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The principal tax issues linked to expatriation to Côte d'Ivoire
Tax residency
When a person leaves their native country to live in another, one of the major tax issue is to determine their tax residency.
The determination of the tax residency allows to designate the country in which a person is required to declare and pay taxes on their worldwide income, meaning the income coming from the country of residence and foreign sources.
Rules of tax residency determination can vary from a country to another. However, the most recuring criterias are usually the duration of the stay as well as the economic and social links with the country.
Also, it is important to know the rules of tax residency in Côte d’Ivoire in order to better apprehend the taxation applicable to the expatriated employee’s perceived income in the said country.
Double taxation
One of the main challenges of expatriation resides in the possibility of double taxation, meaning when the expatriate’s income are subject to taxation in both their home and host countries.
In order to prevent a situation of double taxation, several countries, including Côte d’Ivoire, have signed bilateral or multilateral agreement of non double taxation with other countries.
Those agreements may include dispositions such as the exonerations of incomes in a country, if those incomes are already taxed in the other country or the possibility to benefit of a tax credit for taxes paid in a foreign country.
It is important to understand those taxes agreements and to take some measures to avoid double taxation in order to avoid a significant impact on the expatriate and the employer’s incomes.
Tax treatment of remuneration in Côte d'Ivoire
Taxation of remuneration received
According to the local laws, applicable in the absence of double taxation or tax treaties, remuneration paid to expatriate employees are taxable in Côte d’Ivoire following those conditions:
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The employee is domiciliated in Côte d’Ivoire
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The paid activity is located in Côte d’Ivoire even if the employee lives outside of the country
According to international laws, applicable when a tax agreement exists between the home country and Côte d’Ivoire, the salary’s taxation is attributed according to these principals:
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The taxation of salaries is attributed to Côte d’Ivoire if the employee lives there
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When an employee doesn’t live in Côte d’Ivoire, they are taxable if they stay in the country for a total or more than 183 days through a year or if they are paid by an employer established in Côte d’Ivoire (even without a long duration stay on the territory).
Applicable tax rate
The rate of payroll tax payable by the employer is 15%. It drops to 12% after deduction. In addition, the employer has to retain and give back to taxation 28% of the employee’s gross income (the rate is determined by the height of the remuneration, the marital status and the number of dependent children) in respect of taxes due.
The repartition of the taxation rate payable by the employer is done as follows:
Solutions for a controlled and compliant international taxation
Tax briefing meeting
The “Tax briefing meeting” is an informational meeting (paid by the employer) organised between the expatriated employee and a taxation expert during which the tax residency is determined. They also determine the tax obligations during their expatriation, but also at the end of their time in Côte d’Ivoire.
Tax equalization
The “Tax equalization” is a policy, usually put in place in multinationals, which aims to guarantee that employees don’t pat any more or less taxations following their assignment abroad. To do so, a comparative simulation is realised between the taxation that the employees would have to pay in their home country compared to the one they have in their host country during the duration of expatriation. Then, a compensation of the potential difference is effectuated between employer and employee.
Shadow payroll
The “shadow payroll” is a system used by companies to follow and declare taxes obligations of the employee in their host countries. It is usually put in place in case the expatriated employee would perceive part or the total of their remuneration from their home country even if its taxable in their host country. To do so, a payslip showing all remuneration received in the expatriate’s country of origin because of a job in the host country is established taking into account taxations and deductions calculated according to the taxation legislation of the host country. Also, the employer might have the possibility to declare directly to the tax authorities, or if possible through a local representative (in case he’s not established in said country), the total amount of tax due.
by Guillemette Paillet
