Transfer Pricing in Senegal

The legal framework

Senegal's transfer pricing rules live in the Code général des impôts enacted by Loi n° 2012-31 of 31 December 2012, but the architecture practitioners work with today was recast in a single stroke by Loi n° 2018-10 of 30 March 2018. That law rewrote article 17 and the interest limitation in article 9.2, created the annual transfer pricing return (article 31 bis) and the country-by-country report (article 31 ter), replaced the contemporaneous documentation obligations (articles 638 and 639) and the auditors' dedicated information power (article 570) — all three of which already stood in the 2012 code — and added the specific penalties in article 667-III. Article 17.1 does not transpose the OECD article 9 formula; it reinstates into taxable profit any profit indirectly shifted to a related enterprise abroad — through inflated or deflated prices, thin capitalisation or any other means — measured against the result that would have arisen absent the dependency or control link.

Scope is wider than the ownership test suggests. Article 17.4 deems dependency where one enterprise holds a majority of the other's capital or in fact exercises decision-making power over it, or where both sit under common control. Article 17.3 then removes the test altogether when the counterparty is established in a privileged tax regime or a non-cooperative jurisdiction within the meaning of article 18 — the status of the counterparty alone brings the transaction into charge, and article 18 separately denies deduction for interest, royalties and service fees paid to such recipients unless the payer proves the transactions are genuine and neither abnormal nor exaggerated. For a Senegalese permanent establishment article 17.2 goes further still, barring deduction of any payment to the head office other than reimbursement of costs actually incurred. Senegal does not apply the Authorised OECD Approach; attribution follows article 7 of the UN Model. The OECD Guidelines are not enacted, but the DGID reasons from them where it finds them useful.

Methods, comparables and benchmarking

The CGI prescribes no transfer pricing method. Senegal's OECD country profile records that all five OECD methods are available on a most-appropriate-method basis with no hierarchy, that an arm's length range may be used and that comparability adjustments are required — but every one of those answers is sourced to a draft Instruction sur les prix de transfert described in February 2022 as awaiting signature, and no signed version has surfaced since. Treat the method rules as administrative practice rather than binding law. The practice is real: in decision N° 180 of 12 February 2020 the DGID applied the comparable uncontrolled price method to granulated attapulgite exports and described it in orthodox terms.

On comparables, Senegal states a preference for domestic data on the ground that national comparables bear the closest link to the controlled transaction, and confirms it does not use secret comparables. In practice Senegalese and regional financial data is thin, and the DGID has accepted regional and foreign sets while attacking those whose scope does not match the contracts under review. It states a tripartite functional analysis — significant activities and responsibilities, assets used or contributed, risks assumed — but has also held that a risk analysis on its own can identify the assets to be mobilised and the functions performed, rejecting a taxpayer's complaint on precisely that point. There is no statutory interquartile convention; expect the DGID to test the result against the range the taxpayer has documented. For low value-adding intra-group services Senegal has adopted the OECD simplified approach and reads the 5% mark-up as a ceiling, with auditors challenging 7.5% and 7.9% charges on that basis. Nothing in Senegalese law addresses intangibles, hard-to-value intangibles, financial transactions beyond article 9.2, cost contribution arrangements, commodities or safe harbours, and year-end adjustments are neither required nor permitted.

Documentation: what the DGID expects

Article 638.1 requires a Senegalese legal person to hold documentation justifying its pricing with foreign related enterprises where it has annual turnover excluding tax, or gross assets, of at least XOF 5 billion, or sits above or below a company meeting that test in a more-than-50% ownership chain. Article 638.2 splits the file into group-level and entity-level information, and a Minister of Finance order of 1 August 2023 finally settled the contents: a master file covering group structure, business lines, intangibles, financing and the group's financial and tax position; a local file covering the local entity, its controlled transactions, methods, comparables and financials. Article 639 adds a complete supplementary file — including balance sheet and profit-and-loss account — for each related enterprise in a non-cooperative jurisdiction.

The obligation is contemporaneous in the strict sense. The file must be in the taxpayer's hands on the day the audit opens; there is no preparation window. If it is missing or partial, article 638.3 gives 20 days from a mise en demeure to cure — and note that the 45-day extension some commentaries cite belongs to article 570, which applies to taxpayers below the article 638 thresholds, not to the documentation regime. Alongside the file, entities within article 638.1 lodge the article 31 bis return with the corporate results return by 30 April, and groups with consolidated turnover of at least XOF 491 billion file the article 31 ter country-by-country report electronically within twelve months of year-end. Reports that the DGID suspended secondary filing of that report for financial years 2023 and 2024 cannot be substantiated against anything published on dgid.sn, so plan on the article 31 ter I.3 designated-entity and secondary-filing triggers applying in full unless a signed communiqué is produced. Assume French throughout: article 33 requires certified translation of non-French accounts, and auditors have refused to work with an English-language benchmarking study.

Audits, penalties and the enforcement climate

An audit opens with a written avis de vérification which, on pain of nullity, must carry the taxpayer charter. On-site work is capped at twelve months, or four where turnover is below XOF 1 billion. The taxpayer has 30 days to respond to a notification of adjustments — silence is tacit acceptance — and the auditor has 60 days to confirm, with silence operating the other way. The reprise period is four years, extended to the end of the tenth year for concealed activity, and is interrupted by the notification itself.

The penalty architecture is unusually direct. Failure to file the article 31 bis return costs a flat XOF 10 million; failure to file the CbC report, XOF 25 million; failure to answer a documentation mise en demeure, 0.5% of the transactions covered by the missing documents, per audited year. The real exposure, though, is article 17.5: where the taxpayer does not answer an article 570 request or does not produce the article 638 file, the DGID assesses the affected bases on the information in its possession. That shift into taxation d'office territory is where article 671 penalties rise from 25% to 50%, with late payment at 5% plus 0.5% a month. Article 88.7 then feeds any corporate tax reassessment into the same period's distributable mass, producing a secondary-adjustment effect and withholding exposure. Documentation buys no penalty protection — only avoidance of the 0.5% fine and the article 17.5 shift. Enforcement is tightening: the DGID deployed its ASREF risk tool to large and medium taxpayer auditors in June 2025 and collected XOF 2,915 billion in 2025, up 12%.

Dispute resolution and advance certainty

Domestic remedies are shorter than they were. Loi n° 2025-02 of 6 January 2025 repealed articles 700 to 705 and abolished the Commission paritaire de conciliation, so the factual rung — abnormal acts of management, the probative value of the accounts, whether an expense served the enterprise's interest — has gone, and with it the suspension of recovery that a referral used to bring. What remains is the hierarchical appeal under article 707: to the Minister of Finance or the Director General of Taxes, on questions of law, within two months of notification of the titre de perception. That authority has three months to decide, silence being implicit rejection, and the taxpayer then has two months to seize the competent court. Proceedings do not suspend collection, and counsel is optional.

Advance certainty is thinner than the tick-boxes suggest. Article 602 protects a taxpayer where the administration has concluded an advance agreement on the article 17 pricing method, with a treaty competent authority or directly — so unilateral and bilateral APAs are legally contemplated and binding once made, and the DGID's treaty page does publish an intake channel, directing requests to the Director General or to dgid.senegal@dgid.sn. But there is no published procedure, form, threshold, fee, term, rollback rule or statistics, and the OECD profile's APA answers rest on the unsigned draft Instruction. MAP is available across nineteen bilateral conventions plus the UEMOA instrument, and Senegal has ratified the Multilateral Instrument, yet the OECD's March 2025 Action 14 review used the simplified process reserved for jurisdictions with negligible MAP experience. Correlative relief is available only under a treaty article 9. In that vacuum the DGID's État des réponses volumes for 2020 to 2022, published in February 2026, are the most useful source of interpretive positions — and, as formal positions under article 601, opposable to the administration.

Pillar Two, ECOWAS and what changes in 2026

The most probable driver of legislative change is regional. ECOWAS Directive C/DIR.6/07/23 of 6 July 2023 harmonises transfer pricing across member states, requires an associated-enterprises test modelled on OECD and UN article 9 in national law, and contemplates placing the burden of proof on the taxpayer in transfer pricing audits. Member states, Senegal included, must adopt implementing measures by 31 December 2026. The substantive rules survived the 2025 legislative year intact: Loi n° 2025-17 of 27 September 2025 addressed money transfers, vehicles, gaming, alcohol, tobacco and cash-receipt stamp duty and left articles 17, 31 bis, 31 ter, 638, 639 and 667 alone. Procedure did change, and against the taxpayer — Loi n° 2025-02 of 6 January 2025 repealed articles 700 to 705, closing the commission route for factual transfer pricing disputes.

On the two-pillar package Senegal is a bystander. There is no income inclusion rule, no undertaxed profits rule and no qualified domestic minimum top-up tax; groups should plan on Senegalese profits being topped up elsewhere, though a 30% statutory rate makes that unlikely absent significant incentives. Senegal is on the Inclusive Framework's June 2024 list of jurisdictions covered by the political commitment on Amount B for 2025 to 2029, but has taken no domestic step to apply the simplified and streamlined approach — no CGI provision, no ministerial order, no DGID guidance. The live questions for 2026 are domestic: whether the ECOWAS transposition lands before the deadline, and whether the long-pending Instruction sur les prix de transfert is ever signed.

How practitioners should respond

Three things drive Senegalese transfer pricing outcomes more than the choice of method. First, timing: the file must exist before the audit letter arrives, because article 17.5 converts a documentation gap into an assessment on the administration's own figures. Second, language: master file, local file and benchmarking study in French, with the study's search scope, screening criteria and rejection reasons visible on the page. Third, functional substance: the DGID states the tripartite test but will accept a risk-led analysis, and in decision N° 698 it placed the high-value functions, the principal assets and the highest risks on the Senegalese entity — a finding that defeats inbound charges but also raises the return the local entity is expected to keep.

For inbound service and royalty flows, expect the recurring challenges — reality of the service, shareholder or duplicative activity, mark-ups above 5% on low value-adding services, royalties paid for functions the local entity in fact performs — and prepare the price-adjustment answer rather than the all-or-nothing one, since the Director General has repeatedly held that wholesale disallowance is the wrong remedy where the correct analysis is a price adjustment. Screen every counterparty against article 18 before assuming the dependency test matters. Model the article 9.2 interest limits before, not after, funding decisions. And treat the ECOWAS deadline as a planning horizon: a codified associated-enterprises test and a statutory burden of proof would make Senegal a materially harder environment than the one described here.