CÔTE D’IVOIRE Law and Practice Contributed by: Innocent Kouakou, Assemian Kouakou, Francky Lukanda and Lonzo Colombe, Ofori Conseils Africa LLP
2.3 Special Incentives The Ivorian tax framework provides several incentive measures supporting financial investments, private equity and strategic sectors. Regarding investment income, interest received by companies is 50% exempt from BIC based on the net amount collected. To promote long-term investment and capital markets, a 90% tax reduction applies to income derived from bonds issued by listed compa - nies and from locally issued bonds with a minimum maturity of five years. Consequently, only 10% of such income remains taxable. In addition, income from government securities issued by West African Economic and Monetary Union (WAE - MU) member states benefits from full tax exemption. Banks are exempt from the tax on income from claims ( impôt sur les revenus des créances – IRC) on their lending activities, although such income is fully rein - tegrated into the BIC taxable base. Certain intra-WAE - MU financial flows and interest already subject to IRC are also exempt. Fixed-capital investment companies benefit from a 15-year exemption from BIC and withholding tax on investment income ( impôt sur le revenu des valeurs mobilières – IRVM), provided that at least 50% of their portfolio is permanently invested in unlisted shares. Capital gains are exempt after a three-year holding period, or immediately if the proceeds are reinvested within 12 months. Free zone companies benefit from customs and tax exemptions in exchange for a turnover-based levy. Specific incentives also apply to large shopping mall projects (temporary VAT and tax exemptions) and to petroleum companies holding a petroleum contract, which are exempt from VAT. 2.4 Loss Relief Losses incurred during the financial year may only be carried forward and offset against the profits of the
vent artificial profit shifting. Interest on loans between related companies is tax-deductible only if cumulative conditions are met: • intra-group advances must not exceed the bor - rower’s share capital; • deductible interest is capped at 30% of tax EBIT - DA; • the interest rate may not exceed the WAEMU cen - tral bank ( Banque Centrale des États de l’Afrique de l’Ouest – BCEAO) average rate plus two per - centage points; and • the loans must be repaid within five years, provided the beneficiary company is not subject to liquida - tion proceedings. 2.6 Consolidated Tax Grouping Ivorian tax legislation does not provide for any tax consolidation or group taxation mechanism. Each entity within a corporate group is taxed separately. Consequently, tax losses cannot be transferred or offset against the profits of other group companies; they may only be carried forward and offset against the future profits of the company that incurred them. 2.7 Capital Gains Under Ivorian tax law, capital gains realised by cor - porations are generally included in taxable profit and subject to BIC, in accordance with the principle that taxable income encompasses the net results of all transactions, including asset disposals. However, several exemptions and relief mechanisms apply. • Capital gains arising from the disposal of fixed assets may be excluded from taxable income if the company commits to reinvest, within three years, an amount equal to the capital gain plus the net book value of the disposed asset in new fixed assets located in Côte d’Ivoire. If reinvestment is not completed within the deadline, the deferred gain becomes taxable. • Capital gains derived from the sale of qualifying participating interests held for at least two years are taxed at a reduced rate of 12%. Net capital gains may be offset against losses of the same nature.
following five financial years. 2.5 Deduction of Interest
Ivorian tax law requires compliance with the arm’s length principle for intra-group transactions to pre -
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