Tax on property income in Senegal
December 13, 2017
Effective Tax Rate on Rental Income
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Global Property Guide research
Nonresidents are taxed on their Senegalese-sourced income. Married couples are generally taxed separately but the head of the family may opt for joint taxation. Under the law, the following can qualify as dependants: (1) spouse with no income of her own, (2) minor or invalid children, (3) children under the age of 25 who are still studying, and (4) orphaned or abandoned children cared for by the taxpayer.
Income is generally aggregated and taxed at progressive rates. Taxable income is generally computed by deducting income-generating expenses and other allowable deductions from the gross income.
However, some categories of income, such as income from real estate, are taxed at flat rates.
Rental Income Tax
Income from real estate is taxed at a flat rate of 20% on net income. In computing for the taxable income, the following can be deducted: (1) costs incurred in the repairs or maintenance of the property, (2) property tax paid by the owner in respect of developed land, (3) interests on borrowings in relation to the acquisition, maintaining or repairing the property, and (4) 20% of the gross rental income for depreciation and insurance.
Value Added Tax (VAT)
VAT is generally payable on rental income, at 18%. However, rental of unfurnished properties for residential purposes are exempted from VAT.
Capital Gains Tax
Capital gains realized from the sale of real property are considered as business income and are subject to corporate income tax at a flat rate of 30% on the net gains. The seller or the owner of the property is held liable for this tax.
In computing for the taxable capital gains, acquisition cost, registration costs, and expenses on the improvements or repairs are deductible from the selling price. In addition, the acquisition price will be increased annually by 1% starting from the fifth year of holding the property and by 2% annually after a 15-year ownership period.
Property Tax on Developed Land (contribution foncière des proprieties bâties)
Property tax is levied at a rate of 5% for all immovable properties except factories. The taxable value is the property's rental value, which must exceed CFA500,000 (US$762). The property owners are liable to pay for this tax.
This tax is levied on the following types of property: houses, factories, all buildings constructed in stone, wood, steel or brick fixed to the ground, non-cultivated lands intended for industrial or commercial use and, in general, all similar commercial or industrial installations.
Factories and similar industrial establishments are taxed at 7.5%.
Property Tax on Undeveloped Land (contribution forfaitaire des propriétés non bâties )
All land situated in urban or metropolitan areas which is either undeveloped or developed with buildings not fixed permanently on the property is taxable. The tax is levied at 5% of the taxable value (which is computed as 5% of the property's market value).
Income and capital gains earned by companies are subject to corporate income tax at a flat rate of 25%. Taxable gains are calculated as gross income less income-generating expenses.
Alternative Minimum Tax
An alternative minimum tax may be imposed on a company. The tax base is the company's turnover.
ALTERNATIVE MINIMUM TAX
|TAX BASE, XOF (US$)||TAX, XOF (US$)|
|Up to 250 million (US$492,117)||XOF500,000 (US$984)|
|250 million - 500 million (US$984,235)||XOF750,000 (US$1,476)|
|Over 500,000 (US$984,235)||XOF1 million (US$1,969)|
|Source: Global Property Guide|