Burkina Faso

In Burkina Faso, employers shoulder several tax obligations and statutory contributions for their employees.

Employer Taxes and Contributions

• Social Security Contributions: Employers contribute 16% of the employee's gross salary towards social security. This encompasses allocations for occupational accidents (3.5%), family allowance (7%), and old-age pension (5.5%). The contribution is capped at XOF 33,000 per month. Companies with 20 or more employees must remit these contributions monthly, while those with fewer than 20 employees can remit quarterly.
• Payroll Tax: Employers are subject to a 3% payroll tax on the employee's gross salary.
• Universal Health Insurance Contribution: Both employers and employees contribute 2.5% each, totaling 5% of the employee's gross monthly remuneration (excluding reimbursement costs), towards universal health insurance.
• Patriotic Support Fund (FSP) Withholding Tax: 1% of the employee's net salary is withheld and remitted by the employer for the Patriotic Support Fund. This is applicable to both public and private sector employees. Additionally, a 25% tax is levied on incentives and bonuses for public sector employees only.

Employee Taxes and Contributions

• Social Security Contributions: Employees contribute 5.5% of their gross salary to social security.
• Individual Income Tax (IUTS): Employees are subject to IUTS, a progressive tax with rates ranging from 0% to 25% based on gross taxable income. Employees can claim deductions of 20% or 25% for professional expenses.
• Universal Health Insurance Contribution: Employees contribute 2.5% of their gross monthly remuneration.
• Patriotic Support Fund (FSP) Withholding Tax: 1% of the employee's net salary is withheld for the FSP.

Corporate Taxes

• Corporate Income Tax (IS): Companies in Burkina Faso are subject to a 27.5% corporate income tax on their profits.
• Value Added Tax (VAT): A standard VAT rate of 18% applies to most goods and services.

Tax Deadlines

• Monthly payroll taxes and contributions are typically due within 15 days following the end of the month.
• Quarterly contributions are due within 30 days following the end of the quarter.
• The Patriotic Support Fund withholding tax is due by the 5th of the following month.
• Universal health insurance contributions are due by the 10th of the following month.

Other Considerations

While employers are not obligated to provide private health insurance, the universal health insurance contributions cover basic healthcare. Employment contracts should be drafted in accordance with Burkina Faso labor laws. Note that this information is current as of February 5, 2025, and might change in the future. Always consult with local authorities or tax professionals for the latest regulations.

In Burkina Faso, employers deduct taxes and social security contributions from employee salaries.

Employee Tax Deductions

• Individual Income Tax (IUT): A progressive tax levied on all income earned by residents and non-residents.
• Tax on Incentives/Motivations: A 1% tax applied to net salary after social security and IUT deductions, applicable to bonuses and other incentives. An additional 25% tax on incentives/motivations is levied on public sector employees. These contributions are deducted by the employer.
• As of 2025, the tax treaty between Burkina Faso and France is no longer in effect, impacting tax obligations for French companies operating in Burkina Faso. This means that dividends, interest, and royalties paid by Burkina Faso-based companies to French parent companies are now subject to French withholding tax, and taxes paid in Burkina Faso cannot be credited against French taxes, but may be deductible in France.

Social Security Contributions

• Employees contribute 5.5% of their salary towards social security.
• There is no wage-based limit on these contributions as of today, however, it could be introduced in the future.

Employer Payroll Tax

• Employers pay a 3% payroll tax based on the employee's gross salary.
• Employers also match employee social security contributions with 16% of the employee’s salary.

Additional Considerations

• 13th Salary: End-of-year bonuses are common in Burkina Faso. These are subject to the 1% tax on incentives/motivations, and, if applicable, the additional 25% for public sector employees.
• Minimum Wage: The minimum monthly wage in Burkina Faso's formal sector is 34,664 XOF. Some sectors, like agriculture, don't have a set minimum wage. Note: While the minimum wage is important for overall compliance, it currently does not directly influence tax calculations.

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Disclaimer: This information is current as of February 5, 2025, and is subject to change. Consult with a tax professional for personalized advice.

In Burkina Faso, the Value Added Tax (VAT) is a consumption tax applied to most goods and services.

VAT Rates

• Standard Rate: 18% This applies to most goods and services.
• Reduced Rate: 10% This applies specifically to accommodation and catering services provided by hotels and restaurants.

VAT Registration Threshold

Businesses must register for VAT if their annual turnover exceeds XOF 50,000,000. Additionally, individuals or companies engaged in liberal professions are automatically subject to VAT regardless of their turnover. State and local government bodies, along with public establishments, are also automatically liable for VAT on their industrial and commercial activities.

VAT Filing and Payment

• VAT returns must be filed monthly, by the 15th of the following month, covering transactions from the previous month.
• Returns are filed using a standard form provided by the tax administration.
• Non-resident taxpayers must appoint a tax representative in Burkina Faso to fulfill their VAT obligations.

Exempt Goods and Services

Some goods and services are exempt from VAT, including certain basic necessities like some agricultural products, medical supplies, and educational materials. Exports are typically exempt with the right to deduct input VAT, effectively making them zero-rated. Additional exemptions exist for diplomatic missions and international organizations with proper certification.

Other Tax Considerations for Businesses in Burkina Faso

• Country-by-Country (CbC) Reporting: Multinational Enterprises (MNEs) with a consolidated group turnover of XOF 491 billion or more are required to file CbC reports within 12 months of their fiscal year-end. This applies from 1 January 2023.
• Transfer Pricing: Businesses meeting specific turnover or asset thresholds (XOF 1,000,000,000) engaging in related-party transactions must maintain transfer pricing documentation and file an annual declaration.
• Beneficial Ownership Register: Companies are required to maintain a register of their beneficial owners and submit a declaration of beneficial owners with their corporate income tax return.

E-commerce and Digital Services

E-commerce transactions, including digital services like video-on-demand and online sales, are subject to the standard 18% VAT. Platforms facilitating these transactions are responsible for collecting and remitting the VAT, even if the supplier is not based in Burkina Faso.

Note: The information above is based on available information as of 05 February 2025 and might change due to new legislation or administrative decisions. It is crucial to consult with local tax professionals for the most up-to-date advice.

Burkina Faso offers various tax incentives to attract investment, particularly in priority sectors.

General Tax Incentives

Burkina Faso's 2018 Investment Code offers several tax incentives. These include exemptions from Value Added Tax (VAT) on specific equipment, along with other tax breaks aimed at reducing the effective tax rate for investors. Additionally, a special tax and customs regime exists for large investment agreements signed with the state, offering substantial tax benefits. Furthermore, the 2013 Finance Law introduced measures like the removal of limitations on deducting remunerations paid to non-residents and allowing for the carryback of head office expenses in loss-making years. While permanent tax exonerations have been abolished, there are regional incentives for investments made more than 50km outside Ouagadougou and Bobo-Dioulasso.

Incentives for Small and Medium-Sized Enterprises (SMEs)

Recent legislation, adopted in July 2023, introduced new tax and customs incentives specifically for SMEs. These include exemptions from VAT on imports of production equipment and utility vehicles, particularly those used for transporting goods. It's worth noting that while the 2012 law established a special tax regime for large investors, Burkina Faso is actively working to support smaller businesses as well.

Sector-Specific Incentives

While specific details are not available in the provided sources for sector-specific incentives for 2025, it's worth noting that previous incentives have targeted key sectors. Information about the energy sector, highlighted in some of the sources, indicates the government's interest in attracting investments in both traditional and renewable energy sources. This suggests that sector-specific incentives may exist or be developed in the future to further encourage investment in this and other priority areas.

Tax Administration and Recent Developments

Burkina Faso is undergoing improvements in its tax administration, including strengthening core functions and implementing a standardized electronic invoicing system for large taxpayers under the Directorate of Large Enterprises as part of the 2025 budget law. This is part of an ongoing effort to improve fiscal sustainability and tax collection accuracy. The country has also shown improvements in economic freedom and corruption perception indices. While the provided resources don't contain further sector-specific details for 2025, it's highly recommended to consult official government resources and tax advisors for the most up-to-date and detailed information.