background image
4.2. Foreign PE of a Domestic Entity

Ivory Coast applies a territorial system whereby resident and non-resident companies are subject to corporate tax on account of income derived through a business enterprise carried out in Ivory Coast. Therefore, an Ivorian company is not subject to tax in Ivory Coast on business income (or losses) attributable to a business carried out abroad. However, it remains taxable in Ivory Coast on passive income not attributable to a business abroad.

The same tests used to determine whether or not a foreign entity has a business establishment in Ivory Coast (see Sec. 4.1.) are used to determine, in the reverse situation, whether or not an Ivorian company has a business establishment abroad.

While foreign losses attributable to a business establishment abroad may not be set off against positive Ivorian income, there is an exception regarding studies and prospection costs incurred in the framework of establishing a sales outlet abroad. These initial costs may be deducted in Ivory Coast, but must be added back to taxable income in 5 equal instalments starting from the fourth year following the opening of the foreign establishment.