The Tax Hub

Burkina Faso has introduced various tax changes for 2020 through the Finance Law for Execution of the 2020 Budget, which was reportedly adopted in parliament on 5 December 2019 and subsequently enacted. The main amendments are summarized as follows:

• The rule limiting the deduction of royalties paid to related parties for licenses, patents, trademarks, manufacturing processes or formulas, and other similar rights are amended to provide that the limit is equal to 3.5% of turnover (excluding VAT) from goods or services, the production or marketing of which gives rise to the royalty fees (the limit was previously based on total turnover);
• The rule limiting the deduction of payments made to persons domiciled or resident in a country with a privileged tax regime are amended to provide that a person is considered domiciled or resident in a country with a privileged tax regime if it is not taxable in that country or it is subject to tax on profits or income not exceeding half of the tax that would be payable in Burkina Faso (the prior rules referenced corporate tax in Burkina Faso, which is broadened under the amended rules to cover other taxes more generally for natural persons);
• The scope of persons liable to deduct withholding tax on payments to non-resident and resident service providers is expanded to include diplomatic and consular representations, as well as international organizations;
• An optional VAT exemption is provided for road transport operations for people and goods carried out by transport companies subject to the normal real tax regime;
• Electronic tax payment is made mandatory for taxpayers under the supervision of the large taxpayers office, while electronic return requirements are made mandatory for taxpayers under the supervision of the medium-sized taxpayers office (electronic returns already required for large taxpayers from 2019).

The amendments are effective from 1 January 2020.