Although it is not
exactly the first of its kind, the Kossodo project is nonetheless an example,
fiscally speaking. To better understand, let‘s go back in time: in order to put
an end to tax evasion practiced by multinational companies, in the BEPS action
plan adopted in 2015 by the member states of the OECD, an „inclusive“ framework
was instituted allowing non-member states to be associated with it in order to
establish standards of substance, transparency and coherence in their tax
Some 100 countries have
committed to this process, including 21 African countries. „Many of them have
started work on revising, or even creating, their General Tax Code and have set
up formidable tools to collect public revenue,“ says Véronique Fontaine, head
of accounting and taxation at MAN ES France.
To put it plainly, in
most cases, any company setting up in a foreign country for several months must
become a tax resident and, as such, pay taxes there. The risk is that they will
be taxed twice: in their host country and in their country of origin... and
emerging countries, which see this as a major financial windfall, have in
recent years applied a tax system that is certainly transparent, but much more
In this context, the MAN
ES Group is seeking to optimize its business and France has, in addition to its
expertise in onshore projects, a major advantage: it has signed 121 tax
treaties, including more than 30 with Africa - in this respect it has one of
the most extensive networks in the world. These treaties provide fiscal
security and, above all, avoid significant local administrative costs.
It is in this
increasingly aggressive international tax environment that the Kossodo project
was signed in 2019. It covers two main services: firstly, the supply of
equipment, and secondly, an on-site service, from supervision of installation
to commissioning. Although these activities are quite distinct from each other,
they have been the subject of a special tax arrangement within the Group, in
the form of a contract split into two: the „offshore“ part, which includes
studies and the supply of equipment, is handled by Augsburg; the „onshore“
part, i.e. the on-site activity, is handled by MAN ES France. „This arrangement
has a double advantage: on the one hand, thanks to the separation of the
contracts, we avoid the risk of being taxed by Burkina Faso on the basis of the
total turnover of the offshore and onshore contracts; on the other hand, thanks
to the tax convention signed between France and Burkina Faso (Germany does not
have one), MAN ES France will not have to establish itself in Burkina Faso for
the first six months. This will avoid the costs and complex management of a
Permanent Establishment“, explains the tax manager. This offshore/onshore
format is not new: having already proven its effectiveness on several other
contracts, it is the subject of a systematic study by the IPC teams in France
and Augsburg. Thanks to this, MAN ES is not subject to double taxation.
Ouagadougou, Burkina Faso
„This fiscal dimension
obviously adds a certain amount of pressure to the management of our project,
but we feel supported,“ confides Yohann Pasquier, project manager of the
Kossodo contract. In fact, as soon as the French team set foot in Burkina Faso
last February, the countdown began! Translation: „six months, not a day more,
to get the plant up and running“. Fortunately, if we refer to the number of
days actually spent on site - that is, subtracting the days when the team
returned to France - the count is good. Between the project and tax teams,
cooperation is flawless: „Every two weeks, we meet to review the situation. And
I alert Véronique as soon as there is a hitch. This close monitoring has proved
all the more useful as we have had to deal with the uncertainties linked to the
current health situation. Esteban Sopena, who is in charge of assembly and
commissioning activities, is a valuable ally in mobilizing resources on site,“
says the project manager. At the time of writing, the project seems to be on
track to meet the established schedule and transfer the plant to the final
client, SONABEL, at the end of August.
As soon as a project
offer is made at MAN ES France, the Tendering team consults the IPC
(International Project Consulting) team. Made up of experts in support
functions - tax, HR, finance, export-control, insurance and purchasing - and
coordinated by Nathalie Cotentin, the team works alongside the sales staff to
keep them informed of the risks involved in each offer. Then, throughout a
project identified as „sensitive“, the follow-up is close so as not to leave
any room for hazards.
for the supply of equipment and supervision of the installation and
commissioning of a heavy fuel oil power plant (55 MW).
18V 51/60 TS.
Faso, in Ouagadougou (French-speaking Africa).
(final customer: SONABEL).
signed in 2019, transfer of the plant planned for August 2021.
Back to overview