The Ivory Coast is the latest next African jurisdiction to extend its VAT rules to the B2C supply of digital services provided by non-resident businesses.
The VAT rule changes apply from January 2022. The news was originally contained in a draft tax schedule published by Ivory Coast’s tax authority (Direction Générale Des Impôts, DGI) on October 11, 2021.
As a result, non-resident businesses supplying digital services to customers based in the Ivory Coast will need to register for VAT, collect VAT, and remit the VAT collected to the tax authority in the West African state. The standard VAT rate in the Ivory Coast is currently 18%. A simplified registration system, in line with OECD recommendations, was also introduced. The payment of VAT will be on a monthly basis with a deadline of the 15th day of the following month.
Practicalities of VAT rule changes
Ivory Coast has been in a similar position to many African jurisdictions when it comes to taxing online sales. The reason why they have not previously legislated for the taxation of such sales is quite a common one. Indeed, the Ivorian tax administration admits in the text of its draft schedule that they face “enormous difficulties in collecting VAT on online sales of goods and services.”
When jurisdictions assess their readiness for such an extension of VAT to foreign digital businesses the practicalities need to be addressed and, up until recently, the Ivory Coast tax administration system was simply not ready for such a VAT rule change.
Such practical topics have been a subject that the African Tax Administration Forum (ATAF) has touched on during technical workshops. As more and more jurisdictions look at moves elsewhere in the world there is a temptation to mirror and fast-track other implementations without accepting the practical implications (e.g. use of a simplified online registration system, online B2B number validation) of such moves. With this VAT rule change the Ivory Coast is taking its first steps in bridging these practical gaps.
PLEASE REMEMBER THAT THIS INFORMATION HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT PRESENTED AS SPECIFIC TAX OR LEGAL ADVICE. ALWAYS CONSULT A QUALIFIED TAX OR LEGAL ADVISOR BEFORE TAKING ANY ACTION BASED ON THIS INFORMATION. VERTEX INC. ACCEPTS NO LIABILITY FOR ANY LOSS RESULTING FROM ANY PERSON ACTING OR REFRAINING FROM ACTION AS A RESULT OF THIS INFORMATION.