Payroll costs
Calculating ITS in Mali
Month-end at Sahel Logistique. The last truck is back at the depot, timesheets are piling up on the payroll desk, and 42 payslips must go out before Friday. On each one, a single line matters more than the rest: ITS. One bracket applied wrongly, one child left out, one bonus misclassified, and either the employee overpays or the company pays the penalty.
Sahel Logistique, Moussa and Fatoumata are fictitious names, used for illustration only.
1. The legal framework: which texts govern ITS?
Before setting up payroll for its 42 employees, Sahel Logistique’s payroll manager needs to know where to look for the rules. The tax on wages and salaries (impôt sur les traitements et salaires, ITS) is governed mainly by the following texts:
- The General Tax Code (Code général des impôts, CGI), articles 1 to 13. They define taxable income, taxable persons, the tax base, the tax scale and tax reductions (General Tax Code, articles 1 to 13).
- Law No. 2016-10, which rewrote articles 9 and 10 of the CGI. It sets the order of the calculation and the current scale, applicable since 1 July 2015.
- Law No. 2008-002, which created the two-point reduction (CGI, articles 12-A and 12-B), applicable to income received from 1 January 2008.
- The Tax Procedures Code (Livre de procédures fiscales, LPF), published with the CGI. Its articles 29 to 39 set the employer’s reporting obligations and the related penalties. Its articles 410 to 421 govern the deduction of the tax by the employer, payment deadlines and fines.
- Order No. 99-0892/MF-SG of 18 May 1999 on the deduction from the tax base of bonuses and allowances paid in addition to salary. It lists the exempt bonuses and allowances, with their conditions.
- Order No. 99-0894/MFC-SG of 18 May 1999 implementing articles 7 b and 8 of the CGI and setting the taxable value of benefits in kind. It counts benefits in kind at 50% of their value and caps the deduction for executives’ office expenses (60,000 or 80,000 XOF a month) and for the expatriation allowance of expatriate managers (15%).
Decree No. 2015-363/P-RM of 19 May 2015 setting the guaranteed minimum wage completes this framework: its article 2 exempts the minimum wage (SMIG) from ITS. Two social protection texts also apply to the same payslip. The Social Security Code (Law No. 99-041 of 12 August 1999, as amended) governs the pension contribution, the only one the CGI allows to be deducted (article 7). Decree No. 10-578/P-RM of 26 October 2010 sets the employee’s AMO health insurance contribution at 3.06%.
The most common mistake
Looking for the ITS rules in the Labour Code. The Labour Code sets the salary and its components; the tax on it falls under tax law. Another mistake: stopping at the CGI. The exemptions for bonuses and the value of benefits in kind are not in the Code itself, but in the two 1999 orders.
The CGI says how much. The orders say on what. The LPF says when, and what lateness costs.
2. What exactly are we talking about?
Take Moussa, a storekeeper at Sahel Logistique. His contract provides 165,000 XOF a month. He will not receive all of it: part goes to the INPS, part goes to the tax authority. That second part is ITS.
ITS is the employee’s income tax. It applies to every sum paid in return for work: salary, bonuses, commissions, gratuities, tips, whatever they are called (General Tax Code, article 1). Pensions and life annuities are also subject to it (article 2).
Who pays, who withholds
The tax is owed by the employee. But the employer calculates it, withholds it from the payslip and pays it over to the Treasury. This is withholding at source: the tax is taken before the salary reaches the employee (Tax Procedures Code, articles 410 and 413).
Why this system? It gives the State a monthly flow of revenue and spares the employee a large tax bill at the end of the year.
The calculation in five steps
- Isolate the taxable part of gross pay.
- Deduct the pension contribution and convert the result to an annual figure.
- Apply the progressive tax scale.
- Deduct the family reduction.
- Deduct the two-point reduction, then divide by 12.
The most common mistake
Many employers think ITS is “the employee’s business”. It is not. The Tax Procedures Code penalises the employer who fails to withhold, withholds too little or pays late. The employee bears the tax; you answer for the withholding.
ITS is the employee’s tax. Withholding it is the employer’s responsibility.
What you need to do
- Appoint the person who calculates ITS each month, and the person who checks it.
- Give each employee a monthly statement showing gross pay and the tax withheld (Tax Procedures Code, article 32).
3. Step 1: what goes into the tax base, and what stays out
Fatoumata runs the warehouse. Her October payslip shows a base salary of 400,000 XOF, a 100,000 XOF performance bonus and a 30,000 XOF transport allowance. Total: 530,000 XOF. Not all of it is taxable.
The principle is simple: everything that pays for work is taxable, including overtime, performance or profit-related bonuses and benefits in kind. Only sums that reimburse expenses, and those that a text expressly exempts, escape the tax (Order No. 99-0892/MF-SG of 18 May 1999, articles 1 to 5).
Exemptions, and their conditions
The 1999 order lists the bonuses and allowances that are not taxable. Each comes with a condition. If the condition is not met, the exemption falls away.
| Item | Condition for the exemption |
|---|---|
| Transport allowance | The employee does not use company transport, and the amount does not exceed 10% of the base salary |
| Cash and stock handling allowance | Employee who handles funds or manages stock, with personal liability; 10% of the base salary at most |
| Travel allowance | Actual travel, justified by the job, amount in line with the expense |
| Special working conditions bonus | Work underground, at height, in dust or mud, with pneumatic tools |
| Dismissal or retirement payment | Up to the amounts set by the Labour Code |
| Family allowances | Allowances of a social nature |
For Fatoumata, the transport allowance (30,000 XOF) stays below 10% of her base salary, i.e. 40,000 XOF. It comes out of the base, provided she does not already use company transport. Her taxable gross is therefore 500,000 XOF. For details, see our articles on the transport allowance and on the taxation of severance payments.
Benefits in kind count for half
Housing, a vehicle with fuel, water and electricity paid by the employer: these are benefits in kind. They are added to the base at 50% of their actual value (Order No. 99-0894/MFC-SG of 18 May 1999, article 4). See also our article on benefits in kind.
Example. Sahel Logistique houses its depot manager in a house whose actual rent is 120,000 XOF a month.
Value of the benefit: 120,000 XOF
Taxable portion: 120,000 × 50% = 60,000 XOF
Amount added to the month’s taxable gross: 60,000 XOF
The most common mistake
Renaming a bonus an “allowance” does not make it exempt. An 80,000 XOF “transport allowance” on a 400,000 XOF base salary exceeds the 10% cap: the condition is no longer met, and the tax authority can add the allowance back into the base.
Another trap: the employer who bears the ITS to guarantee a net salary. The 1999 order lists personal taxes paid by the employer among benefits in kind. They become taxable themselves.
It is not the name of the bonus that exempts it, but the condition it meets.
What you need to do
- Classify every bonus and allowance on the pay grid as taxable or exempt, with the text that grounds the exemption.
- Check the 10% caps (transport, cash handling) every month.
- Add benefits in kind to the base at 50% of their value.
4. Step 2: from taxable gross to net taxable income
Two operations separate taxable gross from the figure to which the scale applies: a deduction, then a conversion to an annual figure.
The only deductible contribution: the pension
The General Tax Code allows pension contributions withheld by the employer to be deducted, up to 4% of gross salary (General Tax Code, article 7). The employee share of the INPS pension contribution, applied in payroll at 3.6%, stays below this cap: it is deducted in full.
The compulsory health insurance contribution (AMO, 3.06% paid by the employee) is not a pension contribution. Article 7 does not cover it. Some payroll software deducts it all the same: have your tax adviser check this setting.
Round down, then annualise
The month’s net taxable income is rounded down to the nearest thousand francs (Tax Procedures Code, article 410). The scale, however, is annual: multiply this income by 12 before applying it.
Why annualise? The scale is designed for a year’s income. Applied as it stands to a monthly salary, it would put almost everyone in the 0% bracket.
Example. Moussa’s net taxable income.
Monthly taxable gross: 165,000 XOF
INPS pension contribution: 165,000 × 3.6% = 5,940 XOF
Monthly net income: 165,000 − 5,940 = 159,060 XOF
Rounded down to the thousand: 159,000 XOF
Annual net taxable income: 159,000 × 12 = 1,908,000 XOF
What you need to do
- Set the pension deduction at 3.6% and check that it never exceeds 4% of gross pay.
- Round the monthly base down to the thousand before multiplying it by 12.
5. Step 3: the scale, bracket by bracket
The ITS scale has seven brackets, from 0% to 37%. It has applied since 1 July 2015 (General Tax Code, article 10).
| Annual net taxable income bracket (XOF) | Rate |
|---|---|
| 0 to 330,000 | 0% |
| 330,001 to 578,400 | 5% |
| 578,401 to 1,176,400 | 12% |
| 1,176,401 to 1,789,733 | 18% |
| 1,789,734 to 2,384,195 | 26% |
| 2,384,196 to 3,494,130 | 31% |
| Above 3,494,130 | 37% |
Each rate applies only to its own bracket
A progressive scale cuts income into brackets. Each bracket is taxed at its own rate. The highest rate reached applies only to the part of income above that bracket’s threshold.
Example. Moussa’s gross tax, on 1,908,000 XOF.
From 0 to 330,000: 330,000 × 0% = 0 XOF
From 330,001 to 578,400: 248,400 × 5% = 12,420 XOF
From 578,401 to 1,176,400: 598,000 × 12% = 71,760 XOF
From 1,176,401 to 1,789,733: 613,333 × 18% = 110,400 XOF
From 1,789,734 to 1,908,000: 118,267 × 26% = 30,749 XOF
Annual gross tax: 0 + 12,420 + 71,760 + 110,400 + 30,749 = 225,329 XOF
The most common mistake
Applying 26% to all of Moussa’s income would give 496,080 XOF of gross tax, more than twice the correct amount. A pay rise that moves an employee into a higher bracket never lowers net pay: only the part above the threshold bears the higher rate.
You do not change rate, you change bracket. Only the franc above pays the rate above.
What you need to do
- Calculate the tax bracket by bracket, never by applying a single rate to the whole income.
- Check once a year that the payroll software uses the seven thresholds of article 10.
6. Step 4: family reduces the tax, not the income
Fatoumata is married with three dependent children. Sahel Logistique must take this into account, but by a precise method.
The family reduction is a percentage deducted from gross tax (General Tax Code, article 11).
| Employee’s situation | Reduction of gross tax |
|---|---|
| Single, divorced or widowed, no dependent child | 0% |
| Married | 10% |
| Per dependent child, up to and including the tenth | 2.5% |
| Disabled adult child | 10% |
If both spouses are employees, each receives the 10%. They may share the reduction for the children between them, without increasing the total (article 11).
Who counts as a dependent child
Dependent children, provided they have no income of their own, are: minor children, children under 25 who are studying or doing military service, disabled children, and children taken in and fully supported by the employee. Adopted children count up to a limit of four, except for full adoption and adopted orphans. The situation taken into account is the one on 1 January of the year (article 12).
The family quotient trap
Some online guides talk about “tax shares”: income would be divided by a number of shares before the scale is applied. That is the French method, used in other countries too. Malian law does not provide for it: family reduces the tax calculated, it does not divide the income.
Example. Fatoumata, married, three dependent children.
Monthly taxable gross: 500,000 XOF
INPS pension contribution: 500,000 × 3.6% = 18,000 XOF
Monthly net income, rounded: 500,000 − 18,000 = 482,000 XOF
Annual net taxable income: 482,000 × 12 = 5,784,000 XOF
Annual gross tax: 12,420 + 71,760 + 110,400 + 154,560 + 344,080 + 847,252 = 1,540,472 XOF
Reduction rate: 10% + 3 × 2.5% = 17.5%
Reduction: 1,540,472 × 17.5% = 269,583 XOF
Tax after family reduction: 1,540,472 − 269,583 = 1,270,889 XOF
What a forgotten family costs
If payroll ignores Fatoumata’s situation, she overpays 269,583 XOF over the year, about 22,465 XOF a month. The day she notices, it is the employer she comes to see.
Family does not divide the income: it reduces the tax.
What you need to do
- Ask every January for proof of family situation: marriage certificate, birth certificates, school certificate for children over 18.
- Update each employee’s situation in the payroll software as at 1 January.
7. Step 5: the two points that protect low wages
The last step, often forgotten. Since 1 January 2008, the tax calculated is reduced by two percentage points for the employee (General Tax Code, article 12-A).
Article 12-B works through the effective rate: tax after family reduction, divided by annual taxable income. Two points are taken off this rate, which is then applied to the income. In practice, this means deducting 2% of annual taxable income from the tax, without going below zero.
Why this rule? It relieves low wages first: for them, two points represent a large share of the tax.
Example. Moussa, single.
Annual gross tax: 225,329 XOF (no family reduction)
Effective rate: 225,329 ÷ 1,908,000, about 11.81%, brought down to about 9.81%
Two points: 1,908,000 × 2% = 38,160 XOF
Annual ITS due: 225,329 − 38,160 = 187,169 XOF
Monthly ITS: 187,169 ÷ 12 = 15,597 XOF
Example. Fatoumata, married, three children.
Tax after family reduction: 1,270,889 XOF
Two points: 5,784,000 × 2% = 115,680 XOF
Annual ITS due: 1,270,889 − 115,680 = 1,155,209 XOF
Monthly ITS: 1,155,209 ÷ 12 = 96,267 XOF
| Employee | Monthly taxable gross (XOF) | Monthly ITS (XOF) |
|---|---|---|
| Moussa, single | 165,000 | 15,597 |
| Fatoumata, married, three children | 500,000 | 96,267 |
| Fatoumata, if her family is forgotten | 500,000 | 118,733 |
The minimum wage is not taxed
Decree No. 2015-363/P-RM of 19 May 2015 sets the minimum wage (SMIG) at 40,000 XOF a month since 2016 and exempts it from ITS (article 2). The two points produce this result on their own anyway. See our article on the amount of the SMIG.
Example. An employee paid the minimum wage.
Monthly net income: 40,000 − (40,000 × 3.6%) = 38,560 XOF, rounded to 38,000 XOF
Annual net taxable income: 38,000 × 12 = 456,000 XOF
Gross tax: (456,000 − 330,000) × 5% = 6,300 XOF
Two points: 456,000 × 2% = 9,120 XOF
ITS due: 6,300 − 9,120 is negative, so 0 XOF
For an employee with no family reduction, no ITS is due as long as monthly net taxable income, after rounding, does not exceed 45,000 XOF.
Two points off the rate means 2% of income off the tax.
What you need to do
- Check that the software applies the two-point reduction after the family reduction.
- Make sure no employee paid the minimum wage has ITS withheld.
8. Withhold, declare, pay: the employer’s calendar
Sahel Logistique pays October salaries on 31 October. The ITS withheld that day already belongs to the Treasury: the company only holds it until payment.
| Deadline | Obligation | Text (LPF) |
|---|---|---|
| Each payroll | Withhold ITS on the sums paid | Article 411 |
| By the 15th of the following month | Declare and pay the month’s withholdings | Article 414 |
| 15 April, July, October and January | Quarterly payment, if withholdings do not exceed 5,000 XOF a month | Article 415 |
| Each month | Give the employee a statement: gross pay and tax withheld | Article 32 |
| In January | File the annual summary statement of salaries | Article 29 |
| In February | Give each employee the annual statement of salaries and withholdings | Article 32 |
October’s withholdings must be declared and paid by 15 November, or the next working day if the 15th falls on a non-working day (Tax Procedures Code, article 414).
Payroll records showing the withholdings must be kept until the end of the third year following the year of withholding (Tax Procedures Code, article 31). On organising payroll, see our article Payroll in Mali: pay on time, in the right place, and keep the proof.
The employee with two employers
Each employer withholds ITS on what it pays. An employee paid by several employers must file an annual return personally (Tax Procedures Code, article 30). The salaries are then added up, and the withholdings already made are set against the final tax (article 35).
What you need to do
- Put the 15th of each month in the payroll calendar as the deadline for declaring and paying.
- Prepare the annual summary statement in December, ready to file in January.
- Archive payslips and withholding statements at least until the end of the third following year.
9. What a mistake costs
The Tax Procedures Code targets the employer, not the employee. An employer who has not withheld the tax faces a fine equal to the amount not withheld (Tax Procedures Code, article 419).
| Failure | Penalty | Text (LPF) |
|---|---|---|
| Tax not withheld | Fine equal to the withholdings not made | Article 419 |
| Tax withheld understated or inaccurate | Fine equal to twice the withholdings not paid | Article 420 |
| Late payment | 2% per month of delay, capped at 20%; any month started counts in full | Article 421 |
| Withholdings not declared on time | Penalty of double the tax on top | Article 36 |
Example. Sahel Logistique withholds 1,200,000 XOF of ITS on the September payroll. It had to pay it by 15 October. It pays on 10 December.
First month of delay: 16 October to 15 November
Second month of delay, started: 16 November to 10 December
Surcharge: 1,200,000 × 2% × 2 = 48,000 XOF
Had Sahel Logistique failed to withhold Moussa’s ITS for the whole year, the fine would reach 187,169 XOF, the amount of tax not withheld. These fines are not deductible from taxable profit (General Tax Code, article 54). See also our article on financial penalties.
The most common mistake
Believing that a short delay has no consequence. Delay is counted by month started: a single day after the 15th already costs 2%.
One day late costs a month’s penalty.
What you need to do
- Pay the withholdings by the 15th, even when cash is tight: the ITS withheld does not belong to the company.
- Reconcile every month the total ITS on the payslips with the amount declared.
A closer look: is the 2015 scale still in force?
Yes. The scale in article 10 comes from Law No. 2016-10 and has applied since 1 July 2015. Law No. 2023-060 of 22 December 2023, the 2024 Finance Act, does not touch ITS, and we have not identified any later change to the scale.
Some online simulators nonetheless show a top rate of 40% or “tax shares”. They draw on other countries’ laws or on older versions of the text. Before changing a payroll setting, check the General Tax Code published by the Directorate General of Taxes.
Key takeaways in 6 points
- Subject every sum that pays for work to ITS, and exempt a bonus only if it meets the condition set by the 1999 order.
- Add benefits in kind to the base at half their value.
- Deduct only the pension contribution (4% of gross at most), round down to the thousand, then multiply by 12.
- Apply the scale bracket by bracket, then the family reduction on the tax, never on the income.
- Deduct 2% of annual taxable income from the tax, then divide by 12 to get the monthly withholding.
- Declare and pay by the 15th of the following month: each month of delay started costs 2%.