TerraLex Cross-Border Guide to Cross-Border Guide to Business Investment in Africa

Under the OHADA (Organisation for the Harmonisation of Business Law in Africa) A foreign investor can set up several legal entities in Togo, depending on the nature of the targeted activities. The most common business forms are: - Sole Proprietorship which is an economic unit involving the use of human and material resources for production or distribution, based on a pre-established organization.

• The Public Limited Company (SA) is a company in which the shareholders are liable for the company's debts only up to the amount of their contributions, and whose shareholders' rights are represented by shares. The Public Limited Companies are generally used for large-scale projects. The mode of administration is determined by the articles of association, which choose between: Public Limited Company with Board of Directors and Public Limited Company with Managing Director.
• A Limited Liability Company (SARL) is a company in which the partners are only liable for the company's debts up to the amount of their contributions, and whose rights are represented by shares.
• A Simplified Joint-Stock Company is a company set up by one or more partners, whose bylaws freely provide for the organization and operation of the company, subject to the mandatory rules of the Uniform Act on Commercial Companies and Economic Interest Groups (Uniform Act on Business Companies and General Interest Group (GIE).
• General Partnership is a company in which all partners are merchants and are jointly and severally liable for the company's debts.
• A Limited Partnership is a company in which one or more partners who are jointly and severally liable for the company's debts, known as "associés en commandite", coexist with one or more partners liable for the company's debts up to the limit of their contributions, known as "limited partners”, and whose capital is divided into company shares.

It is however, for advisable for foreign investors to set up Public Limited Company or a Limited Liability Company.

These forms of Company are governed by the Uniform Act pertaining to the Commercial Companies Act and Genega Interest Group of January 30, 2014, and the Uniform Act on General Commercial Law of December 15, 2010.

The process of registering a company under Togolese law is governed by Togolese law. Togolese companies are governed by the Code of Commercial Companies and Economic Interest Groups (CSC-GIE). The process for registering a company under Togolese law may vary depending on the type of company you wish to set up. The most common types of company in Togo are as follows: A limited liability company (SARL), The public limited company (SA), General partnership (SNC), A limited partnership (SCS), Joint venture (SP) and Economic Interest Grouping (GIE). To register a company, you need to take the following steps:

• Obtain a negative certificate from the Business formalities center (CFE).
• Draw up the company's articles of association and have them signed by all the founders.
• File the articles of association with the CFE.
• Pay the registration fees and obtain a receipt.
• Publish a notice of incorporation in a legal gazette.

For the public limited company, the minimum share capital is 10,000,000 FCFA. For Limited Liability Companies, the minimum share capital is 1,000,000 FCFA. However, with the recent amendment, this minimum capital requirement for SARLs has been abolished. Henceforth, any interested party may set up his or her own company without the minimum share capital requirement.

For other companies, the law sets neither a minimum nor a maximum.

Exchange control rules are set out in regulation n°09/2002/ CM/WAEMU of September 26, 2022, relating to the freedom of capital transfers within WAEMU member states. This regulation sets out the conditions and procedures applicable to capital transfers between WAEMU member states and between these states and third countries.

Togo has no specific legal requirement for a certain number of locals (Togolese nationals) to be directors of companies incorporated in Togo.

There is no legislation specifically obliging legal entities to comply with specific quotas based on demographic criteria such as gender, ethnic origin, or disability.

Periodic statutory reports must be filed with the clerk of the Commercial Court in which the company is registered. The reports are as follows: - Annual financial statements

• Annual reports
• Tax returns
• Value-added tax (VAT) declarations
• Employee reports
• Commercial and customs declarations

• Law n°2021-012 of June 18, 2021, on Togo's Labor Code;
• The Interprofessional Collective Agreement of December 20, 2011;
• Law N° 2011 - 006 THE TOGO SOCIAL SECURITY CODE.

In Togo, the following types of work permit are issued to foreign workers and investors: Temporary work permit: This permit is issued to foreigners who wish to work in Togo for a limited period. Permanent work permits: This permit is issued to foreigners who wish to work in Togo on a permanent basis.

Work permit for investors: This permit is issued to foreigners who wish to invest and work in Togo.

Foreigners wishing to acquire land in Togo may encounter land law problems. Togolese land laws are complex and can be difficult for foreigners to understand. Foreigners cannot buy land in rural areas, but they can lease land for up to 50 years. Foreigners can buy land in urban areas but must obtain authorization from the Ministry of Urban Planning and Housing. Foreigners may also encounter land ownership problems due to corruption and land fraud.

• Economic Partnership Agreement (EPA) between the European Union and West Africa (Togo)
• African Continental Free Trade Agreement
• United Nations Convention on the International Sale of Goods.
• Economic Community of West African States (ECOWAS) Trade Liberalization Scheme (ETLS) - the ETLS is a regional trade agreement designed to promote intra-regional trade and investment between ECOWAS member countries.
• Agreement establishing the African Continental Free Trade Area (AfCFTA).
• World Trade Organization (WTO) agreements - Togo is a member of the WTO and a party to various agreements promoting international trade.

Togo is party to various agreements that promote international trade and investment.

To encourage investment in Togo, the government has introduced incentives to attract foreign investors. These include tax reform, the digitization of tax revenues, the creation of a one-stop shop for foreign trade, the possibility of transferring capital income to Togo, free access to public procurement contracts, transparency in contract award procedures and the possibility of appeal to the Conseil des Marchés.

Companies also benefit from preferential tariffs on public services (electricity, water, telephone), the free transfer of capital, tax exemption on dividends for the first ten years for non-Togolese shareholders, and protection against the nationalization of foreign investors' assets.

The tax implications of opening and managing legal entities in Togo are governed by the General Tax Code (CGI) and the Investment Code. Legal entities are subject to corporate income tax (IS) and value-added tax (VAT). Companies are required to file an annual tax return and pay corporate income tax on their profits. Tax rates vary according to company type, sales, and location.

As far as VAT is concerned, companies must register with the Direction Nationale des Impôts (DNI) and collect VAT on sales. VAT rates vary according to the type of product or service sold

Law N°99-011 pertaining to the organization of competition in Togo of December 27, 1999. This law has several objectives: to reinforce the competitiveness of economic activities in an open, competitive market, with a rationalized and harmonized legal environment.

Togo recognizes alternative dispute resolution mechanisms. The country is a signatory to the New York Convention of June 10, 1958, on the Recognition and Enforcement of Foreign Arbitral Awards. This means that foreign arbitral awards can be recognized and enforced by Togolese courts.

Togo has promulgated LAW N° 2012 -001 INVESTMENT CODE OF THE TOGOLESE REPUBLIC. This law stipulates that foreign investors shall receive treatment identical to that of Togolese natural or legal persons, subject to reciprocity and without prejudice to measures that may concern all foreign nationals or result from treaties or agreements to which the Togolese Republic is a party.

According to an UNCTAD report, Togo has the potential to become a key investment center in the region. The country has experienced dynamic economic growth thanks to efforts to modernize its infrastructure and improve the business environment. According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2021, Foreign Direct Investment (FDI) on Togo’s economy rose from nearly 191 billion FCFA ($346 million) in 2019 to over 352.5 billion FCFA ($639 million) in 2020, representing 85% growth recorded over the year.

In addition, the Cellule du climat des affaires (CCA) is a strategic tool, placed under the direct supervision of the Head of State. Its mission is to coordinate interministerial efforts to ensure synergy and efficiency in government action to improve the business climate.

Togo has taken steps to improve the business climate and boost investment in the Togolese private sector. Reforms have also been launched to ensure a more competitive economy. Here are a few promising sectors that offer the greatest chances of profitability for foreign investors in Togo:

• Energy
• Agriculture
• Industry
• Infrastructure
• Mining
• Oil and gas
• Financial services

In recent years, Togo has made significant progress in the field of infrastructure, more specifically in the road sector. But more remains to be done.

The risks associated with investing in Togo include economic vulnerability, low business diversity, underdeveloped infrastructure, political and security concerns, and regulatory challenges. To mitigate these risks, investors need to exercise due diligence, seek out local partners with a good track record, understand the business culture, obtain legal advice.