Senegal - VAT Liability of Foreign Providers of Digital Services

In November 2023, the Ministry of Finance (MoF) of Senegal published Decree No.  034269 on implementing a value-added tax (VAT) on the cross-border provision of digital services. This Decree applies to non-resident digital service providers who were initially obliged to comply with the rules starting from April 1, 2024.

The Decree was later amended by the MoF Order, stating that new rules take effect on July 1, 2024.

Regulatory Framework

Digital services are subject to taxation in Senegal when utilized there or when the individual (B2C) or legal entity (B2B) for whom the service is provided is established in Senegal, regardless of the supplier's location.

The regulations impose a VAT of 18% on the delivery of digital services, defined as the provision of intangible goods and services executed automatically through a computer or electronic network. 

Furthermore, commissions earned by non-resident intermediaries selling services within Senegal are also considered digital services. Intermediary refers to entities involved in online sales, specifically digital platforms, online marketplaces, or marketplaces that facilitate connections between suppliers and customers, allowing them to complete transactions using information technology.

Under the regulatives, digital platforms are described as a digital tool that facilitates the electronic connection of people over a distance to sell goods or offer services online. The e-commerce platform can function in two ways:

• A supplier distributing its products,

• An operator linking suppliers with customers.

In cases where non-residents operate these e-commerce platforms, they are treated as foreign platforms.

List of transactions qualified as digital services

The regulative includes the following non-exhaustive list of transactions that qualify as digital services:

• Digital advertising and provision of advertising platforms,

• Digital intermediation services,

• Download/streaming of music, movies, and video games,

• Provision of Software as a Service (SaaS) or software on the cloud,

• The online provision of articles, newspapers, and information,

• Online learning and distance learning,

• Webhosting,

• Provision of travel, accommodation, and transport information,

• Television broadcasting or provision of websites,

• Data software hosting,

• Remote maintenance of software,

• Distribution of images, texts, and information,

• Organization of political, cultural, artistic, sporting, scientific, and other broadcasts and events,

• Provision of streaming platforms and subscription services,

• Cloud storage.

Conclusion

Foreign digital service providers must comply with the MoF's rules or risk being penalized. Failure to comply with these rules will result in suspending access to digital platforms, markets, or online marketplaces used for transactions within Senegalese territory. 

Source: Ministry of Finance - Order, KPMG - Senegal: VAT on cross-border provision of digital services, KPMG - Senegal: Changes to VAT on cross-border provision of digital services