Non-Resident Digital Platform Operators VAT Liability in Ivory Coast

The government of Ivory Coast has dedicated a lot of time, effort, and willingness to shape the indirect tax regulations following the continuous changes in the digitally oriented business environment. 

As we have witnessed since the beginning of 2010, the traditional way of conducting business transactions has radically changed due to the global expansion of e-commerce operations and digitalization. 

The birth of the Platform Economy has changed how transactions are built through a change in the number of participants for the transaction and the structural differentiation of more than one transaction for the main sale in question. 

In the last years, the Government has been working on establishing an efficient legislative framework to combat productively and intelligently the losses of uncollected VAT caused by the non-regulated Platform Economy ecosystem.

The State Budget Law for the year 2022, which had an amendment of the General Tax Code in one of its parts, introduced the institute of VAT liability for supplies made by Non-Resident Digital Platform Operators to customers based in Ivory Coast. 

Timeline

Starting April 9, 2024, Non-Resident Digital Platform Operators should register, charge, collect, and remit VAT according to the instituted simplified procedure and deadlines designed explicitly for this group of taxpayers. 

Impact

Through a tax explanatory note issued by the General Directorate of Taxes on October 9, 2023, the Ivory Coast Tax Administration has announced that starting from April 9, 2024, it will mandate the simplified VAT registration procedure and accompanying electronic submission of return declaration for non-resident digital platform operators and digital merchants.

The simplified registration procedure has been introduced as one of the enforcing tools to guide foreign digital operators to comply with the tax amendments introduced through the State Budget Law for 2022 regarding the VAT liability of non-resident digital platform operators.

The Ivory Coast introduced only VAT liability on businesses mentioned above, and there is no other tax liability if the entity in question isn’t a tax resident in the state.

Returns should be filed quarterly, and they could be paid in foreign currency, USD or EUR.

The VAT liability covers the net value of digital service/goods provided by the underlying supplier and the amount of commission computed by the platform for the intermediation, if there is one between the underlying supplier and recipient.

There is no threshold established. Before commencing the first sale, the businesses in question must already be registered with the DGT. 

The standard VAT rate to be imposed on these transactions is of a uniform value of 18%.

The VAT rules mandate that digital marketplaces and accompanying businesses should follow new procedures starting from April next year. If not, we should start with internal operativity preparation for entering a new market in alignment with new regulations.

The VAT compliance challenges for Digital Merchants when expanding their operations into new markets can often be very tricky, so having a reputable external service provider can be a good solution. The time that should be spent on deep diving into the national tax landscape could be shifted into learning about the market, growing visibility, and boosting sales. 

The Non-Resident Digital Marketplaces and Online Businesses should be aware of their announced upcoming VAT liability if they plan to operate in Ivory Coast.  The specifically designed simplified VAT registration and accompanying procedures should contribute to decreasing the VAT GAP.