The process of creating and registering a company is completed by declaring the existence and start-up of the newly-created legal and economic entity to the tax authorities.
For legal entities, this declaration must be accompanied by a declaration of the entity's beneficial owners, in accordance with Article 633 of the French General Tax Code (CGI). Such legal entities are also required to keep a register of beneficial owners at the company's registered office.
The content of information relating to the identity of beneficial owners, as well as the terms and scope of control of legal entities, have just been specified by Order n°024577 of the Minister in charge of Finance, which came into force on September 02, 2022.
The notion of beneficial owner
The beneficial owner is «the natural person or persons who ultimately exercise effective control over a legal person or entity».
Ultimate effective control refers to all «situations where ownership or control is exercised through a chain of ownership or any other form of control other than direct control».
Beneficial owners are therefore always natural persons who ultimately own or control a legal entity or structure.
A legal arrangement is a set of legal relations or a transaction by which one or more persons acting as settlors transfer assets, rights or security interests, or a set of present or future assets, rights or security interests, to one or more other persons acting as trustees or administrators who, keeping them separate from their own assets, act for a specific purpose on behalf of one or more beneficiaries.
Criteria for identifying beneficial owners
As beneficial ownership can be exercised in many different ways, determining a beneficial owner can be a complex process that needs to be undertaken on a case-by-case basis.
Article 3 of the aforementioned decree sets out the criteria for identifying beneficial owners:
- For legal entities, the beneficial owner is :
- the natural person who ultimately holds, directly or indirectly, a controlling interest, and the natural person who ultimately holds, directly or indirectly, at least 25% of the capital or voting rights for joint-stock companies. This percentage is reduced to 2% for legal entities operating in the extractive sector,
- if it is impossible to identify a beneficial owner as defined above, or if there are doubts as to his or her status as beneficial owner, the natural person who controls, by any means, de facto or de jure, the legal entity,
- if it is impossible to identify a beneficial owner as defined in the first two cases above, the relevant individual who holds the position of principal manager.
- For trusts and fiduciaries, the beneficial owner is (the) settlor(s) or settlor(s), administrator(s), trustee(s) or trustee(s); protector(s) where applicable; beneficiary(ies) or any other natural person exercising, directly or indirectly, de facto or de jure, effective control of the trust or fiduciary.
- In other legal arrangements similar to trusts and fiduciaries, natural persons occupying positions equivalent or similar to those mentioned in the second point above.
Obligation to keep a register of beneficial owners
The aforementioned decree requires legal entities and structures to keep a register of beneficial owners.
Before entering any information on the register relating to beneficial owners, they are required to check the accuracy of the information collected.
These include :
- legal entities: name or corporate name, legal form, address of registered office, registration number with the RCCM, CSS and IPRES, tax identification number, copy of articles of association, surname, forenames, position and address of managers or representatives authorized to act on behalf of the legal entity, bank account numbers held in Senegal and abroad; ;
- legal constructions : surnames and first names of directors established in Senegal and abroad, their nationality, date of birth and country of residence, Senegalese national identification number or, for foreigners, passport number, date and place of issue and date of validity, Senegalese or foreign tax identification number, precise private address or precise business address in Senegal or abroad, the registration number of directors established in Senegal, the dates of incorporation and termination of the legal structure, a copy of the deed of incorporation and amending deeds, the numbers of bank accounts held in Senegal and abroad, and information concerning any persons indicated in the incorporating or amending documents of the legal structure;
- Beneficial owner : surname, first names, date and place of birth, nationality, country of residence, Senegalese national identification number or, for foreigners, passport number, date and place of issue and date of validity, Senegalese or foreign tax identification number, precise private address or precise business address in Senegal or abroad, the terms of control exercised, including where applicable the nature and extent of interests held, the date on which the individual became or ceased to be a beneficial owner, proof of the procedure followed or measures taken to identify beneficial owners.
This register must be kept for at least ten (10) years from the date of its creation. In the event of cessation of activity, the said register must be kept for the same period from the date of cessation.
This obligation to keep a register is incumbent on the managers or representatives of the legal entity or legal structure.
The form of the register has not yet been specified in the decree, nor have the storage conditions; it may be kept in digital format. In any event, it must be kept by any means that enables it to be consulted and guarantees its accuracy and the protection of the personal data of beneficial owners.
Disclosure and communication obligations
The declaration of beneficial owners must be made :
- at the time of filing the declaration of existence for legal entities subject to this obligation, or within one month of incorporation for legal entities;
- when filing their income tax return, or on the date of their anniversary;
- within fifteen days of any change in the information contained in the register;
- within twenty days of their appointment as directors or directors established in Senegal of legal entities governed by Senegalese or foreign law, and their removal from the register within one month of ceasing to act as directors.
It should be noted that in the case of legal entities governed by foreign law which own property, rights and shareholdings in Senegal, and none of whose members are established in Senegal, the obligation to declare is incumbent on their designated representative in Senegal.
The tax authorities, using their right of inspection, investigation or communication, may ask to consult the register of beneficiaries or request an extract within a week.
Penalties for non-compliance with obligations relating to beneficial owners
Failure to comply with any of the obligations relating to beneficial owners is punishable under the provisions of e. and f. of point III of article 667 of the General Tax Code by a fine of ten million (10,000,000) CFA francs. The fine is payable as many times as there are documents or information requested and not produced, omitted, incomplete or inaccurate.
It is important to note that all companies created before the decree came into force have six (06) months to comply with the obligations described above. If they fail to do so, they will be subject to the penalties specified above.
This is a real tax risk that we absolutely must guard against!
