CÔTE D’IVOIRE Law and Practice Contributed by: Innocent Kouakou, Assemian Kouakou, Francky Lukanda and Lonzo Colombe, Ofori Conseils Africa LLP
4.7 Transfer Pricing Disputes and Mutual Agreement Procedures No published data is available regarding the use of the mutual agreement procedure (MAP) by Ivorian compe - tent authorities to resolve international transfer pricing disputes. Under Côte d’Ivoire’s tax treaties, the com - petent authority function is assigned to the Minister of Budget or the Minister of Finance and delegated to the General Tax Directorate. In practice, MAP cases are handled by the sub-direc - torate of international tax co-operation. The compe - tent authority team, composed of two officials, also manages tax treaty negotiations, provides support in international tax and transfer pricing disputes, and oversees the exchange of information for tax pur - poses. 5. Taxation of Non-Local Corporations 5.1 Compensating Adjustments Transfer pricing is a key issue during a tax audit. The tax authorities must ensure that the profit declared in Côte d’Ivoire by the audited company accurately reflects the activities carried out within the national territory, in accordance with the arm’s length principle. Under domestic law, Article 38 of the CGI empowers the tax administration to verify compliance with this principle and to adjust declared profits where income has been indirectly transferred abroad, whether through the increase or decrease of purchase or sale prices, or by any other means. This provision is consistent with the tax treaties signed by Côte d’Ivoire based on the OECD Model Tax Con - vention, which provides that where associated enter - prises are linked by commercial or financial conditions differing from those agreed between independent enterprises, the profits that would have accrued absent such conditions may be included in the tax - able profits of that enterprise and taxed accordingly. 5.2 Local Branches and Local Subsidiaries Local branches of non-resident companies are taxed in the same manner as local subsidiaries of non-res - ident companies.
entitled to treaty benefits where it considers that such structures have been set up primarily to obtain treaty advantages or to abuse the provisions of the relevant tax treaty. 4.4 Transfer Pricing Issues for Inbound Investors The biggest transfer pricing issues faced by inbound investors operating through a local corporation include the lack of reliable local comparables, bur - densome documentation requirements (master file, local file and état des transactions internationales intragroupes – ETII) combined with short filing dead - lines, heightened scrutiny of intra-group services and interest payments, and a significant risk of tax reas - sessments and penalties. 4.5 Challenges to Related-Party Limited Risk Distribution Arrangements Local tax authorities challenge the use of limited-risk distribution or service arrangements between relat - ed parties for the sale of goods, or the provision of services carried out locally, where they consider that such arrangements confer a tax advantage and were not concluded on arm’s length terms. 4.6 Local Transfer Pricing Rules and OECD Standards The OECD and UN transfer pricing guidelines apply in Côte d’Ivoire, unless they conflict with domestic rules. However, local transfer pricing provisions diverge from OECD standards in two major respects: • in addition to requiring compliance with the arm’s length principle for intercompany payments, the CGI provides that remuneration paid between related companies is deductible only within a dual cap of 5% of net turnover and 20% of the local entity’s operating expenses; and • where the recipient of the payments is in a low-tax or noncooperative jurisdiction, the deductibility of such payments is further limited to 50% of their gross amount, without prejudice to the dual limita - tion mentioned in the foregoing.
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