Formerly known as Dahomey, The Republic of Benin is a relatively small West African state that shares its borders with Togo, Nigeria, Burkina Faso, and Niger.
Despite its small size, Benin records some of the highest monthly transactions in West Africa. It is a commercial nation that sells imported and locally produced goods in bulk to its neighboring countries.
Benin is home to approximately 12 million people. The country’s economy is highly dependent on subsistence agriculture, cotton production, and regional trade.
Being a West African commercial hub, the government depends on taxes for a fair share of its revenue. In this article, we’ll be giving you an expat guide to taxes in Benin.
If you are an international wholesaler or businessman looking to franchise your business in this lucrative West African commercial market, this guide will help you understand how taxes work in the country.
Overview Of The Benin Tax System
Benin has a source-based taxation system where residents are subject to taxes on their worldwide income regardless of the source or form of payment. Non-residents on the other hand are subject to tax only on their Benin-sourced income.
Indirect taxes account for 60% of state revenues and direct taxes make of about 25%. The tax year begins on the 1st of January and ends on the 31 of December.
In the next sub-heading, we will be reviewing the income and corporate taxes levied by the state on residents, non-residents, and companies.
Income Tax
All residents of Benin, including foreigners and expats, are required by law to pay taxes on income generated from your business. You will be considered a resident of Benin for tax purposes if you live or/and work for more than 183 days a year.
Once the tax registers you as a tax resident, you will pay Beninese rates on your worldwide income.
However, if you live or/and work in Benin for less than 183 days in a calendar year, you will be taxed at Beninese rates on your Beninese income only. Foreigners may not have to pay taxes at Beninese rates, depending on their residency status.
Benin uses a progressive income tax system that allows the states to tax you on your total earnings in a fiscal year. Your tax rates are highly dependent on how much you earn in a year.
The income tax rates for residents and expatriates working in Benin are listed below.
| Income | Taxable Income |
| up to 50,000 XOF | 0% |
| 50,001 – 130,000 XOF | 10% |
| 130,001 – 280,000 XOF | 15% |
| 280,001 – 530,000 XOF | 20% |
| above 530,001 XOF | 30% |
Other taxes in Benin include 4% payroll tax, 15.4% social security contribution, 6% pension, 9% family allowance, 4% for industrial injury insurance, 8% on the transfer of land, real estate, or shares, 6% on real property and 5% for undeveloped property.
Corporate Taxes
Benin tax law did not clearly define the meaning of a “residence company” but it stated of companies, establishments, and legal persons that are subject to corporate income taxes.
Newly established companies can enjoy a tax reduction of up to 25% in the first two years of activity, and 50% in their third year.
Resident companies and permanent establishments of foreign corporations are subject to a CIT rate of 30%. Companies in the industrial and mining sectors are taxed at a rate of 25% and 35% taxes are levied on companies in the petroleum companies.
Resident companies are subject to taxes on revenue generated in Benin and foreign-source income, interest, royalties, dividends, and capital gains. Resident companies are not taxed on their foreign-source industrial and commercial profits.
Branches and franchises of foreign corporations use the same tax rates as domestic companies. The profits remitted to the head office of these companies and franchises are subject to a 15% branch tax.
Non-resident companies are taxable on their Benin-source income and the rental value of their property.
All legal entities domiciled in the country are required to register with the General Tax Office and file annual returns before the end of September every year.
Public limited companies are required to submit an audited financial statement every year. Limited liability companies must also appoint an auditor if the company generates capital of more than XOF 10 million, have a turnover of XOF 250 million, or has more than 50 employees.
The VAT rate in Benin has been 18% since 1991 when it was introduced. Companies situated in Benin must register for VAT and file returns before the 10th of the following month.
A 15% withholding tax may also apply to dividends and interests paid to both resident and non-resident companies.
Banking institutions and insurance companies are exempted from VAT in Benin. Companies in the industrial sector and industrial-free zones can also enjoy exemption from income tax for 5 years and 10 years, respectively.
Benin has four double-taxation treaties with France, Norway, Kuwait, and all eight countries in the West African Economic and Monetary Union (WAEMU).
