Transfer Pricing in Togo

The legal framework

Articles 104 to 106 ter of the Code Général des Impôts, with the penalty provisions at article 113 of the Livre des Procédures Fiscales, were enacted in their present form by Loi n°2022-022 of 27 December 2022, the Finance Law for 2023. The operative text is the Office Togolais des Recettes' consolidated CGI/LPF, republished on 18 September 2025.

Article 104 states a free-standing arm's length principle: an enterprise transacting with an associated enterprise, in Togo or abroad, must compute taxable profit as independent enterprises would have agreed for comparable transactions in comparable circumstances. The wording is transaction-based, and it reaches purely domestic related-party dealings. Article 104(1) then carries the francophone transfert indirect de bénéfices power: profits shifted by inflated or deflated prices, or by any other means, are added back by comparison with what would have been earned absent the dependence relationship. Control is defined at article 104(3) as majority capital or voting rights, held directly or through an intermediary, or de facto decision-making power, in either direction or through a common parent. Article 104(2) dispenses with the control test entirely where the counterparty sits in a privileged tax regime within article 99.s.

The statute names no methods, sets no hierarchy, identifies no comparability factors, and is silent on intangibles, services and cost contribution arrangements. The OECD Guidelines have no status in Togolese law, and no OECD country profile exists for Togo.

Methods, comparables and benchmarking

Because the statute prescribes nothing, the method taxonomy enters Togolese practice through a form. The OTR's simplified declaration (ref. OTR/Pro-Pf/ErG/005) requires a tick, for each category of related-party transaction, in one of six columns: comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split, or other methods described in free text.

Benchmarking mechanics are absent. The form pushes toward a single point: one method and one margin per category, and where several counterparties transact at different margins, only the margin on the largest transaction is reported. A tick-box records any change of method, rate or margin during the year or against the prior year. In Togo the practical audit trigger is an unexplained movement in margin, not a result outside a range.

Fixed statutory ceilings do much of the work benchmarking does elsewhere. Royalties are deductible only to 5% of turnover excluding tax, and only where the payer proves a real and non-excessive transaction (article 99.k). Technical assistance fees and head office cost shares are capped at 25% of taxable profit before their deduction (article 99.l). Related-party interest is limited to the legal rate plus three points on partner advances, to the legal rate for non-bank foreign lenders, and overall to 30% of EBITDA (article 99.m).

Documentation: what the OTR expects

Two obligations sit at different thresholds. Article 105 requires an annual simplified transfer pricing declaration from controlled or controlling Togolese enterprises where turnover excluding tax or gross balance-sheet assets exceed XOF 500,000,000, or where the enterprise holds, or is held as to, more than half the capital or votes of an enterprise above that level. Article 106 requires a complete documentation file at XOF 1,000,000,000 on the same tests. That documentation threshold was cut twentyfold by the 2023 Finance Law: the pre-2023 figure was XOF 20 billion, and any source still quoting it is describing repealed law.

The declaration is due with the corporate income tax return under article 49 LPF — 30 April, or 31 May for insurers — and OTR's notice requires paper and electronic filing simultaneously. Its five parts cover general information, the group and its intangibles, a summary of related-party transactions by nature, amount, country, method and margin, intra-group loans, and the declarant's own activity including restructurings. A XOF 50,000,000 floor governs granularity: categories are aggregated above that figure and loan balances listed individually only above it.

The article 106 file is never filed annually. It must exist, in paper or electronic form, at the date the audit commences. If it is missing or incomplete, article 106(5) requires a mise en demeure giving 15 days to produce or complete. Article 106(3) describes a two-tier structure, group information plus entity information, but leaves content and format to a ministerial arrêté that has never been published, so there is no official master file or local file specification. The same is true of the CbC report format and the exchange-partner list. French governs throughout under article 4 LPF, which lets the administration order translation at the taxpayer's cost.

Country-by-country reporting bites at consolidated turnover of XOF 492,000,000,000, filed electronically within 12 months of year end (article 106 bis), with secondary and designated local filing and a surrogate-filing notification that carries no stated deadline or form.

Audits, penalties and the enforcement climate

Enforcement is built around the audit, not annual review. On-site examination is capped, on pain of nullity, at three, six or nine months depending on regime, the nine-month ceiling applying to taxpayers handled by the Direction des Grandes Entreprises, and extended while foreign authorities respond to information requests. Reassessment runs to the end of the third year following the year the tax was due (article 316 LPF); there is no extended cross-border period. Article 106 ter lets the administration reach below-threshold taxpayers once it holds evidence suggesting profit shifting, with 30 days to answer a precise request and a further 15 after a formal notice.

The compliance fines are flat and heavy for a market this size: XOF 10,000,000 for a late, incomplete or inaccurate simplified declaration; XOF 50,000,000 for a CbC failure; XOF 5,000,000 per year covered by an unanswered article 106 ter request. Documentation is priced differently — 0.5% of the transactions covered by documents not produced after the mise en demeure, subject to a XOF 10,000,000 floor, for each audited year. On a three-year audit the floor alone is XOF 30 million before any adjustment.

Adjustments then attract the ordinary uplifts: 20% for understated bases, 40% for bad faith, 80% for fraudulent manoeuvres, with 30% to 80% on ex officio assessment and late-payment interest of 10% plus 1% a month. There is no documentation-based penalty protection; the only shelter is the mention expresse in article 117 LPF, where reasons stated on the return remove the 20% uplift on those grounds. And although Togo has no repatriation regime, article 43(3) treats audit adjustments not left invested in the business as distributed income, taxed at 13% withholding.

Dispute resolution and advance certainty

There is no advance pricing agreement programme in Togo and no transfer pricing safe harbour. Advance certainty did improve in one respect for FY2026: the 2026 Finance Law inserted article 4 bis LPF, which frames the rescrit fiscal in statute for the first time. The request must be made before the filing deadline or before the tax falls due; the administration has three months to rule, though the text does not say what silence means; and the guarantee ceases only prospectively, from the date the taxpayer is informed, where the facts change, the legislation changes or the administration revises its assessment. What the regime has not yet produced is a transfer pricing rescrit — the anonymised set published on 3 February 2025 covers withholding on sums paid to non-residents and the extension of diplomatic exemptions.

Domestically, adjustments follow the adversarial procedure at articles 234 and 236 LPF, and either party may refer the disagreement to the Commission Administrative des Recours, which rules on fact and must give a reasoned opinion within two months. The opinion binds neither side, but article 363 places the burden of proof on whichever party rejects it. Collection notices issue 30 days after the final notification. A contentious claim then goes to the Commissaire des impôts, subject to the admissibility conditions in article 376, and from there to the Courts of Appeal sitting as administrative chambers in first and last instance, within two months of the decision or six months of the claim if none is given, with cassation to the Cour Suprême.

Treaty relief is thin. OTR publishes only the 1971 France–Togo convention, the UEMOA convention (Règlement n°08/2008/CM/UEMOA) and the ECOWAS Additional Act. UEMOA article 10(2) obliges a corresponding adjustment and article 38 gives a three-year MAP window; the France treaty has a primary adjustment article with no corresponding-adjustment paragraph. Investors from outside francophone West Africa generally have no treaty route to relieve a Togolese adjustment at all.

Pillar Two and what changes in 2026

Togo joined the Inclusive Framework on 1 September 2021 as its 140th member, but has enacted nothing of Pillar Two. The domestic rate is 27% (article 113), with a turnover-based minimum charge of 1%, or 2% on used vehicle imports for resale, under article 120; that minimum has nothing to do with the GloBE rules. Togo has likewise taken no position on Amount B — no election, no guidance, no reference to the simplified and streamlined approach anywhere in the code or in OTR circulars — even though it is named on the Inclusive Framework's published list of covered jurisdictions.

The 2026 Finance Law (Loi n°2025-002), adopted on 29 December 2025 within a XOF 2,740.5 billion budget, leaves articles 104 to 106 ter untouched and adds no CbCR or Pillar Two measure — but it is not neutral for international tax. It cuts the permanent establishment threshold for construction sites and installation projects from six months to three (article 95.2 CGI), so shorter projects now create a Togolese taxable presence whose profits have to be priced, and it inserts the statutory rescrit at article 4 bis LPF. The other reported measures are certified electronic invoicing, a 5% levy on gambling winnings above XOF 500,000, agricultural VAT relief, an export levy on cashew, soya and shea, a disability hiring credit and a 3.5% levy on reassessed property value increases.

How practitioners should respond

Three practical points follow. First, the thresholds are low by regional standards and catch mid-sized subsidiaries: a Togolese company with XOF 1 billion of assets needs a file that exists on day one of an audit, not one commissioned when the auditor arrives. Second, because the code specifies no file content, the defensible course is to prepare an OECD-shaped master file and local file in French and be ready to explain the mapping; nothing in Togolese law forbids it, and no alternative specification exists. Third, the fixed ceilings at articles 99.k, 99.l and 99.m will disallow charges that a benchmarking study comfortably supports, so model them before pricing royalties, service fees or intra-group debt.

Two live traps deserve flagging to clients. OTR's explanatory notice and declaration form still cite pre-2023 numbering and state that all related enterprises must file the simplified return regardless of turnover — the repealed rule. Article 105(2) sets a XOF 500 million test and should prevail, but OTR has not withdrawn the guidance, and where the position is marginal the safe course is to file. And no Togolese transfer pricing case law has yet been reported, which is unsurprising: with a three-year reassessment window, the first audits under the 2023 regime are only now reaching the administrative chambers.