1. Administrative management of the expatriate contract
- Specific features of expatriate contracts
Unlike a standard employment contract, which is approved by the regional labor and social security inspectorate, an expatriate's contract is approved by the labor and social security directorate.
Obtaining a visa (authorization to employ a worker) depends on the worker's needs and level of qualification.
The request must be submitted by the employer and accompanied by the following documents:
- employment contract in 04 copies ;
- copy of passport ;
- Criminal record less than 03 months old;
- medical examination certificate ;
- employee's curriculum vitae ;
- 04 passport photos.
The contract must also contain certain mandatory information, failing which the visa will be refused.
It must specify the employee's last place of residence in his or her country of origin.
It must also mention the worker's marital status and the individual designation of family members (identity and date of birth).
This information is used to evaluate all the benefits available to the employee (housing, transportation, vehicle, ....).
- Residence permit
The expatriate's contract is subject to obtaining a foreign national's residence permit.
The issuance of the said stay is subject to the production of the following documents:
- a copy of the contract endorsed by the Labour Office ;
- a copy of your passport ;
- A birth certificate less than 03 (three) months old;
- an extract from the criminal record ;
- a certificate of medical examination and counter-examination;
- 04 passport photos ;
- a 15,000 FCFA tax stamp;
In addition to the above-mentioned documents, a repatriation deposit, the amount of which depends on the country of origin, is required to obtain a residence permit.
In principle, this deposit is refundable if the expatriate returns to his home country.
Residence permits are also required for all family members accompanying the expatriate worker.
2. Taxation of expatriate remuneration
Our aim is not to provide an exhaustive list of expatriate remuneration packages, which vary from one employer to another, but simply to focus on the main income and benefits paid to employees from the time they are recruited to the end of their contract.
- Indemnities and benefits arising from recruitment
- Moving expenses covered
This covers moving expenses (transporting the employee, his family and their luggage) from his country of origin to his home in Senegal, paid for by the employer.
These expenses, which are often included in the contract, are not subject to income tax.
The exclusion from taxation only concerns expenses that enable the employee to leave his usual place of residence to travel to his place of work in Senegal.
However, once in Senegal, expatriate employees often stay in hotels until they find accommodation.
From a tax point of view, this is considered as a benefit in kind, taxable according to the scale.
If, for example, a hotel room has only one main room, then 33,500 FCFA should be charged to the employee's pay slip for each month spent at the hotel.
- Coverage of installation expenses
These are equipment expenses (household furniture, kitchen, furnishings....) that are paid for by the company.
From a tax point of view, if this support is materialized by the payment of sums of money to employees, who are responsible for purchasing equipment, this amount is fully taxable in the hands of the employee, according to the system of gross-up of the net amount paid.
If, on the other hand, the equipment belongs to the company and is included in fixed assets, in our opinion these amounts are not fully taxable.
In our opinion, taxation could be based on the depreciation charged on this equipment. In this case, the depreciation reflects the provision of the equipment to the employee.
- Allowances and benefits during expatriation
- Taxable allowances and benefits
In principle, during expatriation, all allowances, emoluments and benefits are taxable.
First and foremost, of course, the salary and benefits in kind paid by the company to the expatriate are subject to income tax.
With regard to housing and accessories (water, electricity, domesticity), company car, these benefits are taken into account in the basis for calculating income tax in accordance with the scale for evaluating benefits in kind Order 012914/MEF/DGID/ of July 31, 2013, the application of which does not pose any particular problems.
Secondly, expenses paid by the company for fuel and internet at home, children's school fees, family sports clubs, etc.... are taxable under the same gross-up system, the amount borne by the company being considered net of tax.
It should be noted that for all these benefits, the company is responsible for repaying the tax, and must consider these amounts as having been paid net of tax, and recalculate the gross amount involved.
On the other hand, for salaries and benefits from abroad, it should be pointed out that the expatriate himself should make his own declaration at the end of the year.
For example, if the expatriate benefits from a stock option plan in respect of the parent company's listed shares, dividends received and/or capital gains realized by the expatriate are to be declared in Senegal not as wages and salaries, but as income from movable capital.
- Non-taxable allowances and benefits
Administrative doctrine has somewhat taken into account the particular situation of expatriates by allowing certain benefits to be granted to expatriate employees on a tax-free basis under certain conditions.
Firstly, these are personal air tickets paid for by the company for the benefit of the expatriate and his or her family during the period of leave entitlement.
The above tolerance applies to only one airline ticket per family member (spouse and direct ascendants) per year. In the event of additional tickets being paid for, the tolerance no longer applies, and these additional amounts must be included in the expatriate's bulletin after reprocessing to determine the corresponding gross amount.
Secondly, contributions paid by the employer for compulsory retirement benefits to provident organizations abroad are deductible from corporate income tax.
As the administrative doctrine currently stands, the income tax exemption does not apply to compulsory contributions. Contributions voluntarily made by the employer, on the other hand, remain subject to income tax.
3. Compensation and benefits at the end of expatriation
The end of the expatriation often corresponds to the expatriate's departure to France. In this case, taxation is determined by applying the annual scale to all income received from the 1st to the day of departure, without extrapolation.
Thus, if the amount of tax deducted is higher than that actually due, the employer refunds the surplus in the pay slip.
- Regularization of salaries paid over a period of less than twelve months
In the case of expatriate employees arriving and/or leaving Senegal during the year, different scenarios are envisaged for calculating their income tax:
- Employee leaves the company and Senegal during the year
If the employee does not receive any special compensation on departure, taxation is determined as follows:
- income tax is calculated by applying the annual scale to all income received from January 1 to the day of departure, without extrapolation.
- for TRIMF, no extrapolation is made. TRIMF is due according to the category corresponding to the total sums collected during the period concerned.
If, on the other hand, the person concerned receives a special severance pay, the income tax is determined by applying the extrapolation system under the conditions defined by note n°01072 of May 17, 1979; no extrapolation is made for the TRIMF.
- Employee leaves employer during the year without transferring domicile abroad
The employee is required to file an annual income tax return, as he or she is likely to resume salaried employment.
It is subject to tax calculated according to the annual scale and does not extrapolate.
- The worker arrives in Senegal during the year
Income tax deductions are made using the monthly scale until November 30.
At the end of December, the amount of tax due on all income received since the beginning of the salaried activity is determined by applying the annual scale.
- The worker arrives and leaves Senegal in the same year
In this specific case, the annual scale must be applied directly to both income tax and TRIMF.
