How has Sojufisc grown in the region?

Sojufisc has grown across our three departments – tax, corporate, and legal. We recently opened a new subsidiary in Senegal, Sojufisc Expertise Senegal, to assist with domestic regulatory aspects. We also inaugurated a subsidiary in Abidjan in 2020, while our practice in Burkina Faso, in operation for five years, has grown very independent with six or more clients of its own. It is our ambition to develop strong tentacles across all major African countries, prioritizing the West African region. In the next two years, we would like to open a new subsidiary in Mali, and further consolidate our presence in Ivory Coast. In response to the high demand we see, Sojufisc is hiring regional managers and putting in place local majority associates to look after the subsidiaries.

Sojufisc is a founding member of the Tax Africa Network (TAN). Could you tell us more about TAN?

TAN is the first and largest African legal network specialized in cross-border advisory and tax compliance. The network spans 12 countries, from Central, East, West, and to the Indian Pacific region in the continent. Many countries in the region operate under the same or similar fiscal regime rules under OHADA (17 countries), CEMAC (6 countries), and WAEMU (8 countries). The network counts 15 members (tax advisory firms) and is growing rapidly.

How has the Senegalese regulation evolved in terms of increasing local beneficiation?

Senegal has undertaken to reform the mining code with an emphasis on revenue sharing and the gradual renegotiation of some mining conventions since 2016, when the country published its new mining code, and local content regulations were introduced last year. In parallel, the petroleum code, dated 1998, was replaced by a new one in 2019, correcting some confusion that emerged over new oil discoveries. Both laws were passed with the aim of ensuring the local population would derive greater benefits from the extractive industries. Because of these new laws, all activities in the extractive sectors are now divisible into three categories: activities exclusively reserved for Senegalese operators; mixed or joined activities occupied by partly foreign, partly Senegalese operators within a JV structure; and free activities performed by individuals or corporates of any nationality. Each player must declare their position and local content policies to a dedicated local content committee that was established in the country.

Moreover, companies active in the country must also declare to the mining registry in their local jurisdiction who is the beneficiary (the owner) of these activities every year. Regarding this latter point, the taxation of mining financial transactions for assets located in Senegal but whose contracts were territorially subject to foreign rights has been rigorously debated.Based on the current legal structure, a beneficiary located in a foreign jurisdiction could sell their assets in Senegal to a company located abroad but whose legal ramifications indicated a unique asset in Senegal. In this way, an investor could make a substantial capital gain without paying the income tax in Senegal, which created a question of tax fairness. As a result, in 2019, the Senegalese legislator amended the code so that capital gains made abroad that are resulting from the transfer of corporate securities directly or indirectly related to mining or oil titles in Senegal become taxable. Companies involved in such transactions must declare these transactions by means of a tax registration at the rate of 5%, while the transferee must declare the capital gains which are subject to a tax rate of 30%. The new rule interferes with the taxation protected by a fiscal stabilization agreement, and, in some cases, the fiscal adjustment has been quite hard on some majors.

How does Senegal compete with other jurisdictions in terms of its attractiveness to investors?

Senegal has an attractive tax framework, well-equipped to incentivize investors. Over the past 10 years, the law has changed quite significantly, and with each change, the authorities have tried to yield more and more benefits from the extractive industries to rebalance the interests between investors and the population. Even though these changes might have created turbulence in the market, the government has been transparent and open to round-the-table discussions with all parties involved to find adequate solutions.