If the new text is more succinct than the old one, this is because it is supposed to be supplemented by regulatory application texts. Decrees dated 18 December 2018 relating respectively to the organization and functioning of the accreditation committee of the Agency for Investment Promotion, and enterprises eligible for a tax credit for opening share capital to nationals, are in line with this perspective.
Basically, the new system aims to strengthen the objectives of promoting productive and socially responsible investments, enhancing local content, and strengthening the competitiveness of businesses.
This study reviews the main innovations and includes a comparative synoptic table of the 2012 and 2018 codes.
1. Scope of the new code
The new code applies to investments made in Côte d'Ivoire regardless of whether they are made directly or not, or of their private origin. It thus repairs the ambiguity under the old code on the types of investments governed by the law, which were sometimes direct investments and sometimes private investments.
Unlike the 2012 code, which limited itself to listing eligible sectors , the 2018 code takes care to categorize them , taking into account the investment zones and the amounts invested. Agriculture, agribusiness, health, hospitality fall under category 1 while sectors not included in category 1, investments in the hotel sector other than those included in the category 1, and sectors other than those excluded from this code constitute category 2. Liberal professions now join the list established by the old code of sectors excluded from the benefits of the code .
2. Tax benefits granted to investors
The new code strengthens tax benefits according to the legal regimes under which investments are made.
Reporting regime
This regime applies to investments made for activity creation. The benefits granted in this scheme relate exclusively to the exploitation phase. As such, the sectors concerned are agriculture, agribusiness, health, and hotels that fall under categories 1 and 2. Companies under the reporting regime enjoy the following tax benefits:
- Tax exemptions ranging from 50% to 75% over a period of five (5) to fifteen (15) years, depending on the area of investment.
These tax exemptions relate to income tax, including the flat-rate minimum tax, the contribution of patents and licenses, employer's contribution , the income tax on securities for dividends paid to domestic shareholders and property tax .
- Tax credits determined as a percentage of the amounts invested. At the end of the implementation of their investment programs, the rates set by the new code vary between 25% and 50%.
These tax credits relate to the contribution of patents and licenses, the tax on property assets, value-added tax, the contribution by the employer for local jobs. It should be noted that these tax credits are chargeable until full repayment .
Accreditation scheme
This scheme now benefits large companies, SMEs, large shopping centers, Category 1 and 2 hospitality activities and structural projects, each with different investment thresholds . It should be noted that the 2018 code introduces structuring projects as a new category. Overall, the investment thresholds vary between CFAF 50 million and CFAF 100 billion, excluding value added tax and working capital, depending on the investment zones.
The benefits accorded to investments made under this scheme also vary according to the evolution of the activities carried out. During the implementation phase of the investment, the benefits granted relate specifically to exemption from customs duties (with the exception of the statistical fee, the community and continental levies, and a temporary suspension of value added tax on the acquisition of goods, services and works). It should be noted that these exemptions relate to a list of legally defined materials. These benefits also vary depending on the investment areas. In addition, when the investment is made simultaneously in several zones, the investor benefits only with respect to the benefit applicable to the zone in which the investment is the highest. During the exploitation phase, the approved investor benefits from tax exemptions and tax credits with percentages and durations similar to the reporting regime.
3. Local content
In order to benefit from the conditions offered by the new legal framework, international investors are urged to rely on local companies to undertake their operations i. The objective is, of course, to open up opportunities for SMEs and give a more inclusive character to Ivorian economic growth.
For example, large foreign companies eligible for benefits under the new code who belong to categories 1 and 2, are entitled to particular tax credits provided that they apply a local content policy on job creation, opening of social capital to nationals and outsourcing.
For local employment, an additional tax credit of 2% is granted to the foreign investor if the number of Ivorian executives and supervisory staff represents 90% of the total workforce in these two categories of employees . The same rate is applied to companies that subcontract to national companies where goods are intended to be incorporated into a final product in Côte d'Ivoire as well as abroad, and for companies that open their capital to nationals. . The implementing decree of 18 December 2018 identifies the conditions for access to the tax credit. They apply to companies in the agriculture, agribusiness, health and hotel sectors, as well as enterprises in other sectors, excluding businesses in the commercial and professional sectors, banking and financial sectors, and the non-industrial building sector. Also, these companies must open at least 15% of their capital to Ivorian nationals.
4. Other benefits granted to investors
The new code expressly sets out the State's readiness to take steps to facilitate the completion of investments. It provides for the creation of developed industrial zones, agricultural lands and areas of tourist interest, and facilitates access to investors through various incentives . These provisions make it possible to guide companies in their choice of investment.
In addition to these common benefits, the new code provides for the possibility of granting additional benefits to structuring projects negotiated under State agreements linking the investor to the State.
All these advantages granted by the new code are valid only if the investments are realized within a duration of 2 years, which can be extended for an additional period not exceeding 48 months .
5. Obligations borne by investors
Obligations relating to investors' commitments on human rights, labor law, social responsibility, environmental protection, taxation and the fight against corruption and the fight against illegal activities, have changed under the new code. If investors were in the past invited to contribute to the promotion of these different requirements, there is now an express obligation to comply with the relevant national laws and, failing that, the applicable international standards . In addition to these binding standards, investors are encouraged to adopt ethical rules, an internal and external control system, and working procedures.
In addition, the new code establishes an obligation on the investor to provide the investment promotion agency all information and all legally defined documents within 10 days of the date of receipt of the application for the investment .
6. Institutional framework for investment promotion
The new code redefines and consolidates the institutional framework for investments. It now provides for a specific agency that is responsible for promoting investments and which is the main contact for investors, carrying out its mission in collaboration with all relevant private and public structures. The new institutional framework also includes a collaborative platform to facilitate expedited processing of investment files and an accreditation committee. The latter makes the approval decisions that are then notified to investors by the director general of the agency responsible for promoting investments. The organization and functioning of this committee are now set by the Decree of 18 December 2018.
7. Dispute Resolution
In addition to resolving interpretation difficulties now devolved to the accreditation committee in liaison with the relevant technical services that respond by notice, the new Investment Code is innovative in that it provides for recourse to the United Nations Rules of Procedure for International Commercial Law on Conciliation in the case of failure to reach an amicable settlement. This legal choice is not imperative in that the law accepts that the parties can resort alternatively to CCJA arbitration. In all cases, the investor must submit a letter of commitment on the dispute resolution procedures it chooses to the investment promotion agency. According to the legislator, this commitment is a waiver of recourse to any other arbitration center for the settlement of the dispute with the State.
Overall, the new investment code strengthens tax benefits to investors, promotes local content, and provides a transparent legal system. Given Côte d'Ivoire's economic stability, investment prospects are real. An attractive legal environment is already available.
Synoptic table of the main legislative developments
| Highlights | 2012 Code | 2018 Code | Comment |
| Sectors of activity in question | -Indicative list of eligible sectors -Restrictive list of excluded sectors | -Categorization of eligible sectors - New excluded sector: liberal professions | More predictability in law enforcement and investor orientation.
|
| Fiscal advantages | -According to the declaration / approval regimes and according to investment areas -Reporting regime -Approval regime applicable according to thresholds and investment zones | -New criteria for granting benefits: category of eligible enterprises -Rehabilitation of tax incentives: Exemptions and tax credit -Revision of access to the plan: thresholds applied according to the size of the investments, precision of the amounts relating to the thresholds -Reorganization of exemptions based on size, category, thresholds and investment areas | -Readability and attractiveness of the new tax system |
| Non-tax benefits | -Establishes aid mechanisms to assist companies that suffer damage by popular movements
| -Suppression of the provisions on the aid mechanism to assist companies damaged by popular movements -Establishes new investment zones with easier access for investors | -Empowering investors in their dealings with local people
-Strengthening public policy for orientating investment to priority areas |
| Obligations of the investor | -Obligations generally formulated flexibly | -More restrictive reformulation and introduction of a new obligation to inform the investor at the time of the investment application | Increased transparency in the realization of investments |
| Institutional framework | -Institutional framework based mainly on the National Agency for the Promotion of Investments.
| -Investment Promotion Agency -Creation of a new accreditation committee and an investor-administration collaborative platform | - Facilitating the implementation of investment operations |
| Difficulties in interpreting the code and settling disputes | -Descriptive presentation of dispute resolution methods
| -Preference for Alternative Dispute Resolution, including CCJA Arbitration -Devolution of interpretation difficulties to a competent technical body |
|
See article Article 3 of the 2012 Code.
Article 5 of the 2018 Code..
See Article 6 of the 2018 Code
It is important to note that the exemption applicable to this contribution concerns national employees. It does not include the apprenticeship tax and the additional tax on continuing vocational training.
See Article 11 of the 2018 Code.
Ibidem.
See Article 1 of the 2018 Code for definitions.
See Article 21 of the 2018 Code.
Ibidem.
See Article 35 of the 2018 Code.
See Article 44 of the 2018 Code.
See Article 36 of the 2018 Code.
See Article 37 of the 2018 Code.