Simple Tax Guide for Americans in Senegal

US Expat Taxes - Senegal

At Taxes for Expats we have been preparing U.S. tax returns for U.S. Citizens and green card holders working in Senegal for over 8 years. Our clients hail from all parts of the country - Dakar and St. Louis, Ziguinchor and Touba, Pikine and Thies.

As a U.S. Citizen or green card holder you are legally required to file a U.S. tax return each year regardless of whether you already pay taxes in your residence country. 

We offer professional tax services. That means we figure out the best and most optimal way to file your U.S. tax return and avail you of all possible exclusions and deductions. But just as importantly - avoid the errors that would allow IRS to disallow your return and levy fines & penalties on top. You can also do them yourself - not that we recommend it. For more information please see IRS. 

The expatriate Foreign Earned Income Exclusion can only be claimed if you file your tax return on a timely basis. It is not automatic if you fail to file and can even be lost.

We have many clients living in Senegal and know how to integrate your U.S. taxes into the local income taxes you pay.  Any Senegalese income tax you already pay can be claimed as against the tax liability on your U.S. return on the same income.

As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end.  (You cannot file using the calendar year as is standard in Senegal for U.S. tax purposes). You must, however, pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.

There are other forms which must be filed if you have foreign bank or financial accounts;  foreign investment company; or own 10% or more of a foreign corporation or foreign partnership.   If you do not file these form or file them late, the IRS can impose penalties of $10,000 or more per form.  These penalties are due regardless of whether you owe income taxes or not.

We have helped hundreds of expats around the world catch up with their past U.S. taxes because they have failed to file U.S. tax returns for many years. This is, in fact, our specialty and we offer a 10% discount to clients to wish to file multiple tax returns at once and get in full compliance with the IRS.

Work with a recognized expert to help you prepare your American tax return. We can also provide tax planning and advice with other expatriate tax; we look forward to working with you.

Below we include information on the Senegalese Tax System for the American Expatriates.
 

Senegal personal income tax is levied up to 50%.

Annual income (XOF*)	Tax rate (%)
0-630,000	0
630,001-1,500,000	20
1,500,001-4,000,000	30
4,000,001-8,000,000	35
8,000,001-13,500,000	37
13,500,001 and over	40

Senegal Income tax is comprised of a progressive and a proportional tax. The rate of the proportional tax depends on the nature of the income:

• wages and salaries: 11%
• dividends: 10%
• income from land: 20%
• other income: 25%
   

In Senegal, taxable income is defined as income from all sources (wages and salaries, proceeds from agricultural, commercial or non commercial activities, income from real property, etc.). Each category of income is subject to a specific proportional duty taking into account different abatements and deductible charges and a progressive rate ranging from 0% to 50% based on the individual's family situation.

The progressive duty ranges from 0% to 40% and is applied per bracket of income, taking into account a dependents' allowance. The total income tax liability obtained by adding the proportional and progressive duties cannot exceed 40% of taxable income.

Basis – Residents are taxed on worldwide income, while nonresidents are taxed only on Senegal-source of income.
 

Residence – An individual is considered resident in Senegal for tax purposes if his/her permanent place of dwelling, centre of interests or centre of business is located in Senegal, or if he/she stays in Senegal for more than 183 days out of any 365-day period.
 

Tax Filing status – A taxpayer whose only source of income is salary, with tax withheld and paid by the employer, is exempt from the obligation to file a tax return. All other tax residents must file their own returns. Spouses are required to file separate tax returns.
 

Capital gains – Capital gains are taxable either at source by a notary in the case of a real estate transaction or based on the taxpayer's declaration.
 

Tax Deductions and tax allowances – Different abatements and allowable deductions apply to each category of income.

Other taxes on individuals:  

Capital duty – No

Stamp duty – Stamp tax is levied on cash transactions based on the amount of the transaction.
 

Capital acquisitions tax – A 15% tax is levied on the value of real estate at the time of acquisition, and 1% on the value of securities and shares and other liquid assets.
 

Real estate tax – Property tax is due at a 5% or 7.5% rate.
 

Inheritance/estate tax – A 1% registration fee is imposed for deeds of pure and simple acceptance of succession or legacy. Inheritance tax is imposed at a 3% or 10% rate, depending on the degree of relationship.
 

Net wealth / net worth tax – No
 

Social security contributions – Social security is supported by the employer, with the annual ceiling for contributions set at XOF 756,000. The rate for family benefits is 7% and that for industrial accidents ranges from 1% to 5%, depending on the line of business.
 

National retirement fund contributions are paid by both the employer (60%) and the employee (40%). The rate of contributions for the general scheme is 14%, with an annual ceiling of XOF 3,072,000. The contribution rate for the executives' scheme is 6%, with an annual ceiling of XOF 9,216,000. Executive personnel must contribute to both schemes.
 

Senegal Tax year – Senegal tax year is the calendar year that ends on 31 December.

Tax Filing and tax payment – Tax returns must be filed by 31 January or 31 March of the following year depending on the type of income. Payment of tax must be made upon receipt of a tax notice.
 

Penalties – Penalties apply for late filing, late payment, failure to file and filing incorrect returns, with the amount depending on the nature of the tax and/or violation.

Senegal Corporate Tax Rate  

Branches and companies are liable for corporate income tax (CIT) at the rate of 30%.

Residence – An entity is generally deemed to be a resident of Senegal if its registered office, permanent establishment or centre of activity is located in Senegal.
 

Basis – Resident corporations are subject to tax on their worldwide income, while nonresidents are taxed only on Senegal source income.
 

Taxable income – Corporate income tax is imposed on net profits. Taxable profits are determined after deduction of allowable expenses and charges.
 

Taxation of dividends – Dividends received from a company, other than a subsidiary, are taxed as income after a 60% tax abatement on the gross amount of the dividends (see also under "Participation exemption").
 

Capital gains – Capital gains are treated as operating profits and included in the corporate income tax base.

Losses – Tax losses may be carried forward for 3 years. The carryback of losses is not permitted.

Surtax – No

Alternative minimum tax – A minimum tax is imposed, based on a company's turnover:

- XOF 500,000 for turnover up to XOF 250 million;
- XOF 750,000 for turnover between XOF 250 million and XOF 500 million;
- XOF 1 million for turnover over XOF 500 million.
 

Foreign tax credit – Senegal tax law does not provide for unilateral tax relief. A tax treaty, however, may provide for bilateral relief.
 

Participation exemption – An amount equal to 5% of dividends received by a resident parent company from its subsidiary is included in the taxable base (considered expenses incurred), unless the actual expenses incurred by the parent company are less than 5% of dividends received; in that case, only the actual amount is included in the taxable base.
 

Holding company regime – No
 

Tax Incentives – Tax incentives are granted under several laws, including the Investment Code, Mining Code, Petroleum Code, Environment Code, Free Zone Law, Free Exporting Companies Law, etc. Investments valued higher than XOF 250 billion are entitled to particular advantages negotiated directly between the investor and the ministry in charge, subject to non-objection from the Prime Minister.

Withholding tax:  

Dividends – Dividends paid a nonresident company are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty.
 

Interest – Interest paid to a company or individual is subject to a 16% withholding tax, unless the rate is reduced under a tax treaty. The tax rate is 8% for interest generated on a bank or stockbroker's account and 20% on interest on cash vouchers.
 

Royalties – Royalties paid to a foreign entity are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty. Branch remittance tax – In certain cases, VAT (at 18%) can be applied on branch remittances.

Other taxes on corporations:  

Capital duty – The initial capital duty is 1% of capital if the amount of capital is higher than XOF 10 million and XOF 25,000 in all other cases. The tax on a capital increase is 1% of the amount of the increase, with a 3% surtax in the case of contributions of real property.
 

Payroll tax – The payroll tax is 3% of taxable gross salary.
 

Real property tax – Tax is charged at 5% of the value of real property other than factories and industrial premises, and 7.5% of the value of factories and industrial premises.
 

Social security contributions – Social security is supported by the employer, with an annual ceiling for contributions of XOF 756,000. The rate for family benefits is 7% and that for industrial accidents ranges from 1% to 5%, depending on the line of business.

National retirement fund contributions are paid by both the employer (60%) and the employee (40%). The rate of contributions for the general scheme is 14%, with an annual ceiling of XOF 3,072,000. The contribution rate for the executives' scheme is 6%, with an annual ceiling of XOF 9,216,000. Executive personnel must contribute to both schemes.
 

Stamp duty – Stamp tax is levied on cash transactions based on the amount of the transaction.
 

Transfer tax – The tax rate depends on the nature of the transfer. For example, the rate on transfers of real property and goodwill is 15% and the rate on transfers of shares is 1%.
 

Other – A business license tax is comprised of a fixed annual payment and a proportional duty, with the amounts and rates fixed according to the nature and size of the business activity. Specific taxes are levied on the sale of petroleum products, alcohol and tobacco.

Anti-avoidance rules:  

Transfer pricing – Payments for interest, royalties or any kind of services rendered by a resident company to another entity are deductible from the income tax base if the company can demonstrate that the payments are real, justified and the price was set under normal business conditions. The burden is on the company that made the payments to demonstrate that the payments meet these requirements.
 

Thin capitalisation – While Senegal does not have specific thin capitalisation rules, limits are imposed on interest paid to partners on funds provided by them to a company. The maximum interest rate is the lending rate of West African States Bank (BCEAO), plus 2 percentage points at the time the interest payment are due. Further, the loan may not exceed the amount of the share capital and the capital must be full paid in.
 

Controlled foreign companies – There are no specific CFC rules, but measures exist to prevent international tax evasion.

Administration and compliance:  

Senegal Tax year – Senegal tax year is the calendar year that ends on 31 December.

Consolidated tax returns – Consolidation is necessary when a company established in Senegal controls other companies or exerts a notable influence on such companies.
 

Tax Filing requirements – A tax return must be filed by 30 April of the following year.Penalties – Penalties apply for late filing, late payment, failure to file and filing an incorrect return. The amount of the penalty depends on the nature of the tax and/or violation.

Senegal vat (Value Added Tax)

Senegal has a single VAT rate of 18%.  VAT on tourism activities is 10%.  A 17% special tax on financial activities (mainly banking, money transfers, and change operations) is applicable instead of VAT.

Taxable transactions – All economic activities are within the scope of VAT, including activities of independent professionals. The main exemptions relate to health care, education, banking, insurance and reinsurance, farming and transportation. Banking transactions are subject to the tax on banking operations.
 

VAT Registration – All corporate businesses are required to register. Nonresident VAT payers are required to appoint a solvent resident representative to be jointly responsible for the payment of VAT and the discharge of other VAT-related obligations.

Filing and payment of VAT – Value Added Tax returns and payments are due on the 15th of the month following the date of the relevant transactions.

 

Questions about Senegalese taxes?

Understanding tax obligations in Senegal can be complicated. If you're looking for an expatriate tax accountant or considering tax consulting, our dedicated team is here to help.

We offer tailored advice to ensure you're well-informed and compliant with your tax obligations. For further assistance, please contact us!