Benin Income Tax Rates

Personal income tax rates of Benin are progressively between 10% - 35%.

Monthly Taxable Income (XOF)     /    Tax Rate %

XOF 0 - 50,000                         Exempt
XOF 50,001 - 130,000                  10%
XOF 130,001 - 280,000                15%
XOF 280,001 - 530,000                20%
Above XOF 530,000                     35%

An individual, either a resident of Benin or a foreign national, whose tax domicile is in Benin is subject to personal income tax in Benin (l'Impôt Progressif sur les Traitements et Salaires - IPTS) on their worldwide income. Foreign source income which already has been taxed outside Benin may be tax exempt if there is a tax treaty between the two countries. Individuals not domiciled in Benin are subject to income tax only on Benin source income.

In Benin, income is taxed under 5 schedules:

- Income from industrial and commercial profits
- Income from non-commercial profits
- Employment income
- Income from moveable capital (investments), and
- Rental income

Basis - An individual, either a Beninese or a foreign national, whose tax domicile is in Benin is generally subject to personal income tax on worldwide income. Foreign-source income that already has been taxed may be exempt if there is a tax treaty between the 2 countries. Individuals not domiciled in Benin are subject to tax only on Benin-source income.

Residence - Domicile is based on habitual residence, evidenced by a permanent home, principal place of residence or centre of economic interests.

Filing status - Tax is assessed on the taxpayer's household (generally the husband's return). Children that have income separate and distinct from that of the parents are assessed separately.

Taxable income - Income is taxed under 5 schedules: industrial and commercial profits; non-commercial profits; employment income; income from moveable capital (investments); and rental income. Taxable income from employment is widely interpreted and includes fringe benefits, assessed at actual cost, or 15% of salary for accommodation.

Capital gains - Individuals are exempt from capital gains on the disposal of shares. In other respects, the rules governing capital gains derived by companies apply.

Deductions and allowances - The first XOF 50,000 per month of employment income is exempt from tax. Tax also is reduced according to the number of dependent children.

Rates - Tax on salaries (ITPS) is deducted at source at progressive annual rates from 10% (first XOF 50,001-XOF 130,000) to 35% (above XOF 530,000).

Other taxes on individuals:

Capital duty - A fixed rate capital duty of XOF 6,000 applies on the formation of a company or an increase in nominal capital.

Stamp duty - See under "Other taxes on corporations".

Capital acquisitions tax - No

Real property tax - An annual real property tax is levied on the owner of property in "main" towns at a rate of 6% of the rental value for developed property and 5% for undeveloped property. The charge may be reduced where the property remains vacant.

The tax is payable in advance, in equal instalments in January and March. Leased property is subject to an additional tax of 6%, payable by the tenant.

Inheritance/estate tax - See "Stamp duty" under "Other taxes on corporations".

The same rates apply for transfers from a deceased person's estate.

Net wealth/net worth tax - No

Social security - The employee's contribution is 3.6% of gross salary.

Tax Year: Tax year in Benin is the calendar year.

Benin Corporate Tax Rates

The standard corporate income tax rate of Benin is 30%. Tax is 25% of taxable income for natural persons and legal persons engaged in an industrial activity. The tax rate is between 35% - 45% for oil companies carrying out research, exploitation, production and sale of hydrocarbons.

Residence - Residence is not defined in the tax law, but includes companies registered in Benin and permanent establishments and branches of nonresident corporations.

Basis - Resident corporations are taxable on foreign-source dividends, royalties, interest, capital gains and Benin-source profits, but not on foreign-source industrial and commercial profits. Nonresident corporations are subject to tax only on Benin-source income.

Taxable income - Income is taxed under 4 schedules: industrial and commercial profits; non-commercial profits; income from moveable capital (investments); and rental income. Deductions incurred in generating income are normally allowable. Management fees are allowed if reasonable for the services rendered.

Taxation of dividends - An 18% withholding tax is levied on dividends, although a special 10% rate applies to income arising from shares (dividends) quoted on a stock exchange in UEMOA (West African Economic and Monetary Union) and a 6% rate applies to income arising from bonds.

Dividends from domestic companies are not included in taxable income when determining corporate income tax liability.

Dividends from domestic and foreign residents are subject to the same rate.

Capital gains - Capital gains derived from the disposal of business assets are included in ordinary income and taxed at the company rate. The taxation of certain capital gains may be deferred if the taxpayer reinvests, subject to certain conditions before expiry of a 3-year period.

Losses - Losses may be carried forward for 3 years. Losses arising due to excess capital allowances may be carried forward indefinitely. Losses may be carried back to the third year following the loss.

Rate - The corporate income tax rate for non-industrial companies is 30%. However, industrial companies and partners are subject to a special rate of 25%. The rate is between 35% and 45% for oil companies carrying out research and the exploitation, production and sale of natural hydrocarbons.

Surtax - No

Alternative minimum tax - There is a minimum tax of 0.75% on prior year turnover, up to a maximum of XOF 200,000.

Foreign tax credit - There is no unilateral relief granted on taxable income from a foreign source. Unilateral relief is available to individuals by way of an exemption of income on which tax has been paid.

Participation exemption - No

Holding company regime - No

Incentives - New or expanding enterprises that contribute to the government's economic and social objectives may be eligible for incentives during a "setting up" period of up to 30 months, and 5-9 years of business operations, depending on the location.

Enterprises investing at least XOF 500 million and creating at least 20 new jobs for nationals of Benin will be able to import production plant, machinery and spare parts duty free; export production free of export duties; and are tax exempt on industrial and commercial profits for an approved period. Enterprises investing at least XOF 3 million may obtain guarantees of a stable tax basis.

One-half of profits re-invested in approved projects may be deducted from taxable income. New industrial enterprises or divisions of established corporations may be granted an income tax exemption for 5 years, up to a total value of exempt profits of 50% of the investment. Enterprises licensed to operate in Industrial Free Zones may be granted a 10-year exemption from income tax on industrial and commercial profits, as well as other tax concessions. Financial and banking institutions, holding companies in general and insurance companies may obtain a licence to operate in Industrial Free Zones.

Withholding tax:

Dividends - Dividends paid to residents and nonresidents are subject to an 18% withholding tax, although a 10% rate applies for dividends quoted on a stock exchange in the UEMOA. This is a final tax.

Interest - Interest paid to residents and nonresidents is subject to a 15% final withholding tax.

Royalties - Royalties are not addressed in the Benin tax code.

Branch remittance tax - Branches are subject to corporate income tax and an 18% withholding tax is imposed on payments of after tax profits made by a Benin branch to its foreign parent, which may be reduced under an applicable treaty.

If there is no treaty between Benin and the state in which the parent company is located, 90% of the after-tax profit is used as the base in applying the 18% withholding tax.

The tax basis will be complemented by other income (e.g. from income property).

Other - A 14% withholding tax on profits is imposed on payments made to nonresidents; the tax is levied in respect of all activities carried out with a resident of Benin.

Other taxes on corporations:

Capital duty - A fixed rate capital duty of XOF 6,000 applies on the formation of a company or an increase in its nominal capital.

Payroll tax - A 4% rate applies, based on a widely defined concept of emoluments.

Real property tax - An annual real property tax is levied on the owner of property in "main" towns at a rate of 6% of the rental value for developed property and 5% for undeveloped property. The charge may be reduced where the property remains vacant.

The tax is payable in advance, in equal instalments in January and March. Leased property is subject to an additional tax of 6%, payable by the tenant.

Social security - The employer's contribution is 15.4% of gross salary (6.4% pension and 9% family allowance), plus 1%-4% as industrial injury insurance, depending on the degree of risk in the employment.

Stamp duty - There are fixed rate charges for the stamping of business contracts and other documents. Ad valorem charges are made as described in "Capital duty", above, and "Transfer tax", below, and at rates of 1% (short leases or hires), 3% (shares); 5% (mergers); 5% (long-term lease or sale of moveable property); and 12% (sale of a business).

Transfer tax - A transfer tax of 8% is levied on the transfer of land and buildings. The transfer of shares is subject to a fixed rate stamp duty.

Other - Business licence tax includes fixed and variable elements, taking into account the rental value of premises used and the nature of the activities. An annual tax on financial activities is charged on banks and other financial institutions at 10% of the gross value of interest, commissions and other financial income. Contracts for insurance of assets in Benin are subject to insurance tax at rates from 0.25% (export credit) to 20% (fire).

Anti-avoidance rules:

Transfer pricing - Pre-tax profits indirectly transferred abroad (by adjusting sales or purchase prices, or by any other means) to a company outside Benin that controls or is controlled by the Beninese corporate taxpayer may be added back to taxable income.

Thin capitalisation - There are no specific thin capitalisation rules, but loan interest due to shareholders will be disallowed to the extent it arises from interest rates more than 2 percentage points above the base rate of the West African States Bank (BCEAO).

Controlled foreign companies - No

Other - No

Disclosure requirements - Manufacturers, importers and wholesalers are required to submit an annual list of their customers to the tax authorities, with identifying details and the total purchases each has made.

Administration and compliance:

Tax year - The calendar year is used, although a company may adopt a different taxable period.

Consolidated returns - Consolidated returns are not permitted; each company in a group must file a separate tax return.

Filing requirements - Tax returns must be filed 4 months after the accounting year end, with any balance of tax due paid. Equal quarterly advance payments are due on the 10th of March, June, September and December based on the previous year tax or, for new companies, a percentage of capital.

Tax also is collected on account of the final liability when a company makes purchases, imports goods or deals with service providers at rates of 1% (for registered enterprises) and 5% (for unregistered enterprises).

Penalties - Penalties are assessed at rates from 20% to 80% of tax due, depending on whether the taxpayer's return was accidentally, mistakenly or fraudulently in error. The 80% rate also applies to estimated assessments in the absence of a return or returns submitted only after an injunction.

Rulings - While there is no statutory requirement to issue binding rulings, the tax authorities may provide advance discussion on the interpretation of the tax legislation.

Benin Value Added Tax Rate

The standard rate of Value Added Tax (Taxe sur la Valeur Ajoutée - T.V.A.) of Benin is 18%.

Export of goods and services are zero-rated. Certain activities are VAT exempt. Those are: imports of certain products, banking and general insurance. Externally financed government contracts are also exempt under certain conditions.

Taxable transactions - Transactions carried out in Benin and imports are subject to VAT.

This extends to supplies of goods and services used, or made use of, in Benin.

VAT Rates - The standard VAT rate is 18%.

Exempt activities include imports of certain products, banking and general insurance.

Externally financed government contracts are exempt under certain conditions. Exports of goods and services are zero-rated.

Registration - All individuals or legal entities that purchase goods for resale or carry on industrial, commercial, non-commercial, artisan or professional activities are subject to VAT and must register with the tax authorities.

Filing and payment - Monthly VAT returns must be submitted, along with any payment due, by the 10th of the following month.

Other - While exempt from VAT, small enterprises must register with the tax authorities and are liable for a "single business tax" at a 6% rate on the rental value of their premises.