the foreign service provider has not registered for VAT or appointed an agent to collect VAT from the customer.
Such VAT can be claimed as full or partial input credit if the entity engages in the provision of taxable supplies.