Recent reform steps
Senegal has taken a number of reform measures to enhance domestic revenue mobilisation. For instance, the ceiling for the minimum corporate lump sum tax (l’impôt minimum forfaitaire des societés, IMF) has been lowered from XOF 20 million to XOF 5 million; stamp duty rates have also been reduced. Tax scrutiny has been strengthened to improve compliance, with better targeting of likely non-compliant taxpayers. Improved monitoring of tax compliance already resulted in a fall in non-compliance for tax deducted at source on pay from 20% in 2012 to 7.8% in 2016 (Large Enterprises Unit, CGE). Furthermore, enforcement officers (who
will carry out the same work as that of bailiffs) have been recruited. Closer monitoring of tax revenue has been ensured by means of regular meetings with the accounting network of the General Directorate of Taxes and Government Property (DGID).
On the legislative front, Senegal took steps in 2013 to modernise the tax system with the introduction of a new taxation code, which seeks to: (1) rationalise tax expenditure, with the establishment of transparent tax incentive measures; (2) simplify tax rules and regulations; and (3) lower tax rates and increase tax fairness.
Measures have also been taken to reform the organisational structure of tax administration services, establishing a clear separation between functional and operational departments.
Progress achieved & good practices
The reforms undertaken, as well as the favourable macroeconomic trends of the last three years, have contributed to an increase in revenues: the General Directorate of Taxes and Government Property (DGID) has recorded a sharp rise in budgetary revenues collected, which showed an average increase of 12.7% between 2014 and 2016.
Policy coherence for development
Outlook & strategic priorities
In 2017, Senegal plans to reform its tax legislation on transfer pricing and interest deductibility to bring it in line with rules on Base Erosion and Profit Shifting (BEPS). Senegal also plans to sign the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, particularly with regard to improper use of tax treaties and artificial avoidance of permanent establishment status.
With respect to tax administration, Senegal plans to take the following measures:
- Creation of a specialised team to deal with transfer pricing.
- Renewal of its assistance programme as part of the ‘Inspectors without Borders’ initiative.
- Exchange information under the Convention on Mutual Administrative Assistance in Tax Matters (MAAC), which came into force in Senegal in December 2016.
- Organisational reform of the DGID, with a focus on improving taxpayer segmentation.
- Implementation of a project to create a tax database.
- Extension of electronic tax filings and payment to all CGE (Large Enterprises Unit) taxpayers.
- Creation of a taxpayer call and support centre delivering near-free services.
- Update of the tax base and collection management software.
- Interconnection between the different financial administrations: Tax – Customs – Treasury.