Global Mobility Services: Taxation of International Assignees - Senegal

Transcription

1 Global Mobility Services: Taxation of International Assignees - Senegal People and Organisation Global Mobility Country Guide (Folio)

2 Last Updated: June 2018 This document was not intended or written to be used, and it cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer.

3 Country: Senegal Introduction: International assignees working in Senegal 4 Step 1: Understanding basic principles 5 Step 2: Understanding the Senegalese tax system 6 Step 3: What to do before arriving in Senegal 8 Step 4 After arriving in Senegal and at the end of the tax year 9 Step 5 When leaving Senegal 10 Appendix A: Rates of tax 11 Appendix B: Double-taxation agreements 12 Appendix C: Senegal contacts 13 Additional Country Folios can be located at the following website: Global Mobility Country Guides Global Mobility Country Guide (Folio) 3

4 Introduction: International assignees working in Senegal This folio is an introduction to the principal provisions governing direct taxation of individuals working in Senegal and serves to inform both the foreign employees and their employers about the most common issues relating to the transfer of an employee into Senegal. This booklet is not intended to be a comprehensive or exhaustive study of Senegalese tax law and should not be used for completing Senegalese personal income tax returns. Before any action is taken, please consult one of the individuals listed at the end of this folio for more detailed and up-to-date advice. 4 People and Organisation

5 Step 1: Understanding basic principles The scope of taxation in Senegal 1. An international assignee sent to work in Senegal will become liable to personal income tax either as a resident or as a nonresident of Senegal, unless otherwise provided by a double tax treaty signed between Senegal and the relevant State. 2. A resident of Senegal is liable to personal income tax on income from sources in Senegal as well as on income from foreign sources. A non-resident is, however, subject to personal income tax only on income from sources in Senegal. Determination of residence 3. Subject to the provisions of any double tax treaty applicable, persons are deemed to be domiciled in Senegal for tax purposes if: Their home is in Senegal; Their main place of abode is in Senegal; They carry on a professional activity in Senegal, salaried or not, unless they can prove that it is a secondary activity; They have the center of their economic interests in Senegal. 4. Only one of these criteria needs to be met in order to qualify as a Senegalese tax resident. Categorization of income 5. Senegal taxes the following classes of income: Income from real property; Investment income; Business profits; Agricultural profits; Non-commercial profits; Wages, pensions and annuities; Capital gains. Tax year 6. The Senegalese tax year runs from January 1 to December 31. Progressive taxation 7. Personal income tax is levied progressively at rates of between 0% and 40% against the global annual income. The taxpayer may, however, benefits from a tax reduction for dependents, depending on his marital situation and the number of dependent children. 8. On the contrary, certain incomes are exceptionally subject to personal income tax at a proportional rate. Spouses 9. Senegal operates a system of independent taxation and each individual is taxed entirely separately. Thus, there is no possibility of a joint tax return. 10. However, the marital status of the taxpayer is taken into account in order to assess his personal income tax. Global Mobility Country Guide (Folio) 5

6 Step 2: Understanding the Senegalese tax system Taxation of employment income 11. Employment income is widely defined and includes all employment benefits provided by the employer, whether in cash or in kind. 12. Benefits-in-kind are included in the taxable income at real value, with the exception of some benefits-in-kind taxed on notional values set by the tax authorities. 13. Unless otherwise provided by a double tax treaty applicable, the employment income is taxed in Senegal, from the first day of work, if: The employee is a Senegalese tax resident, even though his employer is established abroad; The employee is not tax resident in Senegal but he carries on a salaried activity in Senegal. 14. Employment income is subject to the following: Monthly withholding tax at source by the employer levied progressively at rates of between 0% and 40%, after 30% tax write-off within the limit of XOF 900,000. The taxpayer may, however, benefits from a tax reduction for dependents, depending on his marital situation and the number of dependent children. Monthly withholding tax at source by the employer of a lump sum amount totaling annually between XOF 900 and XOF 36,000, depending on the annual employment income level. Monthly proportional tax due by the employer at the rate of 3% against the taxable employment income. 15. The employer shall, monthly, file the return and reverse the aforementioned payroll taxes no later than the 15th of the month following the month in which the employment income is paid. 16. On the contrary, employees receiving employment income from a foreign employer shall assess the payroll taxes themselves. Then, they shall file the return and pay the payroll taxes by the 15 th of the month following the month in which the employment income is paid by the foreign employer. 17. The aforementioned withholding taxes release the employee from personal income tax liability if the individual s taxable income comprises solely employment income duly submitted to payroll taxes in Senegal. 18. In addition, the employer shall file, by January 31 of each year, an annual reconciliation return detailing the employment benefits he has provided to his employees during the last tax year (calendar year). Social security contributions 19. Subject to the provisions of any social security treaty applicable, social security contributions are compulsory for employees working more than 6 months per period of 12 months. 6 People and Organisation

7 20. The local social security covers social risks related to family, work accidents and occupational diseases. 21. The social security contributions are exclusively due by the employer at a proportional rate between 8% and 12% against employment income capped at XOF 63, The employer shall file the return monthly, at the latest in the first 10 days of the month following the month in which the employment income is paid. However, if the company employs less than 10 employees, the employer shall file the return quarterly, at the latest in the first 10 days of the month following the quarter in which the employment income is paid. 23. The employer shall pay the social contributions at the same time that the related return is filed. Pension contributions 24. The payment of pension contributions in Senegal to the local pension funds is mandatory, unless the employee is already liable to compulsory pension contributions in his country of origin throughout his stay in Senegal. The pension contributions comprise of a part due by the employer and another part due by the employee. 25. The employer part is levied at the rate of 8.4% against the employment income, capped at XOF 360,000. If the employee is a salaried executive, 3.6% shall also be levied on the employment income, capped at XOF 1,080, The employee part is withheld at source by the employer at the rate of 5.6% of the employment income capped at XOF 360,000. If the employee is a salaried executive, 2.4% shall also be levied on the employment income capped at XOF1,080, The employer shall file monthly the return at the latest in the first 15 days of the month following the month in which the employment income is paid. However, if the company employs less than 20 employees, the employer shall file quarterly the return at the latest in the first 15 days of the month following the quarter in which the employment income is paid. 28. The employer shall pay the pension contributions at the same time that the related return is filed. Contributions to a provident institution 29. Contributions to a local provident institution are mandatory to cover between 40% and 80% of medical, pharmaceutical and hospital expenses incurred in Senegal. 30. These contributions are monthly levied at the global maximum rate of 15 % to be shared equally among the employer and the employee. 31. Thus, the employee part is withheld at source by the employer and passed on monthly to the provident institution. The employer pays at the same time their part. 32. The taxable base is equal to the monthly employment income capped at XOF 250,000. Other incomes 33. Income other than employment income is generally taxed differently depending on the income category. Global Mobility Country Guide (Folio) 7

8 Step 3: What to do before arriving in Senegal Enter in Senegal 34. To enter Senegal, an entry visa is necessary depending on the nationality of the petitioner. 35. It is issued for 3 months maximum, at the airport or by the diplomatic and consular missions. Work permit 36. Expatriates do require a work permit to carry on salaried activity in Senegal. 37. The work permit is petitioned by the employer with the labour office. 38. The labour inspector shall address the request within 15 days. If the inspector remains silent until the deadline, the work permit is deemed to be granted. 39. The work permit is granted for 2 years renewable. Employment contract 40. To obtain a work permit, it is mandatory for expatriates to conclude a Senegalese employment contract. 41. This employment contract shall be compliant with the local labour legislation. The labour inspector verifies the compliance of the contract with the local law before granting any work permit. 8 People and Organisation

9 Step 4: After arriving in Senegal and at the end of the tax year Resident card 42. A resident card is required, depending on the nationality of the expatriate, to reside in Senegal for a stay exceeding 3 months. 43. This card is issued for 1 year, renewable simply by presenting the card. Registration with the social security and pension funds authorities 44. If applicable, the registration with the Senegalese social security and pension funds authorities must be done by the employer within 30 days following the signature of the employment contract. 46. However, the tax return is not mandatory if the individual s taxable income comprises solely employment income duly submitted to payroll taxes in Senegal through withholding tax by the employer. 47. Plus, persons with less than XOF 630,000 of annual income are exempted. Employers 48. As mentioned above, the employer shall file, by January 31 of each year, an annual reconciliation return detailing the employment benefits he has provided to his employees during the last tax year (calendar year). Annual filing of the personal income tax 45. The annual personal income tax return shall be filed before May 1st of each year. Global Mobility Country Guide (Folio) 9

10 Step 5: When leaving Senegal Tax de-registration 49. When leaving Senegal, the employer shall de-register the employee with the following local authorities: The labour office, The social security, The pension funds. 50. Such de-registration shall be implemented within 1 month, at the latest, following the end of the assignment. 53. The personal income tax is assessed based on the provisional return and it is due immediately. 54. However, the provisional return can be amended within the 3 first months following the year of departure. 55. Before leaving Senegal, professional advice may be necessary depending on the assignee s personal circumstances. Personal income tax return 51. As mentioned above, the assignee shall file an annual personal income tax return before May 1st of each year, provided that his taxable income does not comprise solely employment income duly submitted to payroll taxes in Senegal through withholding tax by the employer. 52. In such case, when leaving Senegal and unless otherwise provided by a double tax treaty, the assignee shall file a provisional return within 10 days, at the latest, before his departure. 10 People and Organisation

11 Appendix A: Rates of tax Personal income tax rates The amount of tax due is calculated by applying the following progressive tax rates to the taxable income: Income tax brackets (XOF) Progressive rates 0 630,000 0% 630,001 1,500,000 20% 1,500,001 4,000,000 30% 4,000,001 8,000,000 35% 8,000,001 13,500,000 37% Over 13,500,000 40% Global Mobility Country Guide (Folio) 11

12 Appendix B: Doubletaxation agreements Countries with which Senegal has doubletaxation agreements Other West African Economic and Monetary Union Belgium Benin Gabon Canada Burkina Faso France Ivory Coast Italy Guinea Bissau Mauritania Mali Mauritius Niger Morocco Togo Norway Qatar Spain Tunisia The Common African and Mauritanian Organization 12 People and Organisation

13 Appendix C: Senegal contacts Contacts Dakar office Matthias Hubert Tel: Mahi Kane Tel: Global Mobility Country Guide (Folio) 13

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