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Plans in Ivory Coast to tax foreign-supplied digital services

Non-resident businesses supplying digital services to customers based in the Ivory Coast will need to register for, collect, and remit VAT to the West African state’s tax authority.

The Ivory Coast is likely to be the next African jurisdiction to extend its VAT rules to the B2C supply of digital services provided by non-resident businesses.

An introduction date has not yet been revealed but the authorities in the Ivory Coast typically make such amendments at the start of the calendar year, meaning the changes may apply from January 2022. The news is contained in a draft tax schedule published by Ivory Coast’s tax authority (Direction Générale Des Impôts, DGI) on October 11, 2021.

The expectation is that 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%. It is also expected that a simplified registration system, in line with OECD recommendations, will be 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 draft tax schedule the Ivory Coast is taking its first steps in bridging these practical gaps. 

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