2018 Finance bill: Government leverages on tax relief to foster economic growth

Public finance

Wednesday, 24 January 2018 11:21

2018 Finance bill: Government leverages on tax relief to foster economic growth

(Togo First) - Last December 20, Togo’s parliament has approved the 2018 finance bill. The latter was amended slightly, in regards to taxes, compared to last year’s.

In fact, the government, this time, is betting on tax relief to efficiently tackle poverty, unemployment and boost consumption and investment in the country.

Lomé’s new strategy involves a battery of measures which should provide both local and foreign investors with a more attractive regulatory framework.

Amongst new incentives planned under the move, SMEs that are regularized will benefit exoneration of single business tax during their first year of operation. Togolese entrepreneurs will also no more pay stamp and registration fees imposed under the 2017 budget, when launching their businesses.

Moreover, the government decreased by 3% registration fees for land titles, from 5% to 2%. These various measures aim to provide SME and SMI with the needed safety net to easily secure loans from lenders.

Besides these, the 2018 finance bill restructured the General Tax Code to foster business creation in the country, which is WAEMU’s second most performing economy, in terms of growth, over the past 5 years.

Also, in 2018, import and sale of IT material and renewable energy production equipment will benefit from Value Added Tax exoneration. Another major incentive adopted is the cancellation of minimum capital requirement for LLC creation, this since January 1st.

All these measures should bear fruits by the end of the year. It is in sight of these that the World Bank said Togo’s GDP should grow by 5.3% in 2018.

Official data shows that in 2017, 10,000 new businesses were created in the country. The establishment of an attractive regulatory framework should help boost public earnings in years to come, thus significantly reducing budget deficit.

Fiacre E. Kakpo

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.