Tax Residency in Benin
1. Criteria for Determining Tax Residency in Benin
According to Article 2 of Benin's General Tax Code, an individual is considered a tax resident if they meet any of the following criteria:
- Physical presence in Benin for more than 183 days in a calendar year.
- Having a permanent home in Benin.
- Exercising a professional activity in Benin.
- Having the center of their economic interests in Benin.
For companies, tax residency is determined based on their registered office or place of effective management.
2. Impact of International Tax Treaties on Tax Residency
Benin has entered into several double taxation agreements (DTAs) with other countries. These DTAs may modify or provide exceptions to the standard criteria for tax residency.
Key Provisions in DTAs
DTAs typically include provisions that address tax residency, such as:
- Tie-breaker rules: These rules determine which country has the primary right to tax an individual or entity that is considered a resident of both countries under their respective domestic laws.
- Specific criteria for determining residency: DTAs may provide specific criteria for determining residency that differ from the domestic laws of the contracting countries.
- Exemptions from residency: DTAs may exempt certain individuals or entities from being considered tax residents in either country.
Goals and Effects of Treaty Provisions
The goals of these treaty provisions are to:
- Prevent double taxation by clearly defining tax residency.
- Facilitate cross-border trade and investment by reducing tax uncertainty.
- Promote cooperation between tax authorities in different countries.
Conclusion
The criteria for determining tax residency in Benin are outlined in the General Tax Code. International tax treaties may modify or provide exceptions to these criteria, with the aim of preventing double taxation and promoting cross-border economic activities.
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