TogoTax Obligations Detailed

In Togo, employers face various tax obligations, including income tax, social security contributions, and VAT.

Income Tax (IRPP)

Income tax is calculated on an annual basis using a progressive system with rates ranging from 0% to 35%.

• XOF 0 to 900,000: 0%
• XOF 900,001 to 3,000,000: 5%
• XOF 3,000,001 to 6,000,000: 10%
• XOF 6,000,001 to 9,000,000: 15%
• XOF 9,000,001 to 12,000,000: 20%
• XOF 12,000,001 to 15,000,000: 25%
• XOF 15,000,001 to 20,000,000: 30%
• Above XOF 20,000,000: 35%

For annual incomes exceeding XOF 15,000,000, a specific formula applies.

Social Security Contributions

Social security contributions are shared between employer and employee. As of January 2024, the total contribution is 31.5% of the employee's salary.

• Employer's share: 22.5% (includes family allowance (3%), work injury (2%), and retirement (12.5%))
• Employee's share: 9%

The contribution base includes the basic salary and taxable bonuses and allowances, excluding reimbursements and family benefits. It cannot be lower than the Guaranteed Interprofessional Minimum Wage (SMIG). If an employee has multiple employers, each employer contributes proportionally to the remuneration they provide.

Additionally, there is a 10% contribution towards Universal Health Insurance, with the employer covering at least 50%.

Value Added Tax (VAT)

The standard VAT rate in Togo is 18%. Certain sectors, like financial, insurance, medical, and transport services, are exempt.

Other Taxes

• Corporate Tax: 27%
• Payroll Tax: 3% of gross salaries (However, another source indicates there is no payroll tax in Togo)
• Property Tax: 15% of the rental value of real estate
• Stamp Duty: Applicable to various documents at fixed or proportional rates.
• Registration Duty: 2% per capital contribution; XOF 35,000 for immovable property transfers.

It's important to consult official sources or a tax professional for the most up-to-date information, as tax laws and regulations are subject to change. This information is current as of February 5, 2025, and may not reflect future updates.

In Togo, employee tax deductions encompass various areas, including social security contributions, income tax based on progressive rates, and other deductions for items such as family relief.

Income Tax

Income tax in Togo is calculated using progressive rates, meaning higher earners pay a larger percentage of their income in taxes. The tax rates range from 0.5% to 35%. For annual earnings exceeding 15,000,000 FCFA, a specific formula is applied: Tax = (Taxable income – 15,000,000 FCFA) x 0.35 + 3,021,500 FCFA. Taxable income includes salary, bonuses, allowances, and benefits in kind. Certain allowances intended to cover work-related expenses are exempt if used for their intended purpose and not overstated.

Social Security Contributions

Both employees and employers contribute to the social security system in Togo. Employees contribute 4% of their gross monthly earnings. Employers contribute 17.5% of the employee's salary, with 12.5% allocated towards old-age pension and 2% allocated towards worker's compensation. Additionally, there's a 2% employer contribution specifically designated for workers' compensation, covering work-related accidents and injuries sustained while commuting.

Other Deductions

• Flat-Rate Deduction: A flat-rate deduction of 28% is applied to the portion of income up to 10,000,000 FCFA per year.
• Family Relief: A deduction of 10,000 FCFA per dependent per month is allowed, limited to a maximum of six dependents.
• Voluntary Pension Contributions: Employees can deduct voluntary or supplementary pension contributions up to 6% of their annual net taxable income.
• Insurance Premiums and Loan Interest: Deductions are permitted for life insurance premiums (up to 200,000 FCFA plus 30,000 FCFA per dependent child, limited to six children) paid to Togolese insurance companies and interest on loans for housing (up to the first ten annuities based on loan schedule.)

Universal Health Insurance

As part of Togo's rollout of universal health insurance, an additional contribution is required. The contribution is 10% of the monthly remuneration, split between the employer (at least 50%) and the employee (the remainder). The remuneration used for this calculation cannot be less than the guaranteed minimum wage (SMIG), currently set at 52,500 FCFA per month. Each employer is responsible for their share of contributions if a worker has multiple employers.

General Information

Togo's tax year aligns with the calendar year, running from January 1st to December 31st. Specific deadlines for tax filings and payments exist and should be adhered to. Penalties may apply for non-compliance. While this information is current as of today, February 5, 2025, tax laws and regulations can change. Always consult with a tax professional or refer to official government sources for the most up-to-date details.

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

VAT Rates

• Standard Rate: 18% This rate applies to most goods and services.
• Reduced Rate: A 10% reduced rate applies to accommodation, catering, and tourism-related services offered by registered hotels, restaurants, and licensed tour operators. As of 2022, certain essential consumer goods are also exempt from VAT, including specific types of flour, oil, milk, and canned tomatoes. However, always verify the current status of these exemptions as they are subject to change.

Registration Threshold

As of January 1, 2025, businesses are required to register for VAT if their annual turnover exceeds XOF 100,000,000. Individuals or companies engaged in liberal professions, holding public office, or operating within specific sectors like air/sea transport, freight, and port services are required to register for VAT, regardless of their turnover. If a business's turnover falls below this threshold in a given year, they may continue with their VAT obligations until December 31, 2027, or apply to deregister. Voluntary registration is allowed and requires maintaining tax obligations for at least five years.

Filing Requirements

• Businesses must file monthly VAT returns by the 15th of the following month, even if no taxable transactions occurred.
• Newly registered businesses, including occasional taxpayers, must submit a declaration of existence to the tax authorities within 15 days of commencing operations.

Exempt Goods and Services

• Financial services
• Insurance services
• Medical services
• Transport services
• Agriculture, fishing, and livestock-related activities
• Goods and services linked to the fight against the COVID-19 pandemic (as of 2024). It is important to note that exemptions are subject to change.

Payment Methods

VAT can be paid through electronic platforms in partnership with financial institutions. Mobile money platforms are also available.

It's important to consult with a tax professional or the Togolese Revenue Office (OTR) for the most current information as tax regulations can be revised. This information is current as of February 5, 2025, and might be subject to change.

Togo offers various tax incentives aimed at attracting investment and promoting economic growth. These incentives apply to both domestic and foreign investors and cover various sectors.

General Tax Incentives

• Investment Code Incentives: For investments exceeding CFA 10 million in industrial, agricultural, forestry, renewable energy, or subscription of shares/bonds, incentives include exemptions from customs duties, VAT, and corporate income tax advances on imported equipment and materials for up to five years. Additional incentives based on job creation are also available, particularly for investments in rural areas. The Agency for the Promotion of Investments and the Free Trade Zone (API-ZF) facilitates the application process, which has a 30-day adjudication deadline.

• Tax Incentives for Companies Registered with the Centre de Gestion Agréé (CGA): Businesses registered with the CGA benefit from tax reductions, especially during the initial years of operation. Businesses under the single tax regime can enjoy a 30% reduction for the first three years and 15% for the fourth and fifth years. Those under the real regime can deduct CGA registration and account management fees for five years, capped at CFA 300,000 annually.

• Excise Duty Cuts for Local SMEs (2025): Natural products produced by local SMEs and certified by authorized State bodies will benefit from reduced excise duties throughout 2025. Specific rates will be defined by a regulatory act.

Free Zone Incentives

• Corporate Tax Exemption: 100% exemption for the first five years, followed by reduced rates (8% for years 6-10, 10% for years 11-20, and 20% from year 21 onwards).

• Customs Duties and Taxes: 100% exemption on imported machinery, equipment, raw materials, and office supplies. 50% reduction on commercial vehicles. 100% exemption on exported manufactured goods.

• Payroll Tax: Reduced flat rate of 2% for the company's lifetime.

• Other Exemptions: 100% exemption on business license tax, land tax, VAT on works and services, and other unspecified duties and taxes.

Personal Income Tax

Togo has a progressive income tax system. Taxable income is rounded down to the nearest CFA 1,000, and the calculated tax is rounded down to the nearest CFA 10. While there are no specific tax credits for individuals, certain deductions are available, such as social security contributions, a flat-rate deduction of 28% on income up to CFA 10,000,000, family relief for dependents, voluntary pension contributions, and specific insurance premiums and loan interest payments.

Additional Information

• Minimum Tax Payment Requirement (2025): A minimum tax payment requirement for corporate and income tax advances is being introduced in 2025. The turnover calculation for the minimum flat-rate tax will include all income sources. Corporate tax reassessments and penalty payments will apply to companies not meeting this requirement.

Please note that these details are based on available information as of today's date, February 5, 2025, and are subject to change. It is recommended to consult official government sources or a tax advisor for the latest updates and specific details regarding eligibility and application procedures for these incentives.