Rankings Report: Ivory Coast

Ivory Coast accountancy to push SME taxation agenda

Ivory Coast is bouncing back from the pandemic at a rate that outstrips the World Bank estimates. The SME sector is key to the economy’s health and there has been wide-spread reform in how the sector is taxed. Guiding SMEs, while getting to grips with a global way of doing business, are key objectives for local accountancy firms. 


s the leading exporter of cocoa, Côte d’Ivoire is trying to move away from an agriculture-based economy to an industrial one. As well as encouraging foreign investment, it needs to repair the widespread deforestation that has led to a drop in food production, rural employment and a national economy that focuses on the capital, strangling vital SME communities in outlying regions. While FDI is going to be the motor that drives growth, 98 per cent of businesses are SMEs but many are unofficial and pay no tax. Local accountancy firms will have a challenge over the next 12 months to persuade them to become regulated and then help them get access to the resources they need to thrive.

Côte d’Ivoire is a country member of the Organization for the Harmonisation of Business Law in Africa (OHADA) with 16 other African countries. All these countries have a common business law and a common accounting GAAP known as SYSCOHADA (Système Comptable OHADA). In 2020 a revised Uniform Act on Accounting Law and Financial Reporting saw a new single set of accounting standards come into force in the OHADA zone; the popularisation of a system of approval of financial statements by the Chartered Accountants for their admissibility by the Tax Directorate; electronic transmission of financial statements and the adoption of International Standards on Auditing as the only standards applicable in the OHADA zone (17 countries ).

This should have created a boom in demand for accounting services in the country, but two years on, firms are still waiting for that boom to materialise.

Noel Koffi Yao
MD of Baker Tilly,
Ivory Coast

“The revision of the Uniform Act on Accounting and Financial Reporting is a great opportunity to create a boom in demand for accounting services,” says Noel Koffi Yao, MD of Baker Tilly in the Ivory Coast. “This boom is not yet fully effective for the organised accounting profession. Indeed, besides the professions that are on the roll of the Order of Chartered Accountants, several non-recognised accountants continue to absorb a significant part of the market for accounting services. But the future for the demand for accounting services looks good for the profession.”

According to Yao, the growing areas for accountancy services are taxes, HR outsourcing, payroll, and full-service support but the taxation of SMEs has fundamentally changed, and assisting this sector constitutes one of the major challenges for the next 12 months in Côte d’Ivoire, as well as the digitalisation of accounting firms.

The new Investment Code regimes involve the creation of three zones (A, B, and C). The new Code has also created priority economic sectors, Category 1, which includes agriculture, health, and education, while Category 2 includes all other economic sectors. During the investment period, the beneficiaries are exempt from customs duties and enjoy a temporary suspension of VAT on acquisition of equipment, goods, and service for activities subject to VAT. After the completion of the investment Category 1 SMEs are granted 75 % exemption from business licence tax, real estate tax, and employer contribution on salary for five years in zone a, while in zone c they are eligible for 100% exemption for CIT, business licence tax, real estate tax, employer contribution on salary, and dividend tax for 15 years. Category 2 SME investments enjoy 37.5% CIT credit in zone and 75% in zone c. They can also qualify for tax credits if they train local people for degrees and internships.

According to government figures, 98% of Ivorian companies are SMEs, making them a vital component in building a stronger economy. While the government has made huge strides in creating an SME tax friendly regime, including a decision in 2016 to allow previously unregulated businesses to regularise their status by filing a tax return, serving to cancel all their previous tax debts, poorly informed SMEs are wary of tax authorities. They often do not know what resources and networks are available to them and in turn, a lack of financial planning makes it almost impossible for them to get loans. Many of them are unregistered and pay no taxes but also find it hard to get access to resources to help them survive the first three years of business and thrive.

According to Alexandre Kouame, accountant, and statutory auditor at Exco ECA, a Kreston Global member firm, educating the SME market is going to be the big challenge for local firms over the next 12 months. “Accounting firms must focus on advice, which is more in demand due to the increase in competition among clients,” he says, “Legal and tax advice, organisation and implementation of management instruments, consolidation of accounts and IFRS, financial support and implementation of procedures.”

Alexandre Kouame accountant and statutory auditor
Exco ECA, a Kreston Global member firm

All this at a time when firms also need to get to grips with digital transformation, which Kouame says is putting a strain on resources as firms are bearing the cost of infrastructure and training without necessarily seeing an increase in turnover. “The new provisions of the OHADA Uniform Act on consolidations, combined accounts or IFRS accounts (stock exchange companies) have also had an impact on local skills, with many firms needing to invest heavily in training,” he said.

But both Yao and Kouame are positive that the future looks bright. “There is demand out there and the growing sectors are, in my opinion, construction, telecommunications, electricity, mass distribution, digital, and agribusiness,” said Kouame. “Demand seems to be low in services such as transport, distribution of beverages and spirits products.”

As in other regions, many countries in Africa are seeing the market for traditional accounting services – such as preparation of financial statements and audit reviews – reaching saturation. Firms are being forced to explore new opportunities and develop new skills in tax planning, global compliance and international accounting standards implementation. Yao says demand for full-service firms, with a focus on legal and tax services as well as accounting, is growing. “Clients are expressing greater interest in areas outside of taxation. Here in Côte d’Ivoire, we are seeing a spike in demand for social management services, which encompass payroll and human resources.” 

The economy certainly seems to be bouncing back the strongest out of all the country reports IAB has done so far. The Minister of Economic Planning and Development Niale Kaba said the economy is expected to grow by 7.2 in 2022 – that is higher than a World Bank estimate of 5.7% growth for 2022. Kaba said Côte d’Ivoire, the world's top cocoa producer, was shifting from an agricultural to an industrial economy. But he added that the growth figure could be revised due to the impact of external shocks such as the war in Ukraine.

Intensive cocoa farming has led to widespread deforestation in the country, impacting rural communities heavily and leading to a business environment that many SMEs complain is centred around the capital. Ivory Coast aims to raise $1.5 billion for a five-year land restoration programme to bring back forest and increase food production – it lost 80% of its forests between 1900 and 2021, and risks losing them all by 2050 if the pace of decline continues. President Ouattara called on the private sector to help fund a separate ongoing $1 billion government project to restore three million hectares of forest by 2030. The new five-year ‘Abidjan Legacy Programme’ will use technologies such as tree-planting drones and drought-resistant plant varieties to repair degraded land and boost rural employment.

The Ivorian economy remains a preferred destination for foreign investors in the region. According to UNCTAD's 2021 World Investment Report, the country attracted USD 509 million in FDI inflows in 2020, a sharp drop from the nearly USD 1 billion achieved in 2019, due to the pandemic. The total FDI stock was estimated at USD 12.2 billion in 2020.

The National Plan of Development (PND 2021-2025) aims at making private investment a motor of the country's economic growth. Since 2017, the political situation has stabilised and the country has put into places major reforms, such as adoption of a new constitution and creation of a Senate, improving the business climate. However, political stability remains fragile, as illustrated by the social unrest that surrounded the presidential elections of October 2020. In the 2020 edition of the Doing Business Report of the World Bank (latest report), Ivory Coast has been ranked 110th worldwide, for the ease of doing business. This represents a leap from its 122th position of the 2019 edition. Côte d’Ivoire has made paying taxes easier by implementing an electronic filing and payment system, and by introducing an online case management system to process value added tax cash refunds. The country has also facilitated enforcing contracts by publishing reports on commercial court performance and progress of cases (Doing Business).

Unfortunately for foreign investors and local businesses alike, corruption is still an issue in Côte d’Ivoire. The ‘Corruption Perceptions Index’ for the public sector showed 64 points in Côte d’Ivoire for 2021. The scale has a range from 0 to 100, in which corruption raises, the higher the number is. With this result Côte d’Ivoire ranks 104th. So, compared to other countries it is slightly below average. Compared to the previous year, in 2021 the level of corruption stayed without change. In the long term, it has nevertheless declined moderately in recent years.

In July 2021, the government launched audits of around 40 state-owned enterprises to crack down on corruption and improve efficiency. The government also wants the companies to reduce their reliance on state funds, which could instead be spent helping the economy recover from the pandemic. The audits came just weeks after the director general of the Land Management Agency was arrested for alleged embezzlement and money laundering. In 2020, subsidies to state companies accounted for 9.9% of the budget, excluding public debt and special treasury accounts, according to government documents. The state enterprises audited were involved in a wide range of sectors including banking, energy, tourism, agriculture and mining.

Main image credit: Agre guy thony roger