CÔTE D’IVOIRE Law and Practice Contributed by: Innocent Kouakou, Assemian Kouakou, Francky Lukanda and Lonzo Colombe, Ofori Conseils Africa LLP
6.3 Dividends From Foreign Subsidiaries Dividends distributed by companies benefiting from the parent-subsidiary tax regime are, for each finan - cial year, exempt from IRVM up to the net amount of dividends received from their subsidiaries during the same year, after the deduction of IRVM. Furthermore, where a foreign parent company trans - fers at least 10% of the shareholding it holds in its subsidiary operating in Côte d’Ivoire to Ivorian indi - viduals or legal entities, the dividends subsequently distributed to the parent company in respect of the remaining shares are eligible for a 25% exemption from IRVM for the first year of distribution following the transfer. 6.4 Taxation of Intangibles Developed by Local Corporations Intangible assets developed by local companies may be used by foreign subsidiaries without triggering local taxation. However, income derived from the exploita - tion of such assets is subject in Côte d’Ivoire to BIC, the business licence tax ( patente ) and TSE. 6.5 Controlled Foreign Corporation-Type Rules Côte d’Ivoire does not have controlled foreign corpo - ration (CFC) rules. However, the Ivorian CGI contains provisions designed to discourage Ivorian companies from accumulating profits in foreign subsidiaries ben - efiting from a preferential tax regime. A privileged tax jurisdiction, according to administra - tive doctrine, is one in which income sourced from Côte d’Ivoire is subject to BIC tax or any similar tax at a rate lower than half of what would have been due in Côte d’Ivoire had the income been taxable there. Under the provisions of the CGI, even where payments made abroad comply with the arm’s length principle, their deductibility is capped within a dual limit of:
In addition, interest paid on foreign intra-group loans may not exceed 30% of the company’s earnings before tax, interest, depreciation and provisions (tax EBITDA). Finally, IRVM is increased by 25% where the taxable amounts are paid to individuals or entities established in a noncooperative or low-tax jurisdiction. 6.6 The Substance of Non-Local Affiliates There are no specific rules governing the substance requirements of non-local subsidiaries. However, the Ivorian tax authorities may challenge any artificial or abusive arrangements based on the general anti- abuse principle (abuse of law doctrine). 6.7 The Sale of Shares in Non-Local Affiliates Ivorian companies are taxed on capital gains derived from the disposal of shares in foreign subsidiaries under the territorial principle: only gains realised in Côte d’Ivoire or arising from assets with a source in Côte d’Ivoire are subject to BIC (25%). Côte d’Ivoire continuously implements anti-tax avoid - ance measures, often through reforms aligned with OECD standards. For instance, Article 38 of the CGI provides that profits indirectly transferred abroad to controlled entities must be reintegrated into the tax - able income of the Ivorian company. Transfer pricing rules, based on the arm’s length prin - ciple and consistent with OECD guidelines, also apply in Côte d’Ivoire to ensure that related-party transac - tions reflect market conditions. 7. Anti-Avoidance Provisions 7.1 Overarching Provisions
8. Audit Cycles 8.1 Regular Routine Audit Cycle
• 5% of net turnover; and • 20% of general expenses.
There is no fixed, regular audit cycle mandated in Côte d’Ivoire. In practice, Ivorian companies are typically audited every two to three years (although annually for many companies – and more frequently for large corporate groups).
Where the beneficiary is located in a noncooperative or low-tax jurisdiction, the deductibility of such pay - ments is further limited to 50% of their gross amount.
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