Senegal – Introduction of VAT Obligations for Foreign Digital Providers

The Government of Senegal, specifically the Minister of Finance and Budget, adopted a decree last November that made the provisions of the General Tax Code, particularly those devoted to VAT, effective. 

The Decree introduced VAT liability for non-resident providers of digital services to customers residing in the country. The obligations for foreign taxable persons within the scope of legislative provisions are entirely new and without precedent in the country. 

A new piece of legislation covers taxable persons who are both foreign digital platforms operating as facilitators between online merchants and customers and foreign digital suppliers operating independently. 

Timeline

Foreign suppliers of digital services need to be aware that the provisions of the Decree will become effective on April 1, 2024, leaving them with limited time to prepare for these changes. 

Impact and Framework 

The scope of non-resident taxpayers impacted by these changes is, by default, extensive. In some countries, we have seen that this obligation exclusively applies to digital platforms(deemed suppliers for underlying supply), the intermediaries between underlying merchants and customers. However, in Senegal, the situation is different. 

The Senegalese tax authorities have developed simplified registration and filing procedures to ease the challenges for foreign taxpayers. 

The obligation is mainly designed to cover B2C transactions, but it also covers B2B transactions in some cases. 

From a practical standpoint, what do these obligations mean for foreign providers of digital services? 

Taxpayers under this legislative umbrella should familiarize themselves with their VAT responsibilities before they start their business operations, where the place of supply is within the boundaries of Senegal. 

In chronological order, they should do the following: 

• Register for VAT(submitting mandatory documentation through specially designed online portal);
• File declaration within the deadline;
• Make the payment for charged VAT.

The reporting period for taxable transactions is the calendar month. The taxable persons have until the 15th day of the following month to submit the declaration and pay for the charged tax.

Penalties 

Foreign providers of digital services that choose non-compliance could experience significant penalties, ranging from fines to total blockage of their domain for Senegalese customers. 

The Ministry of Finance of Senegal adopted a Decree introducing VAT liabilities for foreign suppliers of digital services. Non-resident digital platforms and online merchants operating independently are required to register for local VAT, submit declarations, and make payments accordingly. 

There is no threshold for foreign providers of digital services, so they should make the registration before commencing their activities.