CÔTE D’IVOIRE Law and Practice Contributed by: Innocent Kouakou, Assemian Kouakou, Francky Lukanda and Lonzo Colombe, Ofori Conseils Africa LLP
measures to prevent artificial avoidance of permanent establishment status) into tax treaties, limiting purely tax-driven arrangements without undermining legiti - mate benefits linked to genuine economic activities in the country. 9.5 The Competitive Tax System The most exposed elements are tax incentive regimes, which must become more targeted, transparent, and justified under BEPS and ECOWAS/UEMOA stand - ards. Free zone regimes and similar schemes (BIC holidays, VAT exemptions and local tax relief) are particularly sensitive to BEPS scrutiny, as they may attract low-substance structures if establishment and activity requirements are not sufficiently stringent. 9.6 Hybrid Instruments and BEPS Implementation Côte d’Ivoire does not yet have a comprehensive domestic anti-hybrid regime like those in OECD mem - ber states. However, several BEPS-related reforms already address hybrid arrangements, directly or indirectly, through the MLI, treaty modernisation and enhanced transparency. Although there is no dedicated “anti-hybrid” chap - ter in Ivorian tax law, reforms align with BEPS rec - ommendations. Strengthened transfer pricing rules and the introduction of country-by-country report - ing (CbCR) improve the detection of profit-shifting schemes, including those involving hybrid entities or instruments. The application of the MLI to existing tax treaties reduces opportunities to eliminate taxation on certain financial payments or royalties, thereby limiting hybrid mismatches. More broadly, BEPS implementation aims to com - bat multinational tax avoidance, effectively targeting aggressive hybrid structures even where not explicitly labelled as such. 9.7 Interest Deductibility and Territorial Tax Regime Côte d’Ivoire applies a territorial tax system. The deductibility of interest is already governed by thin capitalisation rules, the arm’s length principle and an overall limitation on net financial expenses capped at 30% of EBITDA.
In addition, the applicable interest rate may not exceed the average lending rate set by the BCEAO, increased by two percentage points. 9.8 Controlled Foreign Corporation Reform Côte d’Ivoire has not introduced CFC rules into its domestic tax legislation. CFC rules, recommended under Action 3 of the BEPS Action Plan, are designed to tax certain undistributed income of controlled for - eign subsidiaries in the country of residence of the parent company, particularly where such subsidiaries are located in low-tax jurisdictions or carry out artifi - cially structured passive activities. In Côte d’Ivoire, no legislative or regulatory provisions establish such a mechanism. Profits earned by for - eign companies controlled by Ivorian tax residents are therefore not taxable in Côte d’Ivoire until they are effectively distributed, typically in the form of divi - dends. 9.9 Anti-Avoidance Rules Côte d’Ivoire does not have a standalone and explicit general anti-avoidance rule (GAAR) in its CGI. Howev - er, several equivalent or complementary mechanisms exist under domestic law, and through tax treaties modernised in line with BEPS standards. In particular, Article 25 of the Ivorian Tax Procedures Code enshrines the doctrine of abuse of law. This pro - vision allows the tax authorities to disregard fictitious acts or arrangements that seek a literal application of legal provisions or decisions for the primary purpose of avoiding or reducing taxes that would normally have been due. Furthermore, an anti-treaty abuse mechanism has been introduced through the BEPS MLI, effective in 2024. The PPT denies treaty benefits where obtain - ing such benefits was one of the principal purposes of an arrangement, in the absence of valid economic justification. 9.10 Transfer Pricing and IP Taxation BEPS reforms have strengthened transfer pricing over - sight in Côte d’Ivoire through enhanced documenta - tion requirements and regional harmonisation within ECOWAS/UEMOA. Meanwhile, the tax treatment of
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