Reforms relative PAYING TAXES AND DUTIES

Reforms relative to Paying Taxes and Duties

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.  

Turnover  tax replaced by direct tax
 For companies, direct tax now replaces turnover tax, which was 13.6% of companies’ profit.

New companies are exempted from paying the direct tax during the first two years of operation 

A dozen tax and duties have been suppressed, including payroll taxes and property taxes levied on inadequately developed properties.  
Consequently, the number of taxes to be paid was reduced from 15 to 12 (according to a study carried out by a bank) and the payment deadlines as well. 

Reduction, by 1 percentage point, of the corporate tax to 27%. 

Categorization of companies according to their turnover:  

 This has led to a differenciation between Small and Medium Enterprises, Enterprises Overseen by the Medium Businesses’ Tax Center 1 (CIME 1), Enterprises overseen by the Medium Businesses’ Tax Center 2 (CIME 2), and Large Enterprises.

• The Small and Medium Companies category regroups firms with a turnover that is below XOF60 million,
• Enterprises Overseen by the Medium Businesses’ Tax Center 1 (CIME 1) have a turnover that is between XOF60 million and XOF200 million,
• Enterprises overseen by the Medium Businesses’ Tax Center 2 (CIME 2) have a turnover that is between XOF200 million and XOF1 billion; and
• Large Enterprises have a turnover that is equal to or exceeds XOF1 billion

Online Tax filing made compulsory for large and medium enterprises
Online tax filing has become compulsory for large and medium size enterprises, just two years after this filing method became effective. By December 31, 2019, all of CIME2 enterprises had already filled their taxes online.  

By December 31, 2019, all of CIME2 enterprises had already filed their taxes online. 

 Payment of tax and duties via online platforms
The Togolese Revenue Office (OTR) and its partnering financial institutions have set up electronic platforms to enable large and medium-sized enterprises to pay taxes and fees online. This reform has reduced a tedious process involving 12 procedures, to just one. The OTR launched the payment of these duties and taxes via the Tmoney and Flooz mobile money platforms.

Over the whole year, online tax and duties payment was promoted with a 72-hour deadline extension for online payments.

Online filing and payment of income taxes for CIME2 companies
As of December 31, 2019, 477 out of 481 (99.1%) of CIME2 enterprises (Turnover comprised between XOF200.000.000 and 1.000. 000. 000) had paid their VAT via the electronic platform.             

As of December 31, 2019, 477 out of 481 (99.1%) of CIME2 enterprises (Turnover comprised between XOF200.000.000 and 1.000. 000. 000) had paid their VAT via the electronic platform.   

Online filing and payment of direct tax for companies under the CIME 2

Payment of taxes and duties

 NB: Number of CIME2 companies: 481 Turnover ( XOF200 000 000 to 1 000 000 000)….Case study, Doing Business  95% 99%

Reduction of the time required to adjust corporate income taxes
Tax inspection deadlines are governed by the tax procedure act (From article 202 onwards).

The delay for responding to a taxpayer’s claims is set at 30 days. In 2019, the average delay was 23 days, down from 50 in 2018.

Performance indicator : Number of tax controls in 2018 vs in 2019

Average delay for responding to a taxpayer’s claims: 50 days in 2018 for 328 tax controls

                                                                                                        23 days in 2019 for 354 tax controls

VAT refunds

In 2019, XOF2,130,459,994 VAT refunding requests were approved and XOF1,153,271,922 were rejected.

Statistics relative to VAT loan refunding in 2019

In brief,

Value of approved requests:  XOF2,130,459,994

Value of denied requests: XOF1,153,271,922

Maximum delay time to process a VAT loan refund request: 8 hours.

Average delay to refund a VAT loan is now 23 days

Rejections occur when requests do not comply with the object of the application. Example: acquisition of personal property in the name of the beneficiary company or of equipment not included in the list of assets eligible for refund as at March 02, 2020.

Online declaration of social contributions

Every large enterprise must declare social contributions online; the measure is compulsory since December 4, 2018. 

Online payment of social contributions by large enterprises

• Throughout 2019, the following steps were taken to facilitate the process:
• Installation of terminals for electronic payments.
• Extension of the CNSS’s digital platform to other financial institutions and the prolonging, by 5 days, of the deadline for payment of the contributions in advantage of all employers using this platform.
• Result: From 12 procedures involved previously, the process now takes only one procedure