Benefits and problems of registering a company in Benin in 2024

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• Benefits of Benin company registration

  

  1. Our Clients can register a company in Benin with only i) US$1 (FCFA1) of share capital and ii) one shareholder and one director, who can be of any nationality and are not required to be residing in Benin to complete the procedures. Our Clients do not need to travel to complete the engagement;
  2. Benin is a good location for Clients willing to start business in Sub-Saharan Africa because:
     • The local authorities have simplified the Benin company incorporation process by reducing the procedures and costs of setting up business. The government fees for company registration has significantly reduced from US$750 in 2012 to about US$100 in 2016;
     • Our Client’s investments will be safe in Benin. Contrary to most other countries of this region, Benin is politically stable and is described as one of Africa’s most stable democracies by the BBC;
     • Benin is relatively secure compared to other African countries. This will notably make it easier to recruit expatriates as employees for the company to be formed in Benin;
     • Benin is also part of the Franc CFA zone, an area of Western Africa using a single currency, which is pegged to the euro. The FCFA is less volatile than most other African currencies, reducing FX risk for foreign investors;
     • Benin’s economic and business capital Cotonou has maritime access. Its port infrastructure are ranked as the 12th best ones within Africa’s by the World Economic Forum.
  3. Benin is a good place to form an agriculture or manufacturing business in Africa because:
     • Benin is predominantly an agricultural economy : entrepreneurs looking to invest in agricultural products such as cotton but also palm oil and rice will find these products cheap and in abundance;
     • Foreigners investing at least US$50,000 and hiring locals on at least five permanent positions can benefit from investment incentives including i) no export duties and ii) no corporate income tax;
     • Benin also has a huge potential for foreign investments in areas of i) ecotourism along the countries beautiful coastline and ii) establishment of apparel factories due to cheap and readily available cotton and labor, with monthly salaries averaging only US$240;
  4. Benin is an attractive destination for foreign investors who want to hire skilled, unskilled and qualified professional for their companies. This is due to the labour code of Benin which is favourable towards investors, providing them with a range of preferential treatments for hiring in Benin.

• Problems with Benin company registration

  1. Our Clients’ sales in Benin will be low, as the population is tiny (10 million) and half of the inhabitants are earning less than US$1.25 a day;
  2. Companies not meeting the requirements for investment incentives are subject to a high corporate income tax rate of 25% or a minimum tax on their turnover of 0.75%. They also must pay i) a 15% withholding tax on dividends and interests remitted abroad ii) a 30% withholding tax on royalties paid to resident companies and iii) a VAT of 18% on the sale of goods and services;
  3. Benin has so far entered into only four double tax treaties with France, Norway, Kuwait, together with the 8 countries of the West African Economic and Monetary Union (WAEMU);
  4. Benin being a francophone African country, non-French speaking businessmen will encounter communication barriers with their suppliers and Clients and incur extra costs in translation of business documents;
  5. Benin has been poorly ranked at the 120^th position (out of 137 countries) in terms of its global competitiveness in the 2017-2018 Global Competitiveness Index. This is largely due to i) presence of corruption and other bureaucratic hurdles, ii) poor infrastructural facilities and iii) an insufficient capacity of the nation to innovate.