PRESENTATION OF THE INVESTMENT CODE
Since its attainment of independence, Côte d'Ivoire has resolutely opted for free market economy.
In this regard, and in order to promote and direct private initiative towards the industrial sector, Côte d'Ivoire has established particularly incentive private investment scheme.
The Ivorian private investment scheme has successively resulted from :
- Decree n°59-134 of 3rd September 1959, determining the scheme of private investment in the Republic of Côte d'Ivoire ;
- Decree n°73-368 of 26th July, 1973 relating to the Tourism Investment Code ;
- Decree n°84-1230 of 8th November 1984 relating to the Investment Code in the Republic of Côte d'Ivoire.
These different Codes have partly achieved their objectives in so far as the present industrial base is, to a large extent, the result of the implementation of these legal instruments.
However, the difficulties relating to the international context and to the persistent economic recession of recent years as well as the prospects of more favourable economic growth in the short and medium terms have led the Government to implement a more voluntarist and innovative policy of :
- investment promotion ;
- gradual disengagement of the State from the production sector in favour of private entrepreneurs ;
- improvement of the competitiveness of our economy.
In this regard, a package of measures have already been taken, the most important of which are undoubtedly the adoption of a new investment Code more capable of meeting the expectations of investors.
The New Code was adopted by the National Assembly in July 28th, 1995. It was promulgated on August 3rd, 1995 (Act n° 95-620).
This Code has been preceded by a series of measures intending to increase the competitiveness of our economy. They particularly concern the following tax relief measures :
- strengthening VAT neutrality especially through the generalisation of the tax deduction system ;
- reducing the normal rate of VAT by 7 points. This rate henceforth go down from 25 to 18 % ;
- cancelling the increased VAT rate ;
- reducing the service tax rate on bank commission. From 25 % now, this rate will henceforth go down to 10 % ;
- reducing income tax rate on industrial and trade profits to 35 % ;
- cancelling the employer's contribution concerning local staff;
- reducing by half companies registration fees.
- reducing by 10 points the weighted average customs duties. From 43 %, this rate henceforth moves down to 33 %.
Additional measures have already been taken, including the adoption by the National Assembly of a new mining Code and a Telecommunication Code, which provide specific incentive measures to investors in those sectors.
The new investment Code is in keeping with the economic recovery policy initiated by the Government and is a vital instrument.
It is at the same time an open, particularly incentive-offering, clear and easily accessible Code.
It is an open Code for it enables any investor organised as company or as individual enterprise, of Ivorian nationality or foreign, resident or non resident, to be eligible to the different schemes available when he fulfils the conditions.
It is an incentive Code for the advantages granted now are more substantial than in the past.
It is also a transparent Code. The conditions that it sets forth are indeed well determined and identical for everybody.
It is also a Code whose access has been greatly facilitated. Indeed the procedures have been largely simplified (elimination of some intervening agencies and setting of particularly short granting deadlines, that is 48 hours for declaration of investment and 45 days for approvals).
It is finally a Code, of which the scrupulous compliance with the provisions is henceforth a better guarantee for the investor who moreover benefits from the arbitration available in this area (legal proceeding or recourse to arbitration before the National Investment Promotion Committee (COM-INVEST) which has been specially created for this purpose and in which the private sector is largely represented. The role of this committee is to see to the effective enforcement of the deadlines and advantages granted by the Code.
The new Code introduces two incentive schemes:
- the declaration scheme which enables any investment, regardless of the cost, to be eligible, within a maximum of 48 hours and in almost automatic manner, to the benefits contained in the Code on the basis of a simple declaration of the investor testified by the Investment Promotion Centre in Côte d'Ivoire (CEPICI).
This scheme is applicable to all sectors of activities other than Transport, Trade, Construction and Public Works and Finances. It only covers the investments relating to the starting of new activities ;
- the approval scheme covers investments whose costs are over CFA F 500 million (? 1.000.000 $US, 1$ = 500 CFA F).
It also concerns all sectors of activities excluding Finances, Construction and Public Works. It takes into account all investments regardless of their nature (setting up or development of activity).
The new code removes the lower threshold (CFA F 40 million). Henceforth, all investments, regardless of their costs, shall be eligible to either scheme.
The new code reduces the numbers of geographical zones from 3 to 2 :
- Zone A comprising the region of Abidjan ;
- Zone B covers the other regions of the national territory.
The duration for the enjoyment of the benefits is 5 years for investments made in zone A and 8 years for investments made in zone B. The implementation time is added to this duration.
The procedures have been considerably simplified :
the number of intervening administration services and of agencies have been reduced. Henceforth, the following services shall be the sole negotiators :
- CEPICI, the Investment Promotion Centre, the sole negotiator of the investor. This centre receives the file, forwards it to the services concerned, sees to its successful completion and communicates to the investor the answer given to his application ;
- the Industrial Development Department, which under the Ministry of Industry, drafts a synthetic note to the Technical Investment Committee ;
- the Technical Investment Committee examines the application. CEPICI plays the role of secretary to this Committee ;
henceforth, the approval is granted by an interministerial order and no longer by Cabinet decree whose decision-making procedure is influenced by the priorities on its agenda.
Concerning the declaration of investments, the only declaration of the investor considered valid by CEPICI shall be sufficient to declare eligibility ; no further action shall be needed ;
the deadlines have been determined and set by the Code. They are now shorter than under the former code.
These deadlines are determined as follows :
48 hours for the declaration of investments
45 days for the approval of investments.
Going back to the principles in force in the administrative law, the Code provides that when the investor has not got an answer from the Authorities after the 45 days time limit, the approval is as a matter of fact granted.
An administrative appeal procedure is offered to investors before an ad-hoc committee, the National Investment Promotion Committee (COM-INVEST).
The new Code involves general measures applicable, across the board, to all sectors of activities in a nearly automatic manner.
- Measures applicable to all investments concerning the setting of a new activity.
They concern :
- exemption from income tax on industrial and commercial profits or on non-commercial profits for a period of 5 to 8 years ;
- exemption from taxes and licences for a period of 5 to 8 years.
- Measures applicable to investments over CFA F 500 million .
Investments concerning the setting up of a new activity or the extension of an existing one with a cost higher than CFA F 500 million (? 1.000.000 $US, 1$ = 500 CFA F).are offered the following benefits :
- levy of a unique and preferential charge of 5 % on equipment and materials, and on the first consignment of spare parts for investments over CFA F 500 million ;
- exemption from property taxes on the properties built for investments over CFA F 2 billion.
From now on, these advantages shall apply across the board without discriminating between imported equipment, materials and spare parts and those manufactured locally. The package of measures offered by the Code do not hinder the application of specific measures already provided by the General Income Tax Code and the General Customs Code, if need be, by the mining Code. Similarly, the Investment Code is not opposed to the implementation of measures which would result from treaties and agreements signed between the Republic of Côte d'Ivoire and other States.
Finally, the new Code offers to investors important guarantees. In this regard :
- it reaffirms the principle of free transfer outside the Republic of Côte d'Ivoire of all income generated by the investments and particularly the surplus balance resulting from the winding up of a company, if need be ;
- it authorises any legal proceedings or arbitration appeal deemed necessary by the investor to settle any claims resulting from the implementation of the Code ;
- it also provides an administrative settlement directly before the Committee created for this purpose, the National Committee for Investment Promotion (COM-INVEST) which aims at enforcing the provisions of the Code, especially those relating to deadlines.
To achieve its goal, the State intends to turn towards CIRDI competency and has already given its consent through article n° 24 of the Investment Code.