Edouard Messou, Senior Partner; and Dominique Taty, Tax Partner; PwC: Viewpoint

Viewpoint: Edouard Messou

A department for VAT credit refunds was created back in 2006, fuelled by the 12% VAT collected by recipients from Customs and tax authorities, and deposited into an account at the Central Bank of West African States. The VAT credits are thus refunded, as funds get deposited into the account.

Some corrections have been implemented to its methods, but it fully plays its role, given that companies are reimbursed within a reasonable time frame. To ensure its efficiency, the government has created a committee charged with overseeing these procedures, from the registration of the dossiers to the payment of the VAT. The committee includes representatives from both the public and private sectors.

Not all enterprises are eligible for a VAT refund. This procedure is reserved for those subject to VAT and whose activities or investments make them incapable of absorbing the VAT credits generated.

These operations include: exports; cessation of business activities; investments made by industrial firms subject to the VAT; leasing operations, unless their clients are exempt from VAT; investments of companies subject to the Investment Law, to which the refund of VAT is admitted for local purchases; acquisition of investment assets, opening the right for a deduction for a value superior to CFA40m (€60,000); operations subject to a reduced rate of 9%; operations benefitting from conventional exemptions; and those carried out with diplomatic missions and the like, under reciprocity conditions.

Eligible companies must provide a dossier that includes: a request for reimbursement, directed to the head of tax administration at the end of the third year (at the latest) following the year in which the credits were constituted; a security deposit delivered by a banking or financial institution for an amount equal to 25% of the refund amount requested; copies of the VAT statements and nature of the deductible taxes, stating the refund amount requested; and a certificate of the sums requested as a refund, on a form supplied by the head of tax administration.

The administration has made great strides to improve the time frame in which reimbursement is provided. Today, if the dossier is compliant, it takes two months on average to receive a VAT refund. The pre-trial phase is 15 days for large enterprises. The normal time frame for the treatment of requests for the reimbursement of VAT is two months, starting from the date of receipt of the request. For companies eligible for the accelerated refund procedures, it must be done within 15 days, starting from the date of receipt of the request. Companies for which exports account for 75% of their turnover, as well as banks and financial institutions in activities related to leasing, are also subject to the accelerated refund deadlines.

The role of the oversight committee is to also seek improvements to this procedure, even if it is considered satisfactory. The pre-trial phase is an essential part of the treatment process of the dossier. It may extend the delay if challenges are not treated in due time, which is the case for incomplete or inconsistent dossiers. The oversight committee has instituted an online platform in which contributors can follow the progress of their dossiers until the date of payment, as well as their treatment times by the different services. This important tool is in the testing phase.

The obligation to receive an export Customs certificate by exporting companies can also be a procedural challenge. In practice, the Customs administration delivers the export declaration, but also requires the Customs authorities of the destination country, to issue an import declaration. This constraint, linked to the difficulty of obtaining such a document within an acceptable time frame, needs to be overhauled. Under the watchful eye of the oversight committee, this matter is under deliberation at the tax and Customs administrations, in an effort to ease the conditions for the delivery of export Customs certificates.