Disclosure Requirements

Effective 1 January 2022, companies meeting the documentation threshold (given below) are required to submit an annual transfer pricing statement by 31 May every year. Further, Burkina Faso issued an Order 2022-101 on 15 April 2022 providing the content and format of the annual transfer pricing statement.

The contents of the annual transfer pricing statement include:

Information on the reporting company such as its legal form, company’s name, IFU number, address as well as a description of the company’s activity and changes that have occurred during the accounting (reporting) year in question;
Information on the MNE group company such as:

information on the ultimate parent company of the MNE group including the company name, address, and country of tax residence;
description of the main activities of the MNE group;
description of the transfer pricing policy applied by the MNE group in relation to the reporting company;
list of intangible assets held by the MNE group that are used by the reporting company together with the legal name and country of tax residence of the related company that owns or co-owns the intangibles; and
description of corporate restructurings within the MNE group that affected the reporting enterprise; and

Information on the reporting company such as:

summary statement of the transactions carried out by the local entity with related companies, including nature and amount of the transactions, company name and country of tax residence of the related companies concerned by the transactions, nature of the relations between the reporting company and the related companies party to the transactions, and the transfer pricing method applied including changes during the accounting year;
information on loans and borrowings made by the local entity with related companies;
information on transactions carried out by the local entity with related companies without consideration or with non-monetary consideration; and
information on transactions carried out with related companies that are the subject of an advance pricing agreement or a tax ruling concluded between the related company party to the transaction and the tax authorities of another country.

Standard Documentation

When requested by the tax authorities in the framework of an audit, taxpayers are required to submit documentation in order to substantiate their transfer pricing policies. In case the documentation is not available or is partially available, a formal notice is issued to produce or complete the documentation within 30 days. The documentation must include information on transactions with related parties, and any specific information concerning the audited company as required by the tax authorities. The documentation requirement applies to companies operating in Burkina Faso meeting any of the following conditions:

Have an annual turnover or gross assets exceeding XOF 1 billion (reduced from XOF 3 billion effective 1 January 2022);
At the end of the tax year, hold directly or indirectly a majority of the share capital or voting rights of:

a company operating in Burkina Faso; or
a company operating outside Burkina Faso that has an annual turnover or gross assets exceeding XOF 1 billion; or

At the end of the tax year, more than 50% of their share capital or voting rights is held by a resident or non-resident company that has an annual turnover or gross assets exceeding XOF 1 billion.

On 15 April 2022, Burkina Faso issued an Order 2022-102 amending the content and format of the transfer pricing documentation requirements in line with the ‘Master file’ and ‘Local file’ requirements as per the OECD transfer pricing guidelines.

Master File

The contents of the Master file include:

Details of the MNE’s organizational structure, including a chart illustrating the MNE’s legal and ownership structure and geographical location of operating entities;
Description of the MNE’s business(es), including important drivers of business profit, description of the top five goods or services of the MNE group by revenue, important service arrangements between members of the MNE group, and other information;
Description of the MNE’s intangibles, including a description of the MNE’s strategy regarding intangibles, location of R&D facilities and management, a list of important intangibles of the MNE group, transfer pricing policies regarding R&D and intangibles, and other information;
Details of the MNE’s intercompany financial activities, including how the group is financed, financing agreements with unrelated lenders, group members providing a central financing function for the group and other information; and
Information on the MNE’s financial and tax positions, including annual consolidated financial statements for the year concerned and a list and description of any existing advance pricing agreements (APA) and tax rulings related to the allocation of income.

Local File

The contents of the Local file include:

Details of the local entity, including ownership structure, management structure, a local organization chart, detailed description of the business and business strategy, important business restructuring transactions, acquisitions and divestitures, and other information;
Details of material-controlled transactions involving the local entity, including descriptions of the transaction types, the amount of intra-group payments and receipts for each category of controlled transactions, identification of associated enterprises involved, transfer pricing methods used, comparables selected and adjustments made, related APAs, and other information; and
Financial information of the local entity, including financial accounts for the year concerned, Information and allocation schedules, summary schedules of relevant financial data, and other information.

Country-by-Country (CbC) Report

Effective 1 January 2023, Burkina Faso introduced Country-by-Country (CbC) reporting requirements. Each resident ultimate parent entity (UPE) of the MNE Group or a resident constituent entity (which is not the ultimate parent entity of an MNE Group) is required to file a CbC report in Burkina Faso if the total consolidated group revenue is at least XOF 491 billion in the preceding tax year. CbC reports must be submitted electronically within 12 months following the end of the reporting tax year (template yet to be prescribed by the tax authorities).

The primary reporting obligation falls on the UPE if resident in Burkina Faso. Under a secondary filing obligation, constituent (non-UPE) entities are required to file locally in Burkina Faso if:

The UPE is not resident in Burkina Faso and is not obligated to file a CbC report in its jurisdiction of residence;
The UPE’s jurisdiction of residence has a current international agreement with Burkina Faso but does not have a qualifying competent authority agreement in effect with Burkina Faso by the time the CbC report is due; or
An agreement is in place, but there has been a systemic failure for the spontaneous exchange of CbC reports with the UPE’s jurisdiction of residence, and the failure has been notified by the Burkina Faso tax authority to the constituent entity resident in Burkina Faso.

Where there is more than one Burkina Faso constituent entity of the same MNE Group and one or more of the conditions set out above apply, the MNE Group may designate one of such constituent entities to file the CbC report and notify the Burkina Faso tax authority that the filing is done on behalf of all the constituent entities in Burkina Faso.

Further, a Burkina Faso constituent entity may not be required to file a CbC report locally if the MNE Group has made available a CbC report for the relevant tax year through a surrogate parent entity (SPE) (i.e., a constituent entity appointed as a sole substitute for the ultimate parent company to file the CbC report) and the following conditions are fulfilled:

The jurisdiction of tax residence of the SPE requires the filing of CbC reports conforming to the requirements mentioned in the domestic tax law of Burkina Faso;
The jurisdiction of tax residence of the SPE has a Qualifying Competent Authority Agreement in effect to which Burkina Faso is a party on or before the CbC report filing due date;
The jurisdiction of tax residence of the SPE has not notified the Burkina Faso tax authority of a systemic failure;
The SPE has notified in its jurisdiction of tax residence that it is designated as the SPE on behalf of the MNE Group; and
A notification has been provided by the Burkina Faso constituent entity to the Burkina Faso tax authority providing details of the SPE.

Language of Documentation

The transfer pricing documentation and accounting documentation are required to be maintained in French.

Penalties

Failure to submit or submission of an inaccurate transfer pricing statement is subject to a penalty of XOF 10 million. Effective 1 January 2023, failure to submit or submission of an inaccurate CbC declaration is subject to a penalty of XOF 50 million.

In addition, general penalties prescribed under the domestic tax law may be levied for non-compliance with the transfer pricing regulations. Consequently, if the transfer pricing documentation is not maintained or is only partially maintained, any transfer pricing adjustment made by the tax authorities cannot be deducted for determining the income of the taxpayer, and a fine of 0.5% of the amount of the transaction or XOF 10 million, whichever is higher, may be levied.

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