Togo | Finance Law 2025: Tax Code Amendments Effective 1 January 2025
On 27 December 2024, the Togolese parliament adopted the
2025 Finance Law, which includes changes to Article 28 of the General Tax Code. These changes will affect payroll in Togo for the 2025 tax year.
The key amendment to the General Tax Code is the updated definition of "managers" in Article 28. The new definition now includes "majority" managers, majority shareholders, and majority directors of companies. As a result, the remuneration of majority shareholders in general partnerships, limited liability partnerships, private limited companies, and sole shareholders in public limited companies, will now be subject to personal income tax (Impôt sur le revenu des personnes physiques - IRPP). This applies provided the company can deduct the remuneration from its taxable income for corporate income tax purposes.
There are two important conditions for the deduction of remuneration:
- The remuneration must reflect the actual work performed by the manager, meaning the payment should align with the manager's duties and responsibilities within the company.
- The remuneration for the work performed must be reasonable and not excessive. It should reflect the value of the manager's contribution to the company.
This change will mainly impact business owners in various types of partnerships and companies, as the tax burden shifts from corporate tax to personal income tax.
These tax changes will apply from 1 January 2025.