Under these provisions, digital services, defined as automated supplies over a computer and/or electronic network, are subject to VAT in Senegal. E-commerce platforms operated by non-residents are considered foreign, and foreign direct suppliers and digital platform operators must register, liquidate, collect and remit VAT. Remote tax registration procedures have been simplified, but failure to comply with the obligations may result in the suspension of digital platforms by the Ministry of Telecommunications, with enforcement scheduled from April 1, 2024.
The tax system relies on precise identification of the taxpayer. However, on the Internet, identity checks are not always possible, especially for customers who are mainly private individuals.
E-commerce is thus overturning traditional tax principles relating to the territoriality of taxation, the apprehension of profits, the identification of taxpayers, and the control and collection of taxes.
To remedy this situation, Senegal's Minister of Finance and Budget has just published Order no. 034269 MFB/DGID dated November 08, 2023, applying the provisions of Article 355 bis of the CGI relating to VAT on digital services provided by foreign taxable persons, introduced by Law no. 2022-22 of December 19, 2022, the Finance Law for the year 2023.
- Scope of VAT on digital services
Under the terms of article 352 of the French General Tax Code (CGI), «Supplies of goods and services made for consideration by a taxable person as such, as well as imports, are subject to VAT».».
According to this definition, digital services, defined in article 2 of the aforementioned Order as « supplies of goods and/or intangible services of any kind, carried out automatically on a computer and/or electronic network »are subject to VAT.
The same applies to commissions received by foreign intermediaries in connection with the sale of goods and services on Senegalese territory. These are sums paid by the seller and/or buyer as remuneration for using the platform.
A digital platform is a digital tool that brings people together electronically for the online sale of a good or the provision of a service. The e-commerce platform may be operated as follows:
- by an operator who brings suppliers and customers together;
- by a supplier for the distribution of its own products.
E-commerce platforms are considered foreign when operated by non-residents.
Digital services provided via electronic platforms are deemed to be carried out in Senegal, and therefore subject to VAT in Senegal, when the service is used there or when the natural or legal person on whose behalf the service is provided is established there, regardless of the place of establishment of the service provider.
- Procedures for calculating, collecting and paying back VAT on the supply of digital services
When the supplier or operator of the digital platform is not established in Senegal, it is obliged to liquidate, collect and pay the VAT on the digital transaction and the related commission to the tax department in charge of large companies. To do so, they must first register.
However, for local VAT taxpayers, in the absence of proof of regular registration of the operator of the foreign platform, the recipient company or beneficiary of the taxable transaction must liquidate, collect and pay back the tax in accordance with the provisions of point 3 of article 355 of the CGI.
The tax base is determined on the basis of actual sales. It comprises the consideration received or receivable by the digital service provider or supplier. Where all or part of the consideration is received in kind, its value is determined on the basis of the normal selling price of a similar delivery or service.
- Simplified remote electronic tax registration procedure for foreign suppliers and operators of digital platforms
Suppliers and operators of foreign digital platforms benefit from a simplified remote and electronic registration procedure.
To this end, they apply for registration online via the DGID web portal at the following address https:/eservices.dgid.sn/fimfipnet and are required to produce the following documents:
- a copy of the RCCM or any other equivalent document for legal entities,
- a copy of the identification card or passport, in addition to the RCCM, for individuals.
The tax department responsible for handling the tax files of direct suppliers and digital platform operators who sell online is the department in charge of large companies.
Foreign e-commerce platforms must apply for registration within a period of time following notification of their tax obligations by the tax authorities, or the start of their operations in Senegal in the case of newly-created platforms.
It should be noted that the tax registration of foreign digital platform providers and operators is not likely to constitute a permanent establishment for the purposes of subjecting the aforementioned digital service providers to the payment of other types of tax in Senegal.
- Practical procedures for declaring and paying VAT on digital services
VAT declarations are made by direct suppliers and digital platform operators via the remote declaration interface no later than the first fifteen days of each month. This declaration must indicate the total amount, excluding tax, of transactions concluded with customers established in Senegal during the month, as well as the amount of VAT invoiced and collected from customers established in Senegal.
VAT on online transactions carried out abroad is paid by direct suppliers and digital platform operators into the account opened in the name of the Treasurer General in the books of the BCEAO on behalf of the Senegalese Treasury.
The practical arrangements for declaring and paying VAT are set out below:
- Access to the Etax online declaration platform from the following address: https://csfe4.dgid.sn/ ;
- Login with your «login» and password ;
- Online filing of returns from the «Returns» module in the toolbar, with indication of sales for the period and settlement of VAT due by the system;
- If required, the foreign company can print the declaration from the «My contributions» menu;
- Payment by bank transfer to the order of the Treasurer General in the books of the BCEAO on behalf of the Senegalese Treasury.
- Penalties and transitional provisions
Without prejudice to the penalties provided for by the CGI, failure to comply with reporting and payment obligations will result in suspension of access to their digital platforms, markets or online marketplaces used to carry out transactions on Senegalese territory. To this end, the relevant department of the tax authorities, on the basis of the information at its disposal, initiates the necessary steps to ensure the effective implementation of this sanction by the services of the Ministry in charge of electronic telecommunications and by any other competent bodies.
The tax authorities may publish a list of platforms operating in Senegal, specifying those that are up to date with their reporting and payment obligations as described above.
Direct suppliers and operators of foreign platforms :
- Are not required to produce commercial and accounting books and registers in French according to the standards in force in Senegal;
- Are exempt from systematically producing the list of their customers located in Senegal, except in the case of an express request from the tax authorities;
- Are not required to use the services of a tax representative in Senegal for the declaration and payment of online sales subject to VAT.
Lastly, the new arrangements for VAT-taxable transactions carried out by non-resident digital platform operators will take effect from April 1, 2024.
