Withholding Tax

Withholding Tax is deducted at source of income. Withholding Tax rates vary depending on whether the recipient of the income is Resident or Non-Resident.

Types of Payment and Rates to be withheld from payments made to persons resident in Togo are:

  • Payments to contractors (section 117 of the Income Tax Act) 5%

{This does not apply to payments made by a person to a contractor during a month in which the person pays a total of Le 500, 000.00 or less to the contractor”}

  • Dividends (Section 118 of the Income Tax Act) 10%
  • Interest (Section 119 of the Income Tax Act) 15%
  • Rents (Section 120 of the Income Tax Act) 10%
  • Royalties (Section 120 of the Income Tax Act) 25%
  • Pensions and Annuities (Section 121(2) of the Income Tax Act)15%
  • Natural Resource Payments (Section 122 of the Income Tax Act) 25%
  • Real Property (Section 123A of the Income Tax Act) 10%
  • Winnings of Le 500,000 and above from any lottery 10%

Types of Payment and Rate of tax on chargeable income of non-resident:

  • Employment Income (Section 116 of the Income Tax Act) 25%
  • Payment to Contractors (Section 117 of the Income Tax Act) 10%
  • Dividends (Section 118 of the Income Tax Act) 10%
  • Interest (Section 119 of the Income Tax Act) 15%
  • Rents (section 120 of the Income Tax Act) 10%
  • Royalties (section 120 of the Income Tax Act) 25%
  • Pensions and annuities (section 121 of the Income Tax Act) 25%
  • Natural Resource Payments (section 122 of the Income Tax Act) 25%
  • Payments to or applications for the benefit of non-resident beneficiaries (Section 123) 25%.
  • Withholding Tax rates vary as shown on each of the above-mentioned types of income depending on whether the recipient of the income is Resident or Non-Resident. The payer of the income mentioned above is responsible for deducting and remitting the tax to the Commissioner on or before the 15th day of the following month.

Dividends as Withholding Tax:

Section 118 of the The Income Tax Act states that a resident company that pays a dividend shall withhold tax on the gross amount of the payment in:

a)    The case of a payment made to a person resident in Togo at 10%; and

b)   The case of a payment made to a non-resident person at the rate of 10%.

It is important to note that this does not apply to dividends paid to:

  • A resident company; or
  •  A complying retirement fund resident in Togo.

A company paying a dividend to a retirement fund will not know if it is a complying fund. The Domestic Taxes Department needs to confirm this to the dividend paying company. This tax is a final tax under Sections 124 & 125 of the  Income Tax Act.

Interest as Withholding Tax

Section 119 of the  Income Tax Act states that a person resident in Togo who pays interest shall withhold tax on the gross amount of the payment in:

a) The case of a payment made to a person resident in Togo at the rate of 15%;

b) The case of a payment made to a non-resident person at 15%

c) The case of a discount or premium referred to in Section 55 at the time it is given or paid. (The rate of tax will be the same)

This section does not apply to:

a) Interest under Paragraph (e) of Section 24 if paid to a Bank resident in Togo (note that Section 24(e) also refers to companies that lend money. These are not necessarily banks and so the exception from withholding does not apply to such companies—their customers will need to deduct tax.)

b) Interest paid on Government Development Stocks; and

c) Interest the payment of which the Commissioner-General certifies to be exempt from the requirements of this section. (This would be done where interest is paid to an exempt person).

Although Section 124 of the  Income Tax Act does not mention the word interest it does mention in Section 119 and so the tax withheld is a final tax. Income Tax Act

Advance Tax as Withholding Tax (Prepayment of Income Tax)

This is charged when a Taxpayer imports goods into Togo for resale and shall pay to the Commissioner an amount equal to the higher of:

a) 3% of the CIF value of the goods imported; or

b) 3% of the value of the goods imported as assessed for the purpose of customs.

This does not apply to a company taxpayer where:

a) The Taxpayer maintains proper books of accounts of—

i. all receipts obtained and expenses incurred by a business and the matters to which such receipts and expenditures relate; and

ii. all sales and purchases of goods and services made by that business.

b) The books of accounts of the taxpayer have been audited in each of the preceding three years by a recognized firm of accountants; and

c) The taxpayer is not in arrears with respect to the payment of tax for a previous year of assessment.

  • Upon payment of the amount required under Sub-section (1) of the Income Tax Act or satisfaction of the requirements of Sub-section (2) of the Income Tax Act, the Commissioner shall provide the taxpayer with a certificate to be called a Customs Income Tax clearance Certificate certifying that the tax has been paid.
  • The Controller of Customs shall not release any consignment of goods unless the consignee produces to the Comptroller a Customs Income Tax Clearance Certificate.
  • Any amount paid under this section shall be regarded as a payment of income tax in respect of the taxpayer’s tax liability for the year of assessment in which the payment is made and any installments of tax otherwise due for that year shall be reduced by the amount paid pursuant to this provision.