Senegal Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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SENEGAL
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Senegal Payroll and Employer of Record: Employment Contracts
There are numerous types of visas that foreign nationals can use to enter Senegal. Individuals who intend to work in Senegal will require a work permit. The following are the most prevalent forms of work permits in Senegal:
Work licenses for local hire
Work on a project allows
The sort of permit required by your personnel is determined by a number of factors, including their credentials as well as the nature and duration of the work they will be performing for your firm. Business visas are also issued by the Senegalese government, which may be useful for some members of your company. Foreign people with business visas are allowed to enter Senegal for short-term business purposes, such as:
- Dealing with business contracts.
- Conferences, business meetings, and training sessions are all options.
- Creating professional relationships for the sake of business.
- Long-term employees, on the other hand, will require a work permit.
PAID TIME OFF
Annual Vacation
Annual leave is offered to all employees after one year of employment, according to the labour code. After completing at least twelve months of employment, an employee is entitled to 24 working days of yearly leave. According to other legislation and collective bargaining agreements, the period of paid annual leave grows with the length of employment.
For each kid under the age of 14 years, a woman worker’s annual leave is enhanced by one day. For the period of leave, workers are paid at a rate of 1/12th of their yearly salary, i.e., they are paid one month’s pay, exclusive of any benefits, for the annual leave of 24 working days. The payment is made in advance of the start of yearly leave.
Annual leave can be accumulated for a maximum of three years, but six working days must be taken each year. Compensation in place of yearly leave is prohibited unless the employee’s employment contract has been terminated.
Sick
When a worker becomes unwell, his or her right to labour and income should be maintained. Sickness benefits may not be paid for the first three days of your absence, depending on the national labour legislation. At the very least, a worker should be entitled to compensation for the first six months of his or her sickness. At least 45 percent of the minimum salary should be earned. (Countries have the option of opting for a scheme that provides 60% of previous pay for the first 6 months or even the first year of illness.) A worker must be able to take compensated sick time.
Maternity
Women are entitled to a compensated maternity leave of 14 weeks. Paternity leave is not a legal right. Pay and benefits: Maternity leave is compensated at 100% of prior wages, with the government footing the bill.
Paternity
Paternity leave is not a legal right.
Family
N/A
National Holidays
Senegal has a total of 14 public holidays which are paid.
Other Paid Time Off
N/A
STATUTORY EMPLOYEE BENEFITS
Unemployment
There is no provision in the legislation for unemployment insurance or benefits.
Workers Compensation
Work injuries are classified into four types: (i) permanent entire incapacity, (ii) permanent partial incapacity, (iii) temporary incapacity, and (iv) lethal injury resulting in worker death.
In the event of permanent complete incapacity/disability, compensation equal to 100% of a covered worker’s average wages is awarded for the 12 months preceding disability.
The amount of compensation in the case of permanent partial disability is determined by the evaluated degree of disability. A lump sum pension is paid if the assessed disability is less than 10%. In the event of a temporary disability, compensation is paid at the rate of 50% of the worker’s wages in the previous month. This payment is only available for the first 28 days of temporary incapacity. If the disability continues, 66.7 percent of the previous month’s wages (prior to the onset of the ailment) are paid until the worker’s full recovery or certification of permanent disability. Dependents (widow/widower/minor children) get a survivors’ pension in the event of a fatal accident. A widow or widower receives 30% of the monthly pension that a dead worker got or was entitled to receive. When a widow or widower remarries, her pension ends.
Social Security
More than 65 years old If the retirement age is raised over 65, it must take into account “the working capabilities of senior people” as well as “demographic, economic, and social conditions, which must be scientifically shown.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay. When the breadwinner dies, the spouse and children are entitled to a payment calculated as a proportion of the minimum wage or the earned wage. This must be at least 40% of the reference wage. For a short time, the jobless are entitled to unemployment benefits calculated as a percentage of the minimum wage or a percentage of their earned pay.
Invalidity benefits are paid when a covered person is unable to work for a living before reaching the regular retirement age owing to a non-occupational chronic illness that causes sickness, injury, or disability. The Invalidity Benefit must be at least 40% of the reference pay.
Retirement
The Pension Insurance Institution of Senegal (IPRES) gives an old age pay-out to a worker when he or she reaches the age of 60. (for arduous work, this age is 55 years). An early retirement benefit can also be claimed at the age of 53, although the rate of the allowance is decreased by 5% for each year of earlier pension. A worker contributes 5.6 percent of his gross monthly wages to IPRES, whereas an employer contributes 8.4 percent of covered monthly earnings.
Health
Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
Private work accident insurance is available in Senegal.
Retirement
Private retirement/pension funds are available as options in Senegal.
Health
Private healthcare is available in Senegal.
Insurance
Private life insurance is available in Senegal.
PERSONAL INCOME TAX
Tax Year
Tax year runs from January 1st to December 31st.
Tax Tables
The local currency in Senegal is XOF. The first tax bracket is tax exempt at 0%. The highest tax rate is 40%.
Taxable Income | Rates of Taxes |
0 – 630 000 | 0% |
630 001 – 1 500 000 | 20% |
1 500 001 – 4 000 000 | 30% |
4 000 001 – 8 000 000 | 35% |
8 000 001 – 13 500 000 | 37% |
13 500 001 + | 40% |
Taxation Method
Senegal uses a progressive tax system.
Double Taxation
Senegal has multiple double taxation agreements.
Residence Requirements
Senegal considers the following people to be tax residents:
- Individuals with a permanent domicile or permanent residency in Senegal;
- Individuals with a permanent domicile or permanent residency in Senegal;
- Individuals with a professional activity in Senegal, excluding subsidiary activities;
- Individuals with a “centre of economic interests” in Senegal.
Payroll Calendars
Wages are normally paid on the final working day of the month, according to the payroll cycle.
Rebates & Tax Credits
Generally, DTTs may grant some tax credit based on the relationship between Senegalese firms and their foreign partners. The particular mechanism for enforcing the tax credits, either in Senegal or overseas (depending on the payment instructions), is specified in each DTT. Nonetheless, in Senegal, the practice of enforcing international tax credits domestically is extremely unusual.
There is a wide range of tax advantages available, such as the special economic zone, which is a region meant to host economic activities that have a significant influence on economic growth and emphasis on exports (industrial activities, agrobusiness, ICT, tourism, medical services, port activities, and services in general).
Companies created within the zone have advantageous tax treatment (a 15 percent CIT, exemption from taxes and duties at the importation, exemption from CEL, etc.). There are also certain tax breaks for corporations in the mining and petroleum industries (exemption from the CEL, employer tax, VAT [under conditions], etc.).
Health Insurance
Senegal’s public health care system includes a Social Security agency, however health care and employment are not included. As a result, if a person is unemployed but wishes to obtain public healthcare, they can use Welfare services, which encompass primary care.
Unemployment
There is no provision in the legislation for unemployment insurance or benefits.
Social Security
If the retirement age is raised to over 65, it must take into account “the working capabilities of senior people” as well as “demographic, economic, and social conditions, which must be scientifically shown.” Pensions can be calculated as a percentage of either the minimum wage or the earned pay. When the breadwinner dies, the spouse and children are entitled to a payment calculated as a proportion of the minimum wage or the earned wage. This must be at least 40% of the reference wage. For a short time, the jobless are entitled to unemployment benefits calculated as a percentage of the minimum wage or a percentage of their earned pay.
Invalidity benefits are paid when a covered person is unable to work for a living before reaching the regular retirement age owing to a non-occupational chronic illness that causes sickness, injury, or disability. The Invalidity Benefit must be at least 40% of the reference pay.
PAYROLL ELEMENTS
Income
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
Bonuses are rather prevalent in Senegal, albeit they are not given to all employees. They are typically performance-based and amount to 3-5 percent of the employee’s income. As a bonus, some employees earn a 13th month’s income.
Allowances
There is a health allowance in Senegal. A public health care plan provides free healthcare to anyone over the age of 60 and children under the age of five. The business must provide medical coverage to all employees. The extent of coverage is determined on the sort of agreement reached with the dedicated organism. Typically, the employee gets paid for 80% of medical expenditures, despite the fact that the legislation allows for a range of 50% to 80%. For both the employee and the employer, the maximum monthly rate is 15%, based on a contribution rate that cannot exceed XOF 250,000.
Benefits in Kind
The following scale of notional values, given by the tax administration, applies to listed in-kind benefits:
- Accommodation costs XOF 33,500 per month per room in the Dakar area.
- XOF 20,000 per month in other large cities.
- XOF 13,500 per month for the rest of the country.
Domestic workers:
- XOF 61,700 per month for a watchman/gardener.
- XOF 92,500 per month for a cook or waiter.
- Other expenses: XOF 35,600 each month.
- XOF 10,500 per month for water.
- Monthly electricity bill: XOF 30,200.
Depending on the horsepower, the company automobile costs XOF 26,000 or XOF 77,500 each month.
Monthly phone bill: XOF 67,000.
Investment Income
In most cases, inventory is listed at the lower of cost or market value. It is permissible to use both last in first out (LIFO) and first in first out (FIFO). Bookkeeping and tax compliance are essential. Capital gains arising from asset transfers are subject to the 30% CIT. There is no basket system in place. Stock sales by a non-resident are subject to the 30% CIT, subject to the application of a DTT. If a parent business based in Senegal owns 10% of the subsidiary (the basic requirement for applying for the parent-subsidiary corporation special taxable status), a 95% reduction in dividends paid is applied for CIT purposes.
If these requirements are not satisfied, a company’s dividends are liable to CIT as follows:
- 40% of the dividends are deducted from the taxable earnings.
- The corporation receives a tax credit on the CIT equivalent to 40% of the tax on distributions withheld (at the general withholding tax [WHT] rate of 10 percent ).
In Senegal, stock dividends are infrequent. This type of pay-out, however, would be taxed at the usual WHT rate of 10% based on its true worth. Article 105 of the GTC contains a list of interests that are exempt from CIT. CIT does not apply to the following items, for example:
Sovereign debt interest
- Deposit accounts created at the Housing Bank of Senegal (Banque de l’Habitat du Senegal) earn interest.
- The Central Bank’s lending interest rate.
- There are no particular mechanisms in place for royalties. In general, and in the event of international payments, they are liable to 20% WHT (subject to a DTT that might limit or exclude the WHT) and, in any case, 18% reverse VAT.
Retirement Funding
The Pension Insurance Institution of Senegal (IPRES) gives an old age pay-out to a worker when he or she reaches the age of 60. (for arduous work, this age is 55 years).
An early retirement benefit can also be claimed at the age of 53, although the rate of the allowance is decreased by 5% for each year of earlier pension. A worker contributes 5.6 percent of his gross monthly wages to IPRES, whereas an employer contributes 8.4 percent of covered monthly earnings.
Health Insurance
Senegal’s public health care system includes a Social Security agency, however health care and employment are not included. As a result, if a person is unemployed but wishes to obtain public healthcare, they can use Welfare services, which encompass primary care.
Risk Insurance
N/A
Taxable Income
- Senegalese tax citizens are required to pay taxes on their international income.
- Salary income is always taxed in Senegal, as long as the job is done there or the company is based there.
- The personal income tax (PIT) is a progressive levy levied on individuals’ taxable income, including net salaries.
Allowable Deductions
Individual rents are subject to a 5% WHT, which must be withheld at the source by the lessee.
The WHT on rent does not apply in the following circumstances:
- The rent is less than XOF 150,000 per month.
- If the rent is subject to CIT, it is paid to a firm (the true beneficiary).
- Individuals who pay rent to a real estate agent, which remits the money to the owner.
- This WHT must be paid to the tax authorities within 15 days of the month of rent payment. A quarterly and yearly recapitulative declaration must also be filed.
Tax is withheld at the source on the following income (subject to DTTs and specified exemptions):
- Dividends are 10%. When the firm pays the dividend, the WHT should be applied. A complicated system of quarterly instalments payments exists.
- Bond interest rate: 13% The withheld amount must be paid in four equal instalments.
- Deposits or guaranteed interest on Senegalese bank accounts: 8%. The bank pays the amount withheld before the 15th day of the month following the month of payment or posting.
- Other income, most notably interest on loans: 16%. The amount withheld is paid within 15 days after the end of the month in which it was paid or posted.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
The payroll tax is 3% of the taxable gross salary.
Unemployment
There is no provision in the legislation for unemployment insurance or benefits.
Social Security
Employers contribute to social security, with a yearly contribution limit of XOF756 000. The rate for family benefits is 7%, while the rate for industrial accidents ranges from 1% to 5%, depending on the industry.
Contributions to national retirement funds are made by both the employer (60 percent) and the employee (40 percent) (40 percent ). The general scheme’s contribution rate is 14 percent, with an annual cap of XOF3.072 million. The contribution rate for the executives’ program is 6%, with a yearly cap of XOF9.216 million. Both plans need executive staff to contribute.
Workers Compensation
Work injuries are classified into four types: (i) permanent entire incapacity, (ii) permanent partial incapacity, (iii) temporary incapacity, and (iv) lethal injury resulting in worker death. In the event of permanent complete incapacity/disability, compensation equal to 100% of a covered worker’s average wages is awarded for the 12 months preceding disability.
The amount of compensation in the case of permanent partial disability is determined by the evaluated degree of disability. A lump sum pension is paid if the assessed disability is less than 10%. In the event of a temporary disability, compensation is paid at the rate of 50% of the worker’s wages in the previous month. This payment is only available for the first 28 days of temporary incapacity. If the disability continues, 66.7 percent of the previous month’s wages (prior to the onset of the ailment) are paid until the worker’s full recovery or certification of permanent disability. Dependents (widow/widower/minor children) get a survivors’ pension in the event of a fatal accident. A widow or widower receives 30% of the monthly pension that a dead worker got or was entitled to receive. When a widow or widower remarries, her pension ends.
ADMINISTRATION
Income
- Any people subject to PIT must file a tax return for all income (e.g., salary, moveable assets) obtained during the previous year, unless wages are the only source of income for the employee and those earnings have been lawfully withheld by the employer during the year.
- Employers withhold social security payments and PIT from an individual’s earnings on a monthly basis, based on total remuneration received, including fringe perks and bonuses.
Payroll Taxes
The payroll tax is 3% of the taxable gross salary.
Unemployment
There is no provision in the legislation for unemployment insurance or benefits.
Social Security
Employers contribute to social security, with a yearly contribution limit of XOF756 000. The rate for family benefits is 7%, while the rate for industrial accidents ranges from 1% to 5%, depending on the industry.
Contributions to national retirement funds are made by both the employer (60 percent) and the employee (40 percent) (40 percent ). The general scheme’s contribution rate is 14 percent, with an annual cap of XOF3.072 million. The contribution rate for the executives’ program is 6%, with a yearly cap of XOF9.216 million. Both plans need executive staff to contribute.
Workers Compensation
Work injuries are classified into four types: (i) permanent entire incapacity, (ii) permanent partial incapacity, (iii) temporary incapacity, and (iv) lethal injury resulting in worker death. In the event of permanent complete incapacity/disability, compensation equal to 100% of a covered worker’s average wages is awarded for the 12 months preceding disability.
The amount of compensation in the case of permanent partial disability is determined by the evaluated degree of disability. A lump sum pension is paid if the assessed disability is less than 10%. In the event of a temporary disability, compensation is paid at the rate of 50% of the worker’s wages in the previous month. This payment is only available for the first 28 days of temporary incapacity. If the disability continues, 66.7 percent of the previous month’s wages (prior to the onset of the ailment) are paid until the worker’s full recovery or certification of permanent disability. Dependents (widow/widower/minor children) get a survivors’ pension in the event of a fatal accident. A widow or widower receives 30% of the monthly pension that a dead worker got or was entitled to receive. When a widow or widower remarries, her pension ends.
Statutory Benefits
Senegal has public health care as well as a national social security.
Employee Benefits
Certain benefits are mandatory to offer employees in Senegal. These are: 14 public holidays, at least 24 days of paid leave, 14 weeks of paid maternity leave.
LEGISLATION
- Constitution of Senegal, 2001
- Ministerial Decree 3751, 2003
- General Order No. 5254,1954 concerning the Work of Women and Pregnant Women
- Social Security Code, 1997
- Convention Collective Nationale Inter Professionnelle, 1982
- Labour Code, 2007
- Decree n. 2006-1262, 2006
- Decree on the modalities of remuneration of overtime, n. 70-184, 1970
- Decree on the inter-professional and agricultural minimum wages, n. 96-154, 1996
- Ordinance n ° 001-2020 of April 8, 2020 adjusting measures derogating from dismissal and layoffs during the period of the Covid-19
STATUTORY BODIES
Legal and Regulatory Framework Senegal’s corporate finance framework is governed by laws enacted by two regional organizations: the West African Economic and Monetary Union (WAEMU) and the Organization for the Harmonization of Business Law in Africa (OHADA).
