The Ivorian Minister of Budget and State Portfolio, Moussa Sanogo, presented Thursday, to the employers, the draft of the 2021 tax annex with some adjustments to shed light on the motivations of the government.

Mr. Moussa Sanogo exchanged, in his Cabinet, with the General Confederation of Enterprises of Côte d'Ivoire (Cgeci, Ivorian Employers), professional and consular organizations of the private sector.

The Cgeci and other umbrellas had referred the measures of the 2021 tax schedule to the Ministry. According to Mr. Moussa Sanogo, "the draft tax annex was developed with close involvement of the private sector, which made proposals".

This meeting aims to profile the various adjustments before the final text on the 2021 tax annex, which comes in a context related to the Covid-19 health crisis, is proposed to the Council of Ministers and transmitted to the National Assembly.

He said that this approach is part of the strengthening of the predictability of the tax law that allows companies to organize and develop their budgets and investment programs according to the evolution of the tax law.

For this year 2021, the Ivorian tax annex has been drawn up in a context marked by the Covid-19 pandemic, the effects of which are still being felt at the economic and social level and will lead to a deceleration in growth.

The Coronavirus pandemic has led the government to adopt specific tax and customs measures through the issuance of ordinances to support businesses and households affected by this health crisis and to revive the economy.

A tax burden of around 12.6%

The tax resource mobilization mechanism of the 2021 tax annex includes various tax policy measures whose implementation should improve the level of tax burden, currently around 12.6% following the rebasing of gross domestic product (GDP).

This rate of tax pressure, he will argue, is below the WAEMU community standard, set at 20% and does not correspond to the country's ambition to rise to the rank of pre-emerging countries.

He noted that the Government's objectives are focused on raising the level of tax revenue mobilization. And this, in order to reduce the financing of the country's development by external resources, while ensuring a balanced distribution of the tax burden.

After the working session, the budget minister told the press that they "did not separate angry". The president of the Cgeci did not want to make a statement to the press. An implementing decree should give the provisions of the tax law.

The minister insisted that accommodative measures are being taken to support the private sector, while noting that "the volume of tax exemptions in Côte d'Ivoire has always exceeded 300 billion CFA francs".

Over the period 2011-2019, the Ivorian State adopted 150 fiscal policy measures, 70% of which consisted of support measures for the private sector (precisely 104 measures and 46 for measures to strengthen public resources).

Adjustments

Tax policy measures have been proposed in this tax annex. These tax policy measures include the subjection of luxury rice to VAT (Value Added Tax) at the rate of 9%, the subjection of imported meat to VAT at the rate of 9%.

They also concern the introduction of excise duty on cosmetic products. In addition, it was proposed to increase the rate of registration duty on cocoa exports from 1.5% to 3%.

A rationalization plan adopted by the Council of Ministers on March 27, 2019 enshrines the principle of introducing a REDUCED rate of VAT on imported food products, considered luxury, in line with WAEMU regulations, Sanogo recalled.

"These are measures whose induced effects of taxation would not significantly impact vulnerable households," said the Minister of the Budget, adding that "this plan also provides for the gradual reduction of the number of exemptions provided for by the current tax system".

He further noted that this tax annex contains tax relief measures taken to support certain sectors of the economy, in particular the pharmaceutical and insurance sectors.

These tax relief measures relate to the exemption from value added tax, to the commissions collected by wholesalers and pharmacies in connection with the distribution of medicines from the New Public Health Pharmacy to beneficiaries of Universal Health Coverage (CMU).

They also include exemption from the special equipment tax on the turnover achieved by wholesalers and pharmacies in the context of the distribution of medicinal products from the New Public Health Pharmacy to CMU beneficiaries, exemption from income tax of claims on interest on remuneration paid to subscribers to life insurance contracts.

Since 2011, the State has implemented important measures to support businesses. Seventy (70%) of tax policy measures consist of provisions to support the private sector. The fiscal cost of these measures reflected in the various tax annexes is estimated at more than 50 billion CFA francs per year, or about 500 billion since 2011.