Burkina Faso: Global Tax Guide
Table of Contents
Legislation
Residence/Territorial Scope
Article 46 of the General Tax Code provides that profits subject to corporate income tax are determined by taking into account only the profits made by companies operating in Burkina Faso as well as those whose taxation is attributed to Burkina Faso under a double tax treaty.
The following are deemed to operate in Burkina Faso:
• companies and other entities resident in Burkina Faso, i.e. whose registered office or place of effective management is located in Burkina Faso;
• companies and other non-resident entities with a permanent establishment in Burkina Faso.
Profits of entities that don’t meet these conditions are taxable in Burkina Faso if they carry out activities forming a complete commercial cycle there.
Permanent Establishment
Article 47 of the General Tax Code defines a “permanent establishment” as a fixed place of business through which the company carries out all or part of its activity.
In particular, permanent establishments include:
• a place of management or business;
• a branch;
• a sales shop;
• a warehouse;
• an office;
• a factory;
• a workshop;
• a mine, quarry or other place for the extraction of natural resources;
• a construction site, an assembly or installation project or supervision activities related to such project, where such site, project or activities have a duration of more than 6 months;
• the provision of services by an enterprise acting through employees or other personnel engaged by the enterprise for that purpose, but only when activities of such nature continue in Burkina Faso for a period or periods totalling more than 183 days of a year.
A permanent establishment does not apply if:
• facilities are used solely for the purpose of storing or displaying goods belonging to the entity;
• goods belonging to the company are stored for the sole purpose of storage or exhibition;
• goods belonging to the company are stored for the sole purpose of transformation by another company;
• a fixed place of business is used solely for the purpose of advertising, the provision of information, scientific research, or the performance of a contract relating to a patent or know-how, if these activities are of a preparatory or ancillary nature;
• a fixed place of business is used solely for the purpose of carrying out any other activity of a preparatory or ancillary nature for the entity.
A person acting in Burkina Faso on behalf of an enterprise not resident in Burkina Faso, other than an agent with an independent status, is considered to be a permanent establishment:
• whether it has general powers in Burkina Faso, which it usually exercises there, enabling it to negotiate and conclude contracts in the name or on behalf of the company;
• if it habitually maintains in Burkina Faso a stock of goods from which it regularly takes goods for delivery in the name or on behalf of the company.
An insurance or reinsurance undertaking not resident in Burkina Faso is considered to have a permanent establishment in Burkina Faso if it receives premiums or insures risks incurred in Burkina Faso through an employee or through a representative who is not an independent agent.
A non-resident enterprise in Burkina Faso is not considered to have a permanent establishment in Burkina Faso solely by virtue of the purchase of goods on behalf of the enterprise.
A non-resident company in Burkina Faso is not considered to have a permanent establishment in Burkina Faso merely because it carries out its activity there through a broker, commission agent or any other intermediary with independent status, provided that these persons act in the ordinary course of their activity.
Entities Within Scope
Article 43 of the General Tax Code provides that the following are liable to corporation tax:
• capital companies or similar companies, whatever their purpose: public limited companies, simplified joint stock companies and limited liability companies, including those with only one shareholder;
• general partnerships, limited partnerships, joint ventures and economic interest groupings (EIGs);
• cooperative societies and their unions, associations and bodies legally assimilated.
• public establishments, bodies of the State or local authorities, which enjoy financial autonomy and engage in an industrial or commercial activity or in profit-making operations;
• funds created by law or regulation which do not have legal personality and the management of which is entrusted to bodies governed by public or private law, and which are not expressly exempted by a legislative provision;
• civil-law partnerships engaged in operations or operations of a commercial, industrial, craft or agricultural nature, in particular:
o when they engage in intermediary transactions for the purchase or sale of real estate or business assets, shares or shares in real estate companies or when they habitually purchase the same assets in their own name with a view to reselling them;
o when they proceed with the subdivision and sale, after completion of the development and servicing work on land acquired for consideration;
o when they rent out a commercial or industrial establishment equipped with the furniture and equipment necessary for its operation, whether or not the rental includes all or part of the intangible elements of the business or industry.
• civil partnerships which include among their members one or more capital companies or which have opted for the corporation tax regime;
• de facto partnerships;
• any other legal persons engaged in profit-making operations or operations, or which would not be subject to any other income tax, including companies and other non-resident entities with a permanent establishment in Burkina Faso.
The following can make an option to be subject to corporation tax:
• financial syndicates;
• professional civil partnerships.
Similarly, under Article 44 of the General Tax Code, the partners or members of general partnerships, limited partnerships, joint ventures, de facto partnerships and economic interest groupings can make an option to be subject to the tax on industrial, commercial and agricultural profits instead of corporation tax.
Corporate Income Tax Rates
Article 87 of the General Tax Code provides that the corporation tax rate is 27.5%.
Any fraction of the taxable profit less than 1,000 CFA francs is ignored.
Minimum Tax
Under Article 88 of the General Tax Code, a minimum tax applies based on the turnover excluding tax for the last period.
Article 89 of the General Tax Code provides that for the calculation of the turnover, it is rounded down to the nearest 100,000 CFA francs.
The minimum tax rate is 0.5%, but is subject to a minimum 1,000,000 CFA francs for taxpayers under the standard actual taxable profit regime and 300,000 CFA francs for taxpayers under the simplified tax regime.
Members of approved management centres benefit from a 50% discount on the minimum flat rate collection.
Under Article 90 of the General Tax Code, newly created entities are exempt from the minimum tax for their first year of operation.
Taxable Income and Allowances
Article 48 of the General Tax Code provides that taxable profit is the net profit determined on the basis of the overall results of operations of all kinds carried out by legal persons, including the disposal of any element of the assets, either in progress or at the end of their operation.
Net profit is the difference between the value of the net assets at the end and at the beginning of the accounting period the results of which are to be used as the basis for the tax, less any additional contributions and increased by the deductions made during this period by the partners. Net assets are defined as the excess of asset values over the total liabilities of third-party receivables, depreciation and provisions.
Under Article 51 of the General Tax Code, taxable income includes:
• sales and revenue;
• miscellaneous or exceptional income;
• ancillary income or benefits;
• financial income;
• gross income from movable capital;
• income from the rental of built and unbuilt buildings, including ancillary income;
• bonuses on trade-ins and disposals of packaging;
• self-supplies;
• work in progress;
• proceeds from the sale of fixed assets;
• exchange gains actually realized.
For companies that are listed on a stock exchange, turnover may not be less than that determined on the basis of market prices on the day on which the sales are made.
Article 52 of the General Tax Code provides that stock is valued at the cost price or at the value of the closing date of the if it is lower than the cost price.
Raw materials and goods paid for in advance, but not yet received, are included in stocks.
The work in progress is valued at cost price.
Exemptions
Article 45 of the General Tax Code provides that the following are not subject to corporate income tax:
• Certain cooperative consumer societies
• public establishments of the State or local authorities that do not havean industrial or commercial character;
• Agricultural mutual credit unions operating in accordance with the legal provisions governing them;
• Mutual or cooperative savings and credit institutions constituted in accordance with Law No. 023-2009/AN of 14 May 2009 regulating decentralized financial systems;
• Agricultural cooperative societies, associations of general agricultural interest, agricultural mutual insurance and reinsurance companies operating in accordance with the legal provisions governing them;
• Mutual benefit societies;
• Approved management centres;
• Associations or non-profit organisations, subject to strict compliance with their purpose;
• Securities investment companies and management and holding companies for the part of the profits derived from the net income from their portfolio or from the capital gains they make on the sale of the securities or shares forming part of that portfolio.
Tax regime for parent companies and subsidiaries
Under Article 103 of the General Tax Code the gross income from the shareholdings of a parent company in the capital of a subsidiary company is 90% exempt from corporation tax.
This tax regime for parent companies and subsidiaries applies when the four conditions are met:
• the parent company and its subsidiary(s) are constituted in the form of joint stock or limited liability companies;
• the parent company and its subsidiary or subsidiaries have their registered office in a Member State of WAEMU and are liable to corporate income tax;
• the shares or shares of interest held by the first company represent at least 10% of the capital of the second company;
• the above-mentioned shares or interest units are subscribed to or allocated at the time of issue and are registered in the name of the company or that the company undertakes to hold them for at least 2 consecutive years in registered form.
Mergers of companies and partial contributions of assets
Under Article 104 of the General Tax Code, capital gains other than those realized on goods, resulting from the allocation of shares following the merger of public limited companies or limited liability companies are exempt from corporation tax.
This also applies to capital gains (other than those realised on goods) resulting from the free allocation of shares or shares, following the contribution by a public limited company, limited liability to another company constituted in one of these forms, of part of its assets, provided that:
• the company receiving the contribution has its registered office in Burkina Faso;
• the contribution is in the form of a merger, a partial contribution or a company demerger.
Deductions
Article 53 of the General Tax Code provides that taxable profit is determined after deduction of all expenses that meet the following conditions (as amended by the 2024 Finance Law):
• be included in the expenses for the financial year;
• be incurred in the direct interest of the business or be connected with the normal management of the business;
• correspond to an actual charge and be supported by sufficient invoices. Expenses that have not been recorded in the company’s accounts or that have not been recorded as such are not deductible;
• lead to a reduction in the net assets of the operation or undertaking;
• contribute to the formation of a product that is not exempt from income tax.
In addition to these general conditions, the General Tax Code provides certain specific conditions of deductibility.
Personnel costs and other remuneration
Article 54 of the General Tax Code provides that remuneration allocated to employees is deductible provided it corresponds to actual work. This provision applies to all direct or indirect remuneration, including allowances, allowances, benefits in kind and reimbursement of expenses.
Employer contributions paid for the purpose of building up an expatriate’s pension and being compulsory up to a limit of 20% of the basic salary are deductible.
Under Article 60 of the General Tax Code, the flat-rate allowances that a company allocates to its directors and executives for representation and travel expenses are deductible, provided that these expenses are not already among the usual expenses of this nature that are reimbursed.
Headquarters Fees and Technical Support
Article 62 of the General Tax Code provides that the following expenses are deductible, up to a limit of 10% of the general expenses:
• the share of headquarters costs incumbent on companies operating in Burkina Faso;
• technical, accounting, financial and study costs, paid to affiliated entities.
These costs must also correspond to specific and actual services rendered to the business carried on in Burkina Faso.
Commissions and brokerage payments
Under Article 63 of the General Tax Code, commissions or brokerage payments relating to goods purchased on behalf of companies operated in Burkina Faso are allowed as a deduction from taxable profits up to a limit of 5% of the amount of purchases made by central purchasing bodies or intermediaries.
These commissions must be invoiced on a regular basis together with the suppliers.
Royalties
Article 64 of the General Tax Code provides that royalties for the transfer or granting of operating licences, patents for inventions, trademarks, manufacturing processes or formulas and other similar rights in validity are deductible up to a limit of 3.5% of the turnover excluding tax relating to goods or services the manufacture or marketing of which gives rise to the payment of the royalty.
Amounts paid into a country with a preferred tax regime
Under Article 65 of the General Tax Code, amounts paid by companies operating in Burkina Faso to persons who are domiciled or resident in a country with a preferential tax regime, are deductible only if the debtor provides proof that these expenses correspond to actual transactions and that they are not exaggerated.
A company is deemed to be domiciled or resident in a State with a preferential tax regime if it is not taxable in that State or if it is subject to a tax on profits or income in that State, the amount of which is more than half that of the tax on profits or income which it would have been liable in Burkina Faso.
Rental expenses
The amount of rent for business premises is deductible, provided that the detailed statement of rents (provided for in Article 97-h of the General Tax Code) is attached to the annual declaration of results.
Insurance premiums
Article 68 of the General Tax Code provides that insurance premiums are deductible providing they cover risks the occurrence of which leads to a reduction in the net assets of the company.
However:
• premiums paid to insurance companies in the WAEMU zone on account of contracts concluded for the provision of end-of-career, death and disability benefits are deductible only if these contracts concern all staff or at least one or more categories of staff;
• premiums paid to Burkinabe insurance companies on account of health insurance contracts concluded for the benefit of all staff or at least one or more categories of staff are deductible only up to a limit of 5% of the payroll of the staff actually insured.
Hotel and restaurant fees
Hotel and restaurant expenses are allowed as a deduction up to a limit of 5% of the amount of turnover, excluding tax under Article 69 of the General Tax Code.
This limit does not apply to:
• costs incurred directly for the performance of a contract in an administrative region or in a country where the taxpayer does not have a fixed establishment;
• expenses incurred in connection with the secondment or expatriation of staff.
Promotional items
Under Article 70 of the General Tax Code, gifts and items specially designed for advertising are deductible if they are supported by invoices up to 2% of the turnover, excluding tax.
Gifts and donations
Article 71 of the General Tax Code provides that payments made to foundations, sports and cultural associations, works or organizations of general interest of a philanthropic, educational, scientific, social nature recognized as being of public utility, are deductible up to 3% of turnover, excluding tax.
This only applies providing that:
• a statement indicating the amounts, the date of the payments and the identity of the beneficiaries is provided;
• the net taxable result before deduction of these payments is positive.
Finance expenses
Article 72 of the General Tax Code provides that the following are deductible:
• interest paid to the partners on the basis of the sums paid by them into the social security fund, in addition to their share of the capital, up to a limit calculated at the legal interest rate plus 2 points;
• interest on loans made by companies to natural or legal persons other than banks, financial institutions, provided that the loans are justified and within the limit of the legal interest rate.
The total amount of deductible interest may not exceed 15% of the gross operating surplus. This provision does not apply to banks and financial institutions.
Exchange losses actually realized are deductible.
Depreciation
Article 75 of the General Tax Code provides that depreciation is generally deductible when it is within the limit of that which is generally accepted according to the practices of each type of industry or trade.
The lessee may deduct the depreciation of the assets leased under a leasing or hire-purchase contract. The depreciation period of these assets is deemed to coincide with their useful life. For the lessor and the lessor, in the context of the lease-purchase, the depreciation of the leased assets is not deductible.
Acquisition expenses of less than 100,000 CFA francs are allowed as deductible expenses for the year of acquisition.
The taxpayer is authorized to subdivide into separate parts the fixed assets whose value exceeds 900,000,000 CFA francs and to amortize each item separately.
The starting point for calculating depreciation is the day on which the asset is put into service. Depreciation is prorated over the period from the date of in-service to the closing date of the financial year.
Article 76 of the General Tax Code provides that the following are also subject to depreciation:
• packaging that can be reused as is, provided that it is identifiable;
• goods rented out;
• constructions and developments on the land of others.
Under Article 77(1) of the General Tax Code, new equipment and tools with a lifespan of more than 5 years and used exclusively for industrial operations of manufacturing, processing, handling, transport, bakery or mining or hotel operations may be subject to accelerated depreciation.
For these materials and tools, the amount of the first annual depreciation, calculated on the basis of the normal period of use, is doubled. This period is then reduced by one year.
The benefit of accelerated depreciation is subject to prior approval by the tax authorities.
Companies taxed according to the real profit regime may depreciate on a declining balance basis the following fixed assets:
• equipment and tools used for manufacturing, processing, mining, agricultural, pastoral, fisheries or forestry production;
• handling equipment;
• equipment and tools used for scientific or technical research operations;
• storage and storage facility excluding premises;
• equipment of tourism and hotel companies without including office equipment;
• bread-making and pastry equipment;
• computer machines;
• mobile telephony installations and technical equipment;
• construction or public works equipment;
• rail or aeronautical transport equipment;
• equipment for water purification and air purification;
• machines producing steam, heat or energy;
• safety equipment or of a medico-social nature.
Excluded from the benefit of reducing balance depreciation are assets that were already used at the time of their acquisition as well as those with a lifespan of less than 3 years.
Reducing balance depreciation rates are obtained by applying the following coefficients to the straight-line depreciation rates:
• 1.5 when the normal period of use is 3 to 4 years;
• 2 when this period is from 5 to 6 years;
• 2.5 when it is more than 6 years.
Provisions, depreciation and losses on loans
Article 79 of the General Tax Code provides that provisions made in order to meet clearly specified losses or expenses that current events make probable are deductible, provided they have actually been recorded in the records for the financial year and appear in the statement of provisions.
Under Article 80 of the General Tax Code, the following are also deductible:
• provisions for late claims established by insurance undertakings
• charges for impairment of debts constituted by banks and financial institutions in application of the prudential standards laid down by the currency issuing institute.
• provisions made by banks and financial institutions making medium- or long-term loans as well as by companies engaged in land credit transactions and intended to meet the particular risks relating to these loans or operations.
Article 81 of the General Tax Code provides that the following are not deductible:
• provision for self insurance insurer constituted by a company;
• provisions for paid leave;
• provisions for retirement benefits;
• provisions for the depreciation of depreciable fixed assets;
• provisions for foreign exchange losses.
Losses relating to debts deemed uncollectible after exhaustion of the proceedings against the debtor in accordance with the provisions of the OHADA Uniform Act on simplified recovery procedures and enforcement procedures are deductible.
However, these losses must be reintegrated into the profit or loss for the financial year in question in the cases provided for in point 5) of Article 82-1 of this Code.
Tax Losses
Article 83 of the General Tax Code provides that unutilised losses can be carried forward until the fifth financial year following the loss-making year.
Withholding Tax
Under Article 140 of the General Tax Code, the rates of withholding tax are:
For income from receivables, and for all income not subject to a specific rate – 25%
This is reduced by half for interest from deposit accounts and current accounts from banks, financial institutions, stockbrokers, securities brokers, the Treasury and agricultural credit unions.
Income from receivables is defined in Article 129 of the General Tax Code as interest on income from movable capital and all other products, including:
• mortgages, preferential and unsecured debts;
• deposits of sums of money on demand or with a fixed maturity, regardless of the depositary and regardless of the use of the deposit;
• guarantees in cash;
• current accounts;
• cash vouchers.
For income from securities, the withholding tax rate is:
• 6% for interest, arrears and other income from bonds issued in Burkina Faso;
• 12.5% for all other products.
Article 134 of the General Tax Code provides that dividends from public limited companies, simplified joint-stock companies or limited liability companies having their registered office in Burkina Faso and which own either registered shares in a joint-stock company or interest shares in a limited liability company are exempt from withholding tax.
This applies providing:
• the subsidiary company has its registered office in Burkina Faso;
• the shares or interests owned by the first corporation represent at least 20% of the capital of the second company;
• they have been subscribed to or allocated to the issue and have always remained registered in the name of the company, or have been held for at least 2 consecutive years in registered form.
The withholding tax rate for new companies is reduced by half on the income from the shares, interest shares and limited partnerships that they distribute for the first three financial years following their incorporation.
Taxation of non-resident companies
Under Article 157 of the General Tax Code (and subject to the provisions of a double tax treaty), companies that are not resident in Burkina Faso but have a permanent establishment there, must pay tax on income from movable capital in Burkina Faso on the basis of a share of the income distributed, determined according to the activity they carry out in Burkina Faso.
This share is 75 % of the profit made in Burkina Faso by way of corporation tax, including any adjustments that may be made in respect of the profits. Losses incurred in States where the non-resident company has been loss-making are not allowed for deduction.
Transfer Pricing
Article 66 of the General Tax Code provides that for the purpose of determining corporate income tax payable by companies that are dependent on or control of companies operating in Burkina Faso or outside Burkina Faso, the profits indirectly transferred to the latter, either by increasing or decreasing the purchase or selling prices, or by any other means, are incorporated into taxable profits. Indirect pass-through profits are determined by comparison with those that would have been realized at arm’s length or in the absence of control.
A relationships of arm’s length or control is deemed to exist between two companies:
• when one holds, directly or through an intermediary, the majority of the share capital or voting rights of the other or in fact exercises decision-making power;
• or when they are both placed, under the conditions defined above, under the control of the same undertaking or the same person.
The condition of dependency or control is not required when the transfer is made with entities established in a foreign State or in a territory located in a privileged tax regime outside Burkina Faso.
CFC Rules
None