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Hiring in Benin
Benin, officially known as the Republic of Benin, is a country in West Africa. Porto-Novo is the capital and French is the official language. The economy is largely dependent upon subsistence agriculture, cotton production and regional trade. Its main trading partners are China, India, Nigeria and Thailand. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Benin’s legal and tax regulations. Employment regulations including probation period, holidays and termination are covered by the Labor Code. The Labor Code stipulates that the probation period is up to 3 months. An individual, whether Beninese or a foreign national, whose tax domicile is in Benin generally is subject to personal income tax on worldwide income. Individuals not domiciled in Benin are subject to tax only on Benin-source income. Global PEOs facilitate companies by ensuring compliance with Benin’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- Probation period is up to 3 months.
Annual Leave
- Generally, employees are entitled to 24 paid days of annual leave, with increases at the following rate
-
- after 20 years, and additional 2 days
- after 25 years, an additional 4 days
- after 30 years, an additional 6 days.
Public Holidays
- New Year's Day (1st January)
- Fête du Vodoun (10th January)
- Easter Monday (13th April)
- Labor Day (1st May)
- Ascension Day (21st May)
- Eid al-Fitr
- Whit Monday (1st June)
- Eid al-Adha
- Benin Independence Day (1st August)
- Assumption of Mary (15th August)
- Prophet's Birthday
- All Saints' Day (1st November)
- Christmas Day (25th December)
Maternity Leave
- Female employees are generally eligible for 6 weeks of paid leave before the birth and 8 weeks after the birth, with the employer paying for half and social insurance the balance.
Paternity Leave
- Fathers are generally entitled to 3 days of paid paternity leave.
Sick Leave
- Employees with less than 2 years of service are generally entitled to 6 months’ sick leave.
- Employees with 2+ years of service are generally entitled to 12 months’ sick leave.
- Employees with 1-5 years’ service are generally entitled to three months at full pay and three months at half pay.
- Employees with 5+ years of service are entitled to full pay for 6 months.
Work Hours
- Typically, in Benin, work is convened Monday through Friday from 8am to 12:30pm and 3:30pm to 7pm, and on Saturday from 9am to 1pm.
- Total working hours are generally 40 per week and should not exceed 56 per week.
Overtime
- Workers may not work more than 240 hours of overtime per year.
- Overtime is paid at:
- 112% of normal hourly rate for 41st to the 48th hour per week.
- 135% of normal hourly rate beyond the 48th hour per week.
Notice Period
- Notice periods are as follows:
-
- Hourly employees are entitled to 15 days’ notice.
- Employees, workers, and laborers are entitled to one month of notice.
- Supervisors and executives are entitled to 3 months’ notice.
Severance
- Employees are entitled to severance pay.
- The amount depends on length of service:
-
- First 5 years of employment–30% of average monthly salary
- 6-10 years of service–35% of average monthly salary
- 10+ years of service–40% of average monthly salary
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or 14th month salary.
- Instead the holiday will need to be taken within twelve months and it is set by the employer as opposed to the employee.
- Domestic workers are added to the labour code and they are entailed to seniority bonus after a certain time.
- There seem to not be the same requirement for other industries."
income tax
- An individual, whether Beninese or a foreign national, whose tax domicile is in Benin generally is subject to personal income tax on worldwide income.
- Foreign-source income that already has been taxed may be exempt under an applicable tax treaty.
- Individuals not domiciled in Benin are subject to tax only on Benin-source income.
- Income is taxed under five schedules:
- industrial and commercial profits
- non-commercial profits;
- employment income (salary, wages, benefits in kind, bonuses, etc.)
- income from movable capital (investments); and
- property income.
- The tax on salaries is deducted at source at progressive rates from 10% to 30%.
- There are no specific taxation rates for non-residents.
|
Taxable Income (XOF) |
Rate (%) |
|
0 – 50 000 |
0% |
|
50 001 – 130 000 |
10% |
|
130 001 – 280 000 |
15% |
|
280 001 – 5 300 000 |
20% |
|
Over 5 300 000 |
30% |
deductible expenses
Personal deductions
- The first XOF5 000 per month of employment income is exempt from tax.
- Resident individuals are exempt from personal income tax on capital gains derived from the disposal of shares.
- Tax liability is reduced based on the number of dependent children.
Business Deductions
- Deductions normally are allowed for expenses incurred in generating income.
- Management fees may be deducted if they are reasonable for the services rendered.
|
Deductible Expenses |
|
|
Personal Deductions |
|
|
Business Deductions |
|
immigration
- A Benin visa is an official document from the government authorizing someone to enter the country.
- It comes as either a stamp or a sticker in a passport that foreigners must obtain from an embassy or consulate.
- Benin has three overarching types of visas:
-
- Business
- Tourist
- Transient
- The requirements differ between types, but most of your employees will need to obtain a business visa and work permit to stay compliant.
- Most visas are valid for either 30 or 90 days. Foreigners must apply before entering Benin, as they cannot obtain visas upon arrival.
- The requirements to obtain a working visa in Benin depend on the type of visa employees need and whether they want a single- or multi-entry option.
- Some of the documents they must provide include:
-
- A passport-style photo
- A scanned copy of the passport
- A copy of their flight itinerary
- Proof of yellow fever vaccination
- A business letter from your company
- A completed visa application form
- Once employees obtain work visas, they’ll need to also get work permits.
- Employers handle the application process on behalf of employees.
- The process for obtaining a work permit is as follows: -
-
- An expatriate quota approval
- A Subject to Regularization (STR)
- A Combined Expatriate Residence Permit and Alien Card (CERPAC)
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Business Visa |
|
30 or 90 days |
|
|
Work Permit |
|
Varies |
|
value added tax
- The supply of goods and services carried out (or used) in Benin and imports into Benin are subject to VAT.
- The standard VAT rate is 18%.
- Exempt activities include imports of certain products, banking and general insurance.
|
VAT |
|
|
Standard Rate |
18% |
|
Zero Rate |
0% |
withholding tax
Dividends
- The general WHT rate on dividends is 15%.
- However, the rate is reduced to 10% for dividends distributed by a joint stock company and 7% for dividends distributed by a company whose shares are listed on a stock exchange approved by the Regional Council for Public Savings and Financial Markets (CREPMF) in the West African Economic and Monetary Union (WAEMU, comprised of Benin, Burkina Faso, Cote d’Ivoire, GuineaBissau, Mali, Niger, Senegal and Togo).
Interest
- Interest paid to a resident or a non-resident generally is subject to a 15% WHT.
- A 6% rate applies to income arising from bonds, which may be reduced by the government in certain cases.
- The rate on bonds issued by WAEMU countries or by the local authorities is 3% if the term of the bonds five or 10 years and 0% if the term of the bonds is longer than 10 years.
Royalties
- Royalties paid to a foreign individual are subject to a 10% WHT and royalties paid to a foreign company are subject to a 12% WHT.
- Royalties paid to a resident individual are considered non-commercial profits and are subject to personal income tax at progressive rates.
- Royalties paid to a resident company are not addressed in the General Tax Code, so they are subject to corporate income tax at the 30% rate.
Technical Service Fees
- Technical service fees paid by a resident company to a non-resident company are subject to a 12% WHT.
- Technical service fees paid by a resident company to another resident company are subject to a 1% or a 5% WHT.
|
Payment |
Residents |
Non-residents |
|
Dividends |
0%/15% |
0%/15% |
|
Interest |
15% |
15% |
|
Royalties |
- |
10%/12% |
|
Technical Service Fees |
- |
10%/12% |
termination
Employers may terminate a worker for a valid reason, including:
-
- worker health
- inability to hold employment
- competence or conduct
- changes in the organization or technology
- economic hardship or closure of the company
- If the employer dismisses the employee on personal grounds, the employer must notify the employee in writing and include the reasons for termination.
- The labor inspector must also be notified in writing.
- Notice periods are as follows:
-
- Hourly employees are entitled to 15 days’ notice.
- Employees, workers, and laborers are entitled to one month of notice.
- Supervisors and executives are entitled to 3 months’ notice.
- Employees are entitled to severance pay.
- The amount depends on length of service:
-
- First 5 years of employment–30% of average monthly salary
- 6-10 years of service–35% of average monthly salary
- 10+ years of service–40% of average monthly salary
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- The tax year is the calendar year
- Each taxpayer must file a return. Joint returns of spouses are not permitted.
- The individual tax return must be filed by 30 April for business income, with any balance of tax due paid at that time.
- Individual income tax is paid in quarterly advance in instalments on 10 March, June, September and December.
- A tax return is required even when all income is from employment and tax has been deducted at source.
- Taxes on salary must be paid monthly.
- Penalties are assessed at rates ranging from 20% to 80% of tax due, depending on whether the taxpayer’s return was accidentally, mistakenly or fraudulently in error.
- The 80% rate also applies to estimated assessments in the absence of a return submitted only after an injunction.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Benin ranked 149th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% | 0% |
| Christmas Bonus Over Vacations % | 0% |
| Severance per Year % | Severance pay is equal to 30% of the average monthly salary for the first five years (2.5% of annual salary) |
| Vacations % | Generally, employees are entitled to 24 paid days of annual leave (6.59% of annual salary) |
| Notice % | Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 17.42% |
employer accruals
Additional information (Country Accruals)
| Pension |
6.40% |
| Social security |
15.40% |
| Family Allowance |
9.00% |
| Industrial injury assistance |
4.00% |
| Vacations |
10.14% |
| Description |
Employers contribute 15.4% of gross salary to social security, 6.4% for pension and 9% for family allowance, plus an additional 1%-4% for industrial injury assistance. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Generally, employees are entitled to 24 paid days of annual leave | This equals 6.5% (24/365 days) of annual income |
| Maternity Leave | Female employees are generally eligible for 6 weeks of paid leave before the birth and 8 weeks after the birth, with the employer paying for half and social insurance the balance. | This equals 50% of 27% (14/52 weeks) of annual income |
| Paternity Leave | Fathers are generally entitled to 3 days of paid paternity leave. | This equals 0.82% (3/365 days) of annual income |
| Sick Leave | Employees with less than 2 years of service are generally entitled to 6 months’ sick leave. | This equals 50% (6/12 months) of annual income |
| Overtime | Workers may not work more than 240 hours of overtime per year. Overtime is paid at: • 112% of normal hourly rate for 41st to the 48th hour per week. • 135% of normal hourly rate beyond the 48th hour per week. |
Normal hourly rate is around 2,125 XOF. Overtime is paid at an additional 255 XOF. |
| Severance | • First 5 years of employment–30% of average monthly salary • 6-10 years of service–35% of average monthly salary • 10+ years of service–40% of average monthly salary |
This equals 30% of monthly salary |
| Social Security | The employer’s social security contribution is 15.4% of gross salary | This equals 15.5% of annual income |
