Togo: Tax Expenditures Up 25% in 2023, YoY

Economic governance

Thursday, 31 October 2024 09:12

Togo: Tax Expenditures Up 25% in 2023, YoY

(Togo First) - In Togo, tax expenditures reached an estimated CFA143.2 billion in 2023, up 25% from 2022’s CFA114.1 billion. Tax expenditure refers to government cuts to ease the tax burden on taxpayers or specific sectors. These measures often serve as support or incentives, leading to lower taxes for taxpayers and a permanent loss of revenue for the State.

The Ministry of Economy and Finance reported in its 2023 tax expenditure evaluation that these measures represented 17.6% of liquid revenues and 2.6% of national GDP, indicating a rise in tax breaks for taxpayers.

Value-added tax (VAT) accounted for the largest share of these tax breaks, totaling CFA60.8 billion, or 42.4% of tax expenditures. Corporate income tax (CIT) followed with CFA31.8 billion, or 22.2%. Customs duties and statistical fees amounted to CFA24.4 billion (17%) and CFA19.7 billion (13.7%), respectively. Other taxes, including patents and personal income tax, also contributed to these expenditures.

VAT exemptions were the most impactful over the period reviewed. They were incentives related to personal income tax and corporate income tax.

Businesses benefited the most from tax expenditures. They captured 59.7% of the total. Associations and NGOs followed with 7.3%, and households received 9%.

While increasing tax expenditures, the Togolese also secured more tax revenues in 2023. Lomé collected nearly CFA1,000 billion (CFA990.1 billion) in tax revenues that year, exceeding initial forecasts of CFA912 billion.

Ayi Renaud Dossavi

REFORMS OVERVIEW

STARTING A BUSINESS (more info)

At the fifteenth position, worldwide, and first in Africa, under the Starting a Business index of the 2020 Doing Business ranking, Togo sustains its reformative dynamics with more reforms….

ENFORCING CONTRACTS (more info)

Compared to some years ago when it was one of the lowest rankers under the Doing Business’ Enforcing Contracts indicator, Togo, leveraging many efforts to improve its business climate, was able to jump significantly on the index in the recent years... .

CONTRACT EXECUTION (more info)

Creation of special chambers of commerce for small debts • Creation of chambers of commerce at the Court of Appeal • Civil and commercial cases now handled by distinct clerks • Establishment of commercial courts in Lomé and Kara • Lawyers and bailiffs now have access to the FORSETI COMMERCIAL platform • A maximum period of 100 days was fixed to settle a commercial dispute .

TRADING ACROSS BORDERS (more info)

In comparison to previous years,Togo has significantly improved its ranking under the“Trading across borders” indicator by adopting multiple reforms that focus mainly on the digitization and reduction in delays, for import and export procedures related to import and export.

In comparison to previous years, Togo has significantly improved its ranking on the “Trading across borders” index by adopting multiple reforms that focus mainly on the digitalization and reduction in delays, for import and export procedures related to import and export.

CONSTRUCTION PERMIT (more info)

After moving from the 133rd to 127th place under the 2020 Doing Business’ construction permit index, Togo intends to reiterate this feat in the coming edition of the global ranking. To this end, it has introduced this year multiple reforms.

GETTING ELECTRICITY (more info)

Over the past two years, Togo’s ranking under the Doing Business’ Getting electricity and water indicator has increased consistently. Owing this performance to multiple reforms aimed at making it easier for businesses to access power and water, Lomé plans to introduce even more reforms this year to keep up its improvements.

REGISTERING A PROPERTY (more info)

Out of all the 'Doing Business’ indicators, Property Registration is where Togo has improved the most since 2018. Indeed, after spending years in the lowest part of this ranking, the country now seeks to beat Rwanda which is the best performer on this index in Africa. To do so, Lomé has been introducing many reforms, with the latest batch implemented this year.

PUBLIC PROCUREMENT (more info)

From professionalization to digitization, through legislative regulations, Togo’s public procurement framework is constantly being modernized. Several reforms have been implemented to improve the sector much to the benefit of the private sector, which is the focus of the National Development Plan.

PAYING TAXES AND DUTIES (more info)

To improve its business environment, Togo introduced some important reforms related to the payment of tax and duties. From the replacement of some taxes to the cancellation of others through exemptions, the country has only one objective: offer the most attractive tax framework to investors and economic operators. To achieve this, the authorities relied on digitization.