Transparency of the Regulatory System
The government of Burkina Faso aims for transparency in law and policy to foster competition. By law, prices of products, goods, and services must be established according to fair and sound competition. The government believes that cartels, the abuse of a position of superiority, restrictive practices, refusal to sell to consumers, discriminatory practices, unauthorized sales, and selling at a loss are practices that distort free competition.
At the same time, the price of some staple goods and services are still regulated by the government, including: fuel, essential generic drugs, tobacco, cotton, school supplies, water, electricity, and telecommunications.
The government has no history of using tax, labor, environmental, health and safety standards, or other laws and policies to impede entrance of foreign investors into the marketplace. However, the tax schedule is complex. In Burkina Faso, informal sector businesses and other small businesses with an annual turnover of FCFA 15 million (USD 25,000) or less pay a unique tax called the “contribution du secteur informel” or CSI. The maximum CSI tax is FCFA 100,000 (USD 166) per year. Businesses qualifying for CSI tax status are prohibited from bidding on state tenders. Individual enterprises and companies in Burkina Faso with an annual turnover exceeding FCFA 15 million (USD 25,000) are subject to a separate tax regime. These include an annual tax on industrial, commercial, and agricultural profits (IBICA), set at 27.5 percent, and a forfeit tax (IMPFIC) paid in advance each year. There is also a 25 percent tax on interest income (IRC) and a 25 percent tax on investment income (IRVM). Businesses must also pay an apprenticeship tax (TPA) on the salaries of all national and foreign employees (4 and 6 percent, respectively), and a licensing tax, which has two components: a fixed amount based on gross revenues and an 8 percent tax based on the rental value of company buildings and the value of the production equipment. Upon incorporating, companies must pay a registration tax equal to 3 percent of the company’s capital. Since 1993, businesses have been required to apply a 15 percent value-added tax to products.
Non-IBICA profits are taxed at 27.5 percent. Private sector employees and civil servants pay a tax (IUTS) on salaries and tips, usually by payroll deduction.
In mid-February 2017, the government introduced a standardized invoicing system as a fiscal reform to fight against fraud and tax evasion. Additionally, new taxes on gambling gains greater or equal to 100,000 F CFA (163 USD) (10 percent), on passenger cars over 13 horsepower (5 percent), on beer (increased from 25 percent to 35 percent) and on built (0.1 percent) or undeveloped land (0.2 percent) have been effective since September 1, 2016.
International Regulatory Considerations
Burkina Faso is a member of UNCTAD’s international network of transparent investment procedures: http://www.eregulations.org/. Foreign and national investors may be able to find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures at: http://burkinafaso.eregulations.org/.
Legal System and Judicial Independence
Burkina Faso’s legal, regulatory, and accounting systems are transparent and consistent with international norms. Burkina Faso adheres to the West African Economic and Monetary Union’s accounting system, (Systeme Comptable Ouest Africain or SYSCOA). Introduced in 1998, SYSCOA allows enterprises to use a common accounting system. SYSCOA complies with international norms in force and is a source of economic and financial data.
Laws and Regulations on Foreign Direct Investment
The investment code, revised in 2010, 2012 and 2013, demonstrates the government’s interest in attracting FDI to create industries that produce export goods and provide training and jobs for its domestic workforce. The code provides standardized guarantees to all legally established firms operating in Burkina Faso, whether foreign or domestic. It contains four investment and operations preference schemes, which are equally applicable to all investments, mergers, and acquisitions. In light of the policy declaration of the new Prime Minister and his background in the finance sector, it is likely that the investment code will be revised again.
Burkina Faso’s regulations governing the establishment of businesses include most forms of companies admissible under French business law, including: public corporations, limited liability companies, limited share partnerships, sole proprietorships, subsidiaries, and affiliates of foreign enterprises. With each scheme there is a corresponding set of related preferences, duty exceptions, corporate tax exemptions, and operation-related taxes.
Under the investment code, all personal and legal entities lawfully established in Burkina Faso, both local and foreign, are entitled to the following rights: fixed property; forest and industrial rights; concessions; administrative authorizations; access to permits; and participation in state contracts.
Competition and Anti-Trust Laws
Competition matters are reviewed by the National Commission for Competition and Consumption (Commission Nationale pour la Concurrence et la Consommation). Some competition matters are under the aegis of the West African Economic and Monetary Union (WAEMU).
Expropriation and Compensation
The Burkinabe constitution guarantees basic property rights. These rights cannot be infringed upon except in the case of public necessity, as defined by the government. This has rarely occurred. Until 2007, all land belonged to the government, but could be leased to interested parties. The government reserves the right to expropriate land at any time for public use. In instances where property is expropriated, the government must compensate the property holder in advance, except in the event of an emergency.
In 2007, Burkina Faso drafted a national land reform policy that recognizes and protects the rights of all rural and urban stakeholders to land and natural resources; clarifies the institutional framework for conflict resolution at a local level; establishes a viable institutional framework for land management; as well as strengthens the general capacities of the government, local communities and civil society on land issues.
A 2009 rural land management law provides for equitable access to rural lands in order to promote agricultural productivity, manage natural resources, encourage investment, and reduce poverty. It enables legal recognition of rights legitimated by traditional rules and practices. In rural areas, traditional land tenure rules have long governed land transactions and allocations. The 2009 law reinforces the decentralization and devolution of authority over land matters, and also provides for formalization of individual and collective use rights and the possibility of transforming these rights into private titles.
In 2012, the government revised the 2009 law, marking the end of exclusive authority of the state over all land. It includes provisions to recognize local land use practices. The new law provides conciliation committees to resolve conflicts between parties prior to any legal action. There are several property rights recognition and protection acts, such as land charters, individual or collective land ownership certificate and a loan agreement which governs the nature, duration and counterparties for transfer rights between land owner and a third party.
The 2010-2014 Millennium Challenge Compact supported the establishment of local authorities and the issuance of titles as part of the land tenure reform process. USAID continues to support the decentralization of land policy, through the establishment of the National Land Observatory charged to produce/collect/distribute information on national/local land tenure issues to aid in government decision making.
ICSID Convention and New York Convention
The ICSID Convention entered into force for Burkina Faso on October 14, 1966. In the event that an amicable settlement of a dispute between the government and an investor cannot be reached, the investment code requires that arbitration procedures be submitted to international arbitration under the rules outlined by the 1965 Convention of the International Center for Settlement of Investment Disputes (ICSID), of which Burkina Faso is a member.
When the ownership of a company does not meet the nationality requirements laid out by Article 25 of the Convention, the code specifies that the dispute be resolved in accordance with the dispositions of the supplementary mechanisms approved by ICSID in September 1978.
Investor-State Dispute Settlement
Burkina Faso is a party to the Washington Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards and outlines arbitration procedures in its investment code. Burkinabe courts accept international arbitration as a means for settling investment disputes between private parties. Longstanding disputes that remain unresolved after administrative jurisdictional hearings are required to be submitted to arbitration. Burkinabe courts recognize and enforce foreign arbitral awards.
International Commercial Arbitration and Foreign Courts
Burkina Faso’s 1995 Code of Commerce outlines all the commercial laws of the Burkinabe business community. In 2006, Burkina Faso introduced specialized commercial chambers in the general courts and in 2007 opened the Arbitration, Mediation and Resolution Center (Centre d’Arbitrage, de Mediation et de Conciliation de Ouagadougou (CAMCO) under the auspices of the Chamber of Commerce and Industry. (http://www.camco.bf/). If the dispute is not settled by the CAMCO, the case can be referred to international bodies such as the International Chamber of Commerce of Paris.
Burkina Faso has a bankruptcy law, and ranks 112 out of 190 countries (for Resolving Insolvency in the World Bank’s 2017 “Doing Business” report.