Renewable energy companies in Senegal, including startups, have a new set of VAT exemptions to benefit from. The country’s Minister of Finance and Budget and the Minister of Petroleum and Energy have by a joint decree, set the list of materials intended for the production of renewable energies exempt from value added tax.
The list of equipment benefiting from VAT exemption, under the new laws, concerns energy from solar and wind sources as well as biogas.
Here Is What You Need To Know
- Regarding solar energy equipment, the photovoltaic solar panel, the solar thermal collector or panel, the charge regulator, the solar pumping kit etc. have all been exempted from VAT.
- This exemption also extends to wind energy equipment such as the tower, blade, rotor, nacelle and core.
- Finally, with regard to the biogas equipment, the exemption applies to the biogas stove, the biodigester, the water trap, the substrate mixing device, etc.
- However to benefit from the new set of tax exemptions, the exempt equipment must be certified by international certification bodies.
- Upon application for exemption, renewable energy companies, including startups, will be issued with exemption certificates by the General Directorate of Customs or the General Directorate of Taxes and Domains.
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- According to the Business Council of Renewable Energies of Senegal (COPERES), this initiative constitutes a significant step forward for the development and promotion of renewable energies in Senegal.
- The implication of this for renewable energy startups in Senegal is that, at the point of entry into the country of the exempted materials, there shall be no VAT payable on them. However, this is subject upon applications for exemption from tax made by them.
- Value added tax (VAT) is levied at a rate of 18% on transactions (supply of goods and services) in Senegal by persons who, either regularly or on a casual basis, purchase goods for resale or carry on activities other than those relating to agriculture.
- This is in addition to the corporate income tax (CIT) rate of 30% levied on companies in the West African country.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer