Tax optimization: 8 tips for paying less corporate tax
L’impôt sur les sociétés, comme l’impôt sur le revenu, peut être aisément diminué en utilisant certains leviers mis en place par le législateur ou la pratique. On parle ainsi d’optimisation fiscale, c’est-à-dire de l’ensemble des moyens légaux permettant de diminuer son imposition.
Tax optimization: 8 tips for paying less corporate tax: deduction of current charges
In terms of corporate tax, most expenses in the interest of the company are deductible (except for exceptions provided for by law, such as lavish expenses).
Many companies do not necessarily know what charges can be deducted from their results and therefore fail to optimize their tax situation.
In addition, the legislator sometimes gives several methods of taking charges into consideration, by providing a scale for example. It will be necessary to determine which method is the most advantageous, even if it proves more complex to use.
Tax optimization: 8 tips for paying less corporate tax: create useful expenses and put the expenses linked to the manager into benefits in kind
In terms of tax optimization, it is necessary to create expenses to be borne on behalf of the company, even if the cash outflow has not yet occurred. Some examples :
- The fuel used must be used via a card in the name of the company (invoicing made to the company each time it is reloaded);
- The manager's benefits in kind (water, electricity, rent, telephone, fuel, gardeners, cleaning ladies) must be included in his employment contract even if they must be included in the tax base for IR. However, the IS savings generated by the creation of these deductible expenses for the company will supplant the IR borne and paid during the tax year;
- Service and company vehicles must be in the name of the company, which means that their repair, insurance, maintenance costs and depreciation will be deductible for the company;
- Please ensure that all invoices are in the name of the company and that the supplier opposite has the NINEA and that all the mandatory information required by art 457 of the CGI is there.
Tax optimization: 8 tips for paying less corporate tax: the costs borne by the manager on a professional level
The manager of a company must prepare expense reports (professional expenses borne by him on behalf of the company) for which he has the possibility of being reimbursed by the company (Mention must be made in his employment contract to this effect in with a view to covering themselves with regard to this practice).
Tax optimization: 8 tips for paying less corporate tax: only work with formal people (having a proper COFI) for optimal VAT recovery or who are an individual business having opted for it for the CGU
Tax optimization: 8 tips for paying less corporate tax: deduction of financial charges
This is one of the tax optimization levers that certain companies with subsidiaries can use.
Thus, many companies reduce their taxable income by deducting the interest on loans taken out from related companies (intra-group loans) or to make certain investments, such as the acquisition of shares in a target company.
The situation can be optimized thanks to the use of the tax integration regime, allowing the deficits of certain companies to be allocated to the profits generated by other entities (option for the parent-subsidiary regime).
Tax optimization: 8 tips for paying less corporate tax: the proper use of deficits
Using loss carryforwards (forwards or backwards) is a good way to reduce your corporate tax.
Some companies even have a very large “stock” of deficits which allows them not to pay corporate tax for several years.
Tax optimization: 8 tips for paying less corporate tax: tax credits and reductions
As with income tax, the legislator has provided for numerous credits and tax reductions to reduce the corporate tax.
These encourage certain expenses and can, in certain cases, prove very attractive.
We can therefore cite the following tax advantages:
- Tax reduction for investment of profits in Senegal (Art 232 to 239 of the CGI),
- Tax reduction on BIC, BNC and BA for investment in the field of solar or wind energy (Art 240 to 244 of the CGI – 30% of the amounts actually paid for eligible investments);
- Tax reduction for income investment in Senegal;
- Tax credit for investment (Art 249 to 252 of the CGI) for companies which make at least 100 million investments or for an SME if the investments are greater than 15 million: reduction equal to 40% of the amounts invested capped at 50% of taxable profit (70% in regions outside Dakar) and it can be spread over 5 years (possibility of spreading it over 5 years from the year following the closure of the investment program)
- Tax reduction for exports (Art 253 of the CGI): reduction to 50% of the taxable profit for industrial, agricultural and tele-services companies which export 80% of their production (excluding mining and oil companies).
Tax optimization, 8 tips for paying less corporate tax: exemptions
There are two types of corporate tax exemption:
- those relating to certain income,
- those relating to certain entities.
Thus certain income is expressly exempt from corporate tax (after reinstatement of a share of fees and charges in certain cases). This is the case for certain capital gains (on equity securities for example) or intra-group dividend distributions (option for the parent-subsidiary regime).
In addition, certain entities meeting strict conditions see their results (or part of their results) exempt from corporate tax. Among these, we can cite young innovative companies or companies located in certain areas of the territory (Free export companies, Mining code approval, Investment code approval, Law on SEZs).
Tax optimization, 8 tips for paying less corporate tax: Join the approved management center in Dakar or the regions if you are an SME - VSE
CGA members benefit from the tax advantages below:
- a reduction of 15% on the IS taxable base for companies, i.e. a tax rate of 25.5% instead of 30% for non-members;
- a reduction of 15% on the taxable income tax base for individuals;
- payment of VAT upon receipt.
