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Economic Community of West African States
A/P2/7/96 Protocol Establishing Value Added Tax in ECOWAS Member States
- Published in official journal 31 on 27 July 1996
- Commenced
- [This is the version of this document at 27 July 1996.]
Chapter I
Definitions and purpose
I – Taxable and non-taxable operations
Article 1
In this Protocol"Treaty" means the Treaty of the Economic Community of West African States."Community" means the Economic Community of West African States whose establishment is reaffirmed by Article 2 of the Treaty."Member State" or "Member States" means a Member State or Member States of the Economic Community of West African States."Council" means the Council of Ministers established by Article 10 of the Treaty of the Economic Community of West African States."Executive Secretary" or "Executive Secretariat" means the Executive Secretary or the Executive Secretariat of the Economic Community of West African States. referred to in Article 17 of the Treaty.Article 2
Chapter II
Scope
Article 3
All operations shall be subject to value added tax which involve an economic activity carried out in exchange for payment within a Member State by any natural or legal person engaged habitually or occasionally in acts pertaining to an industrial, commercial, non-commercial or artisanal activity, with the exception of salaried activities.Of particular importance are:Article 4
The following are exempt from VAT;II – Taxpayers
Article 5
Any natural or legal persons undertaking taxable activities as defined in Articles 3 above shall be subject to value-added tax, particularly:Chapter III
Territoriality
Article 6
A transaction shall be considered to have been carried out in a Member State:in respect of sales where the sale has taken place in accordance with the conditions governing delivery of goods in that Member State;in respect of any other transaction - where the service provided, the right transferred or the object leased are utilised in that Member State.Article 7
Where a taxpayer is not resident in a Member State, he must appoint a resident representative who shall fulfil all obligations pertaining to value added tax on his behalf. Failing this, all such obligations shall be honoured by the person on whose account the operations are undertaken.Chapter IV
Taxable stage and tax liability
Article 8
The following shall be considered taxable stages of VAT:Article 9
A taxable stage may only be assessed prior to total or partial invoicing.In the case of operations other than importation, payment of an advance shall be the taxable event for VAT.Chapter V
Taxable base
Article 10
The taxable base shall be determined by the price demanded from the client to obtain a product or service and charges, inclusive of all taxes and exclusive of value added tax itself or the value of the object submitted for payment.However, the taxable base shall be determined.For imports, by the customs value of the goods, to which shall be added duties and taxes of all descriptions, except value added tax itself.For deliveries for own use by the cost price of goods or works carried out.For construction works — by the cost of statements, agreements, invoices or deposits.For second hand goods — by the difference between the sales price and the actual price at which the goods are purchased.Article 11
The taxable base defined above shall exclude any rebate, reduction or discount granted to the client on an invoice, within reasonable limits.Chapter VI
Rates
Article 12
It shall be left to the discretion of each member State, provisionally, to determine the rates to be applied to goods and services subject to value added tax.Article 13
The list of goods prepared in accordance with the ECOWAS Customs and Statistical Nomenclature, which are exempt from value added tax or subject to VAT rates other than the normal rate is annexed to the related text of each Member State.The list of services which are exempt or which are subject to rates other than the normal rates is also annexed to the above text.Chapter VII
Tax deductibility
I – Principle
Article 14
Deductibility shall be granted to all VAT taxpayers.Article 15
Tax deductibility is assessed from the point at which the tax becomes payable. Value added tax paid on individual components which go into the price of a taxable operation is deductible from the value added tax applicable to the entire operation.Article 16
Article 17
To become eligible for deductions a tax payer must have in his possession:either invoices issued by his supplier, himself liable to tax; ora customs certificate of entry for home use showing that he is the genuine consignee.Article 18
The total deductible amount shall be charged by the tax payer against all taxes due for the period covered by the declaration eligible for deduction and paid on goods and services.Article 19
In the event of approved deductions exceeding the amount due as taxes for the declared period, Member States may either carry over the surplus to the next year or may effect a refund according to modalities fixed by themselves.III – Limitations
[Please note: numbering as in original.]Article 20
In determining deductibility, tax payers who do not engage solely in taxable activities shall adopt a pro-rata system, whether in respect of fixed or other assets and services. The pro-rata is the ratio of yearly earnings from tax deductible operations to the total annual proceeds from all operations combined, expressed as a percentage.Chapter VIII
Obligations of the taxpayer
Article 21
The taxpayer shall declare, within a time limit to be fixed by each Member State, the date of commencement, change and cessation of his/her activityArticle 22
The taxpayer shall maintain regular and complete accounts in order to justify taxable and non-taxable operations carried out by him.Article 23
A taxpayer delivering goods or services to a client or making a claim from that client for a taxable advance payment shall be required to issue an invoice or equivalent document to the client a copy of which shall be kept by the taxpayer.The invoice or equivalent document, duly dated, shall state clearly:Article 24
Any reference to value added tax on an invoice shall automatically render a person liable for VAT.Article 25
All taxpayers shall submit a declaration on operations within a time-limit to be fixed by Member States. The frequency of declaration and content shall be supplied by each Member State.Chapter IX
Transitional provisions
Article 26
Laws and regulations in force in Member States may continue to be applicable during a 3-year transition period from the date of entry into force of this protocol.Article 27
At the end of the transitional period, the following areas shall be encapsulated within a harmonised text:liability, assessment and collectionrefund of value added taxsanctions and penalties;forfeit system;treatment applicable to small and medium scale enterprises;treatment applicable to agriculture;determination of rates;classification of goods and services;scope of tax deductibility;credit stock management;control;disputes.Chapter X
Final provisions
Article 28 – Settlement of disputes
Any dispute among Member States regarding the interpretation or application of this Protocol shall be amicably settled by the Council of Ministers. In the event of failure to settle such disputes, the matter may be referred to the Community Court of Justice by one of the parties and the decision of the Court shall be binding and final.Article 29 – Amendment and revision
Any Member State may propose any amendment or revision of this protocol.All proposals shall be submitted to the Executive Secretariat which shall transmit them to Member State within thirty (30) days of receipt. The Authority of Heads of State and Government shall consider the proposals for amendment and revision at the expiration of the three-month period granted to Member States,Article 30 – Deposit and entry into force
History of this document
27 July 1996 this version
Consolidation