Transfer Pricing in Benin

The legal framework

Benin regulates transfer pricing inside its general tax code rather than through a dedicated statute: the Code général des impôts enacted by Loi n° 2021-15 of 23 December 2021, in force from 1 January 2022 and consolidated annually, the current edition reflecting Loi n° 2025-22 of 8 December 2025. The regime rests on Article 45 (arm's length rule), Articles 470 and 471 (transfer pricing return and country-by-country report), 542 to 544 (audit-stage information requests and documentation), 496 and 503 (fines) and 578 (rulings, including price agreements). There is no OECD transfer pricing country profile for Benin, so work from the code, the three implementing arrêtés and the DGI's doctrine at impots.bj.

Under Article 45(1), profits indirectly transferred by a Benin enterprise to enterprises outside Benin on which it depends, or which it controls, are added back to accounting profit, quantified by comparison with the profit that would have arisen absent the dependence or control. It is a one-way power: nothing obliges the administration to grant a downward or corresponding adjustment.

Scope turns on Article 45(2): dependence or control exists where one enterprise holds, directly or through an intermediary, the majority of the other's capital or voting rights, exercises de facto decision-making power over it, or where both sit under the same control. Article 45(3) removes the control condition where the counterparty sits in a privileged tax regime as defined by Article 30(2), and Article 30(1) independently reverses the burden of proof on interest, royalties and service fees paid to such persons. Purely domestic dealings fall outside this regime; they are attacked under Article 562 (abuse of law) or Article 563 (abnormal act of management), on both of which the administration carries the burden of proof.

The OECD Transfer Pricing Guidelines have no formal status in Benin, but the 2020 documentation arrêté tracks BEPS Action 13 and the return form uses the five OECD methods, so cite them as persuasive practice, not binding authority. The regional layer matters too: as a WAEMU member Benin is bound by Règlement n° 08/2008/CM/UEMOA, whose Article 10 replicates the associated-enterprises rule including the corresponding-adjustment obligation — directly applicable, and genuine relief for intra-regional adjustments.

Methods, comparables and benchmarking

The code prescribes no method and no hierarchy; the architecture comes from the administrative layer. The DGI's declaration form requires one of CUP, resale price, cost plus, transactional net margin, profit split or 'Other' to be ticked for each transaction category, and the arrêté of 24 January 2020 requires the most appropriate method together with the reasons for choosing it.

On benchmarking, there is no rule on the geographic sourcing of comparables, no accepted local database and no requirement that the Benin entity be the tested party. There is no statutory arm's length range either: the code mentions no interquartile range, no median and no adjustment point, and Article 45(1) simply directs comparison with the counterfactual profit, which leaves the administration free to adjust to a single figure. What the arrêté does demand is process discipline: the search methodology and data source, each comparability adjustment, the tested-party rationale and the reasons for any multi-year analysis.

Documentation: what the DGI expects

The documentation obligation in Article 543 bites where the Benin entity has turnover excluding taxes or gross assets of at least 1,000,000,000 FCFA, roughly EUR 1.52m, or where it holds, or is held by, more than half of an entity meeting that test. Third-party notes circulating a 500,000,000 FCFA intra-group transaction threshold, sometimes citing an 'article 689 bis', are wrong: the code ends at Article 659.

The file has two tiers. The group-level part follows the Action 13 master file: structure charts, business lines with the supply chain for the top five products and any exceeding 5% of group turnover, intangibles, intra-group financing, consolidated accounts and unilateral APAs and rulings. The entity-level part is a full local file, down to copies of rulings obtained elsewhere that bear on the controlled transactions — a disclosure groups routinely discover too late.

Timing is the trap. The documentation must already be held at the date the accounts audit is opened, and if it is absent or incomplete the DGI serves a mise en demeure giving eight days to produce. Everything must be in French, in electronic and paper form; an underlying document in another language needs a French translation certified by the taxpayer on its own honour under Articles 479(2) and 521(2). Separately, Article 470 requires an electronic transfer pricing return by 30 April on the same threshold, and Article 471 a country-by-country report within twelve months of year end where consolidated turnover reaches 492,000,000,000 FCFA. One caution: the three implementing arrêtés were made under the old code and refer to its numbering; their continued application rests on doctrine, not an express saving clause.

Audits, penalties and the enforcement climate

Where an audit throws up evidence of an indirect transfer of profits, Article 542 lets the DGI demand information on the relationships with the foreign enterprises, the pricing method and its justification, the activities those entities carry on and their tax treatment abroad. The request must be precise — country, entity and, where relevant, amounts — and the response window is 30 days, extendable on reasoned request to no more than 45 days in total, with a further eight days after any formal notice. Assessments generally reach back three years, six for undeclared activity, and Article 576 extends the period where the DGI has sent an information request abroad.

Failure to file the transfer pricing return or the country-by-country report attracts a fixed 10,000,000 FCFA fine; a documentation failure that survives a formal notice attracts 0.5% of the transactions covered, with a 10,000,000 FCFA floor per audited year, and Article 544 then permits assessment from whatever information the administration holds. On the substantive adjustment, Article 486 applies 20%, rising to 40% where the supporting documents are inaccurate or good faith is not established, and 80% for fraudulent manoeuvres. There is no documentation-based penalty protection: a complete file avoids the Article 503 fine and the estimated assessment but does not reduce the adjustment penalty. Article 69(9) adds a secondary adjustment, treating audit-driven amounts paid to a shareholder or group company as distributed income.

The enforcement climate is early but sharpening. Gross tax revenue reached 1,348.31 billion FCFA in 2025, up 16.61% year on year, and audit coverage stood at 29.1% of large enterprises and 14.1% of medium-sized ones, while country-by-country exchange capability arrived only with the CbC MCAA signature in January 2026. No published Benin decision applying Article 45 has been located, so the most authoritative domestic positions are administrative: the DGI has ruled that the arm's length principle prevails over the terms of an intra-group contract and that demonstrating the reality of the service received is a separate hurdle from pricing it.

Dispute resolution and advance certainty

Adjustments follow the adversarial procedure. The taxpayer has 30 days to comment on a reasoned proposition de rectification, and the administration must confirm what it maintains within two months of receiving those observations; missing that deadline means the observations are deemed accepted in full, a real and under-used defence. A persisting factual disagreement can go to the Commission des impôts within five days of the confirmation, which suspends the procedure and produces a non-binding opinion within 30 days that allocates the burden of proof to whichever party rejects it. Thereafter a claim goes to the Minister within three months, silence at two months is rejection, and the tribunal must be seised within two months; a stay of payment requires an express request, the undisputed tax paid and 25% security.

Prospective certainty is thin: Benin has no APA programme, no rollback and no bilateral or multilateral procedure. What exists is Article 578(8): a ruling may take the form of an agreement on the arm's length price for one or more Article 45 transactions, binding for the year in which it is given and the three following years. The guarantee lapses if the facts change, if the law changes, or if the administration changes its appreciation — the last operating prospectively only, from the day the taxpayer is told. Cross-border relief is weaker still: the code contains no competent authority article and no MAP deadline, so relief depends on WAEMU Article 38, which allows a case to be brought within three years of first notification, or on a narrow bilateral network.

Pillar Two, Amount B and what changes in 2026

The 2026 finance law changed nothing in transfer pricing: only three articles in the consolidated code carry a 2026 amendment annotation, and none touches Articles 45, 470, 471, 542 to 544 or 578.

Pillar Two is not enacted: the code contains no GloBE, income inclusion, undertaxed profits or domestic top-up rule, and no EUR 750m trigger outside the country-by-country article. An ATAF technical team worked with the DGI, the investment agency and the Ministry of Finance in February 2026 to compute jurisdictional effective tax rates and model top-up exposure created by the existing incentive regime. Amount B sits in a similar half-state: Benin appears on the OECD list of covered jurisdictions for the political commitment running from 2025 to 2029, but nothing in the code implements it, so a Benin taxpayer has no domestic basis on which to elect. The genuine 2026 change is informational: the country-by-country exchange gateway opened with the CbC MCAA signature, roughly six years after the filing obligation was first imposed by the 2020 finance law.

How practitioners should respond

Three things drive risk in Benin. The first is the audit-opening trigger: because the documentation must exist on day one and the cure period is eight days, a group that plans to build its file when the audit letter arrives has already lost. Keep a French-language local file, with the reconciliations to the OHADA accounts, refreshed annually alongside the 30 April return. The second is the interaction between arm's length pricing and the statutory ceilings. An intra-group charge can be perfectly benchmarked and still be partly non-deductible under the 5% royalty cap, the 10% head-office and technical assistance caps, the shareholder interest rate ceiling or the 30% EBITDA limitation — and Article 29 denies most permanent establishment charges outright. Model deductibility and pricing together, never sequentially.

The third is substance evidence. The DGI's published rulings show an administration that treats proof of the reality and benefit of a service as a distinct requirement from proof of its price, and that treats the arm's length principle as prevailing over the contractual terms the group has written for itself. Keep deliverables, time records and correspondence, not just agreements and benchmarking studies. Where a material recurring transaction can bear the process, an Article 578 price agreement buys four years of certainty for a modest procedural cost, and is worth considering because the downstream relief mechanisms — corresponding adjustments, MAP, litigation on Article 45 — are largely untested in Benin.