Executive summary

Senegal has ratified¹ the Organisation for Economic Co-operation and Development's (OECD's) Multilateral Convention with respect to the Base Erosion and Profit Shifting (BEPS) project. Accordingly, in line with BEPS Action 13 (Transfer Pricing Documentation and Country-by-Country Reporting), Senegal is required to amend its fiscal legislation to implement Country-by-Country (CbC) reporting as well as to strengthen its transfer pricing (TP) documentation requirement.

In order to implement these new obligations, the Senegal Parliament approved law n°2018-10,² which amends the existing General Tax Code adopted on 31 December 2012 (2012 GTC).

The 2012 GTC already provided for TP documentation to be prepared and submitted upon request through a tax audit.

The 2018 amendment includes two key changes:

• The requirement to file an annual TP return
• For applicable companies, the electronic submission of the CbC report

Detailed discussion

Annual TP return

The annual TP return should contain general and specific information on the group of companies and the reporting entity such as transaction values, general description of the activities, general description of the TP policy of the group, information on loans, borrowings and other transactions carried out with related entities.

The filing obligation is mandatory for entities meeting one of the following conditions:

1. Gross turnover or gross assets equal to or greater than XOF5 billion (approx. US$ 8.7 million)
2. Holdings, at the end of the fiscal year (FY), with more than half of the share capital or voting rights of a company, located in Senegal or abroad, generating turnover or holding gross assets equal to or greater than XOF5 billion
3. Holding, directly or indirectly, more than half of the share capital or voting rights of a company generating turnover or holding gross assets equal to XOF5 billion

The TP return must be filed no later than 30 April of each year along with the Corporate Income Tax (CIT) return. It should be noted that the rule applies as of 1 January 2018. Therefore, the FY17 financial statements and CIT return due for submission by 30 April should be submitted with a TP return. A late submission fine will apply in the amount of XOF10 million (approx. US$17,376). For this FY submission, since the TP return template was not available in April, the National Revenue Authority (NRA) is expected to waive the penalties.

Country-by-Country Reporting (CbCR)

With respect to the CbCR, an implementing regulation has been issued for discussion with the tax community and relevant stakeholders in Senegal. The template seems to be consistent with the OECD guidelines. The CbCR only concerns legal entities established in Senegal:

• Setting up consolidated accounts
• Holding or controlling, directly or indirectly, one or several companies or branches located outside Senegal
• Realizing in the previous year, an annual consolidated turnover which equals or exceeds XOF491 billion excluding taxes
• Or those that are not held by one or several companies based in Senegal and subject to the CbCR filing or based outside Senegal and subject to a similar CbCR filing under foreign legislation

CbCR is applicable starting from the current fiscal year 2018 and should be filed within the 12 months following the end of each fiscal year. Therefore, companies subject to CbCR have until 31 December 2019 to comply with these new legal provisions. Late submission of the said report will trigger a fine of XOF25 million.

Since 2012, the TP regulation has not been consistently applied.

The NRA has been increasing its resources during the last few years with 25 auditors trained with OECD support. Therefore, it is expected that there will be more scrutiny on intercompany transactions going forward.

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ENDNOTES

¹ 4 February 2016.

² 20 March 2018.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

EY Senegal, Dakar

• Badara Niang
  badara.niang@sn.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

• Marius Leivestad
  marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Rendani Neluvhalani
  rendani.mabel.neluvhalani@uk.ey.com
• Byron Thomas
  bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

• Silke Mattern
  silke.mattern@ey.com
• Dele A. Olaogun
  dele.olaogun@ey.com

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ATTACHMENT

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