Section 8 General Tax Code: Non-Deductible Expenses and Transparency Rules

Section 8 of the General Tax Code introduces critical provisions for ensuring compliance and promoting transparency in tax reporting. These measures focus on limiting non-deductible expenses and addressing tax haven transactions, providing clear guidelines for businesses.

Key Provisions of Section 8(a): Non-Deductible Expenses

1. Cash Payments Above 100,000 CFA Francs:
   • Any expenses equal to or exceeding 100,000 CFA francs per transaction, when paid in cash, are non-deductible.
2. Invoices Without Proper Identification:
   • Expenses supported by invoices lacking a single identification number on the taxpayer’s card are non-deductible. This excludes invoices from foreign suppliers.
3. Electronic Invoicing Compliance:
   • Expenses justified by invoices issued outside the tax authorities’ electronic invoicing monitoring system cannot be deducted.
4. Non-Registered Taxpayers:
   • Payments made to individuals or businesses not listed as active taxpayers with the tax authorities are non-deductible.

Key Provisions of Section 8(b): Transparency and Tax Haven Transactions

1. Tax Haven Transactions:
   • Costs and remunerations recorded in transactions with entities located in tax havens are non-deductible.
2. Exceptions for Production Costs:
   • Property and merchandise purchased for production, cleared through customs, or remuneration for related services remain deductible.
3. Transparency and Cooperation:
   • Transactions with countries or territories considered non-cooperative in fiscal transparency or exchange of information are subject to scrutiny.

Why These Provisions Matter

1. Promotes Accountability:
   • Ensures businesses operate transparently and avoid questionable transactions.
2. Encourages Compliance:
   • Reinforces the use of proper invoicing systems and adherence to fiscal regulations.
3. Mitigates Risks:
   • Protects businesses from penalties arising from non-compliance with tax laws.

Steps for Compliance

1. Use Verified Suppliers:
   • Engage only with active taxpayers and suppliers who comply with the electronic invoicing system.
2. Limit Cash Transactions:
   • Adopt digital payment systems to ensure expenses above 100,000 CFA francs are deductible.
3. Leverage Professional Services:
   • Our Tax Advisory Services can help you navigate these regulations and ensure full compliance.

Section 8 of the General Tax Code emphasizes the importance of transparency and proper documentation in tax reporting. By adhering to these provisions, businesses can avoid penalties, maintain compliance, and foster sustainable growth.

For a complete understanding of Section 8 and other regulations, download the 2024 General Tax Code here.