Côte d’Ivoire Clarifies VAT Treatment of Disbursements under FNE: Key Guidance for Service Providers

Summary

• The May 18, 2026 service note confirms that genuine disbursements remain outside the VAT base if strict conditions are met (mandate, exact reimbursement, full justification).
• A clear distinction is reinforced between non-taxable disbursements (agent role) and taxable re-invoiced costs (supplier role), a frequent source of tax reassessments.
• The FNE framework now explicitly accommodates disbursement reporting through separate notes, ensuring coexistence with taxable e-invoices.

Article

1. Background and Objective of the Service Note

Service note no. 02502/MEFB/DGI/DLCD-SDL/gr/05-2026 of May 18, 2026 provides important clarification on the tax treatment of disbursements within Côte d’Ivoire’s Standardized Electronic Billing system (FNE).

Following the extension of FNE to all taxpayers under Article 6 of the annex to the 2025 Finance Law, taxpayers faced practical uncertainty regarding how disbursements should be treated. The Directorate General of Taxes (DGI) therefore issued this guidance to:

• Clarify the definition of disbursements;
• Confirm their VAT treatment;
• Explain their integration into the FNE system.

This clarification is particularly relevant for service providers (freight forwarders, consultants, logistics operators) frequently advancing costs on behalf of clients.

2. Core Distinction: Disbursements vs. Recharged Expenses

The service note reiterates a fundamental tax distinction.

2.1 Disbursements (Non-taxable)

Disbursements are expenses incurred on behalf of and for the account of a client, with the service provider acting strictly as an intermediary (agent).

Key characteristics:

• No impact on turnover;
• Excluded from the VAT base;
• Example: customs duties paid by a freight forwarder.

2.2 Rebilling of Expenses (Taxable)

In contrast, expenses incurred in the course of the supplier’s own activity and recharged to the client are treated as:

• An accessory element of the main service;
• Fully subject to VAT.

Examples include travel expenses, fuel, administrative fees, and telecom costs.

Practical implication:
This distinction remains a major audit risk. Tax authorities frequently reclassify poorly documented disbursements as taxable services, leading to VAT reassessments.

3. Conditions for VAT Exclusion of Disbursements

The note formalizes three cumulative conditions for exclusion from VAT.

3.1 Exact Reimbursement (“franc pour franc”)

• The amount must be reimbursed without any margin or markup.
• Any excess transforms the amount into taxable consideration.

3.2 Existence of a Mandate

• The service provider must act under clear authorization from the client.
• Evidence may include:
  • Contracts;
  • Purchase orders;
  • Mission letters;
  • Electronic communications.

Audit perspective:
The mandate is key to demonstrating agency status.

3.3 Adequate Documentation and Traceability

• Full supporting documentation is required:
  • Supplier invoices;
  • Customs receipts;
  • Payment evidence.
• The taxpayer must ensure:
  • Traceability;
  • Consistency of amounts;
  • Auditability.

4. Integration into the FNE Framework

A key innovation of the note is the clarification of how disbursements interact with the FNE system.

The DGI confirms that:

• Disbursements must be reported via the FNE platform;
• They must be documented in a separate disbursement note;
• They remain outside the VAT scope, provided conditions are met.

Practical Consequence

The system now explicitly allows:

• Coexistence of:
  • Taxable electronic invoices (FNE);
  • Non-taxable disbursement notes.
• Proper digital reporting without artificially inflating the VAT base.

This represents an important operational clarification for ERP and billing system design.

5. Tax Audit Implications

The note should be viewed against increasingly digital and stringent tax audit practices.

5.1 Reclassification Risk

Auditors will assess:

• Existence of mandate;
• Absence of margin;
• Authenticity of expenses;
• Supporting documentation.

Failure may lead to reclassification as taxable turnover.

5.2 Customer-side Risks

In cases of insufficient documentation:

• Deductibility of expenses may be denied;
• Input VAT may be rejected;
• Penalties may apply.

5.3 FNE Compliance Pressure

Non-compliant or non-standardized invoices are increasingly:

• Rejected during audits;
• Automatically excluded from tax deductions.

The note aims to prevent disbursements from being rejected due to technical non-compliance with FNE requirements.

6. Practical Recommendations for Businesses

To ensure compliance and mitigate audit risk, companies should:

1. Formalize mandates systematically
   • Include explicit disbursement clauses in contracts.
2. Ensure clear separation
   • Fees vs. disbursements vs. recharged costs.
3. Maintain complete documentation
   • Original third-party invoices and payment evidence.
4. Issue separate disbursement notes
   • Detailed breakdowns linked to supporting documents.
5. Ensure system alignment with FNE
   • Avoid automatic VAT application to disbursements;
   • Configure ERP/billing systems accordingly.

7. Overall Assessment

This service note provides an important clarification of administrative doctrine and delivers:

• Legal certainty
  Confirmation that genuine disbursements are excluded from VAT.
• Operational clarity
  Clear guidance on integration within the FNE environment.
• Risk mitigation
  Alignment with audit expectations and reduction of litigation risk.

Conclusion

The May 18, 2026 service note confirms that disbursements remain outside the VAT scope under Côte d’Ivoire’s FNE regime, provided that:

• The service provider acts as an agent;
• Amounts are reimbursed exactly;
• Proper documentation is maintained;
• A separate disbursement note is issued via the FNE platform.

This clarification is particularly significant in the current environment of increasing digitalization, real-time reporting, and intensified tax audits, requiring businesses to strengthen both legal documentation and system design.

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