Côte d'Ivoire: Overview of taxation in the oil and gas sector

Tax incentives to stimulate investment and economic growth

The oil and gas sector plays a crucial role in the Ivorian economy, contributing significantly to the country's fiscal revenues. The taxation applied to this sector is designed to ensure a fair distribution of the revenues generated by oil and gas activities, while encouraging investment and development in the sector.

Current tax system

The current tax regime for the oil and gas sector in Côte d'Ivoire is based on a set of taxes and royalties, the main ones being :

• Royalty on hydrocarbon production : This royalty is calculated on the basis of the quantity of hydrocarbons produced. The royalty rate varies according to the area of operation and the type of hydrocarbons produced.
• Corporate income tax : Oil and gas companies are subject to corporate income tax at a rate of 30%.
• Patent and corporate land contribution (CFE): These taxes are based on sales and company capital.
• Value-added tax (VAT): VAT is charged on the sale of oil and gas products.

Tax incentives

The Ivorian government has introduced a number of tax incentives to encourage investment in the oil and gas sector. These incentives include:

• Investment tax credit : This incentive allows companies to deduct part of their investments from their tax base.
• Tax exemptions : Certain oil and gas exploration and production activities are exempt from corporate income tax and VAT.
• Shared Production Agreements (SPAs) : PSAs are contracts between the Ivorian government and oil and gas companies, defining the sharing of revenues generated by oil and gas activities.

Fiscal Structure and Key Figures

The Ivorian oil and gas sector is subject to a tax regime that mainly comprises royalties, production taxes and corporate taxes. Royalties are levied at a rate ranging from 5% to 12%, depending on production volume. This structure is designed to adjust the tax burden in line with project profitability.

In 2023, the oil and gas sector contributed 20% to government tax revenues, reflecting its importance to the national economy. In addition, foreign direct investment in this sector increased by 15% on the previous year, reflecting an improved investment climate thanks to attractive tax policies.

Tax incentives for new investments

To attract more investors, Côte d'Ivoire has implemented fiscal incentives such as tax reductions and duty exemptions for imported equipment. These measures have considerably reduced initial costs for new entrants. As a result, the number of exploration licenses issued has risen by 30% in two years, testifying to increased interest in the country's under-exploited potential.

Economic impact

The economic impact of these fiscal policies is significant. Crude oil production peaked at 45,000 barrels per day in 2023, a 10% increase on the previous year. This increase in production has generated additional revenue for the state, making it possible to finance critical infrastructure and social programs.

Challenges and prospects

Despite these advances, the sector still faces challenges, particularly in terms of environmental regulation and transparency of transactions. The government is working on reforms to strengthen environmental legislation and improve governance of the sector, with a view to ensuring sustainable exploitation of resources.

Côte d'Ivoire continues to strengthen its fiscal framework to maximize the benefits derived from its oil and gas sector. Fiscal incentives have proven their effectiveness in attracting investment, increasing production, and consequently improving government revenues. However, the future success of the sector will depend on the government's ability to navigate between economic growth and environmental preservation.