Payroll costs
Non-taxable allowances in Mali: what escapes income tax and contributions, and on what conditions
Seven a.m., Kati construction site: the masons climb the third-floor scaffolding, the labourers mix concrete in the dust. At month-end, each one receives a site bonus, a transport allowance and, for some, a meal allowance. The accountant has filed them all as "non-taxable". At the first audit, the tax authority and the INPS will not read the labels: they will check the conditions, one by one.
The company name used in this article is fictitious and serves only as an example.
Our running case: Bâtir Sahel SARL, a construction company in Bamako with 60 employees and annual turnover of XOF 900 million. It pays several allowances and wants to know which ones truly escape tax and contributions.
1. The legal framework: which texts decide that an allowance is not taxable?
No single text answers the question. The tax on wages and social security contributions each have their own rules, and they do not match.
- General Tax Code (CGI), articles 1 to 8. They create the tax on wages and salaries (ITS) and set the principle: everything paid to the employee is taxable. General Tax Code, article 3 lists the sums that may be exempt; article 7 allows job-related expenses to be deducted.
- Order No. 99-0892/MF-SG of 18 May 1999. It sets out the detailed list of bonuses and allowances exempt from ITS, with their conditions and caps (article 5).
- Order No. 99-0894/MFC-SG of 18 May 1999. It sets the caps on executives' job-related expenses, the expatriation allowance and the taxable value of benefits in kind (articles 2 to 4).
- Social Security Code. Social Security Code, article 187 defines the INPS contribution base: all remuneration, except reimbursements of expenses.
- Decree No. 10-601/P-RM of 18 November 2010, article 5. It defines the base for compulsory health insurance (AMO): basic salary plus taxable bonuses and allowances.
- Labour Code, articles L.53 to L.55. They set the statutory amount of severance and retirement payments, which caps their exemption.
Other texts complete the framework. The CGI also creates three taxes paid by the employer on the payroll: the flat-rate employer contribution (article 160), the vocational training tax (article 184) and the youth employment tax (article 185-B). Finally, collective agreements often create bonuses; on their own, they cannot exempt them from tax.
The most common mistake
Believing that a "non-taxable" allowance escapes everything. An ITS exemption applies to ITS only. INPS contributions follow another, narrower test, and employer payroll taxes a third.
Tax has its list, the INPS has its test. An allowance can pass one and fail the other.
2. What exactly are we talking about?
At Bâtir Sahel, a mason's payslip shows six lines above the net pay. For each one, the accountant must decide whether it enters the calculation of tax and contributions.
Four words to master
- ITS (tax on wages and salaries) is the tax the employer withholds from pay and remits to the State.
- The base is the amount to which the tax or contribution rate is applied.
- An exemption is a written rule that removes a sum from the base, on specific conditions.
- A reimbursement of expenses is a sum that offsets a cost the employee incurred for the job. It is not salary.
The starting rule: everything is taxable
General Tax Code, article 1, subjects to ITS all sums paid to the employee in connection with work, "whatever their name and form". Exemption is the exception. It exists only where a text provides for it, and only on its conditions.
Why so strict? Without it, renaming a pay rise an "allowance" would be enough to drain tax and pensions. The rule protects both State revenue and the employee's future rights, because a sum exempt from contributions does not count towards their pension.
The most common mistake
Thinking that the line's label decides. A "transport allowance" paid to an employee already carried by the company bus remains salary. The auditor looks at the actual expense, not the word.
It is not the name of the line that exempts, it is the expense it covers.
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3. Business expenses: exempt if the expense is real
Bâtir Sahel sends a team to a site in Sikasso for three days. It also pays a monthly transport allowance to workers who live far away. Both sums can be exempt from ITS, but not on the same conditions.
Order No. 99-0892, article 5 exempts several allowances linked to the nature of the job. Here they are, with their conditions.
| Allowance | Condition for exemption | Cap |
|---|---|---|
| Transport | Distance between home and work; the employee is not carried by the company | 10% of basic salary |
| Travel | Actual travel, justified by the job; amount in line with the expenses | The expenses incurred |
| Personal vehicle | Regular use of a personal means of transport for the job | No figure set |
| Equipment | Uniforms, tools or equipment not supplied free by the employer | No figure set |
| Relocation | Required by the employer for business needs | No figure set |
The cap that makes the difference
The transport allowance is the only one with a figure cap. Above 10% of basic salary, the excess becomes salary again. Details are in our article on the transport allowance.
Example. Moussa, a mason at Bâtir Sahel, has a basic salary of XOF 150,000. He receives XOF 20,000 in transport allowance and does not use the company bus.
Exempt cap: 150,000 × 10% = XOF 15,000
Taxable portion: 20,000 − 15,000 = XOF 5,000
If Moussa took the company bus, the full XOF 20,000 would be taxable.
Travel: a trip, not a flat rate
The travel allowance requires actual travel. A monthly flat rate paid to an employee who never leaves the office is not one. Our article on the travel allowance lists the supporting documents to keep.
Example. The Sikasso team receives XOF 25,000 per day for three days, for lodging and meals.
Amount paid: 25,000 × 3 = XOF 75,000 per person
Exempt from ITS if the travel order and dates prove the trip, and if the amount stays in line with the expenses.
The meal allowance
The meal allowance does not appear in the order's list. It escapes ITS only if it reimburses a meal the job requires, because Order No. 99-0892, article 1, excludes from the base sums that are "in the nature of a reimbursement of expenses". See our article on the meal allowance.
What a mistake costs
A reassessment is the authority's decision to put back into the base a sum wrongly exempted, with the tax or contributions that should have been paid.
Example. Bâtir Sahel pays a XOF 30,000 "transport allowance" to 40 workers who all take the site bus. Nothing can be exempted.
Amount added back per month: 40 × 30,000 = XOF 1,200,000
Amount added back over one year: 1,200,000 × 12 = XOF 14,400,000
Employer INPS and AMO contributions, at the lowest rate (8% + 3.5% + 1% + 3.4% + 2% = 17.9%): 14,400,000 × 17.9% = XOF 2,577,600
Employee share not withheld (3.6% + 3.06% = 6.66%): 14,400,000 × 6.66% = XOF 959,040
Total contributions to regularise: 2,577,600 + 959,040 = XOF 3,536,640, before the ITS back tax and late-payment surcharges.
The employer alone pays the employee share it failed to withhold: Social Security Code, article 181, makes it liable for both shares. For the AMO share, late payment also costs 2% per month (Decree No. 10-601/P-RM, article 26).
An expense allowance requires an expense. Without one, it is salary.
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4. Job-related bonuses: site work, cash handling, management, expatriation
On the Kati site, workers operate at height and in dust. At head office, a cashier handles funds. The managing director receives an entertainment allowance, and an expatriate engineer an expatriation allowance. Each of these bonuses has its own condition.
| Bonus | Beneficiary | Exempt cap |
|---|---|---|
| Special working conditions | Work underground, at height, in dust or mud, with pneumatic tools | No figure set |
| Cash and stock handling | Employee who handles funds or manages stock, with real personal financial liability | 10% of basic salary |
| Job-related expenses (entertainment) | Salaried executive | XOF 80,000 per month if turnover exceeds 250 million; XOF 60,000 otherwise |
| Expatriation | Expatriate manager working in Mali under contract, present for ten years at most | 15% of earnings |
The caps for executives and expatriates come from Order No. 99-0894, article 2 and its article 3. Above them, the excess is "additional remuneration" and enters the ITS base.
Example. Bâtir Sahel's cashier has a basic salary of XOF 200,000 and a cash allowance of XOF 25,000.
Exempt cap: 200,000 × 10% = XOF 20,000
Taxable portion: 25,000 − 20,000 = XOF 5,000
Example. The managing director receives XOF 100,000 per month in entertainment allowance. Bâtir Sahel's turnover (900 million) exceeds 250 million.
Exempt cap: XOF 80,000
Taxable portion: 100,000 − 80,000 = XOF 20,000 per month
Example. The expatriate engineer, who arrived three years ago, earns XOF 1,500,000, excluding family allowances, job-related expenses and benefits in kind.
Deductible amount for expatriation: 1,500,000 × 15% = XOF 225,000
The most common mistake
Paying the site bonus to all staff, including the head-office accountant. The bonus is exempt only if the employee actually works in the conditions described. Paid in an office, it becomes a salary top-up again.
The bonus follows the job, not the organisation chart.
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5. Benefits in kind: half for tax, in full for the rest
Bâtir Sahel houses its managing director in a villa rented at XOF 300,000 per month. It is not money paid, but it is income. A benefit in kind is a good or service the employer provides instead of paying cash: housing, water, electricity, telephone, domestic staff, fuel.
For ITS, Order No. 99-0894, article 4 counts benefits in kind at 50% of their real value. For the other levies, no such reduction is provided.
| Levy | Value of the benefit counted |
|---|---|
| ITS | 50% of real value (Order No. 99-0894, article 4) |
| INPS contributions | Included in the base: Social Security Code, article 187, expressly includes benefits in kind |
| Flat-rate contribution, training tax, youth employment tax | Real value (CGI, articles 160, 184 and 185-B) |
Example. Managing director's housing: XOF 300,000 per month.
Amount added to the ITS base: 300,000 × 50% = XOF 150,000
Base for employer payroll taxes: XOF 300,000
Flat-rate contribution: 300,000 × 3.5% = XOF 10,500
Vocational training tax: 300,000 × 2% = XOF 6,000
Youth employment tax: 300,000 × 2% = XOF 6,000
Total employer payroll taxes on this housing: 10,500 + 6,000 + 6,000 = XOF 22,500 per month
The most common mistake
Forgetting the benefit because it does not go through payroll. Housing, fuel or a guard paid directly by the company must appear on the payslip. If the employee repays part of it, only the difference between the taxable value and the deduction is added to the base. See our article on benefits in kind.
A benefit in kind is not free: it is half taxed for ITS and fully taxed for payroll levies.
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6. Termination payments: exempt up to the statutory amount, no further
End of a site: Bâtir Sahel dismisses a team leader with eight years' service. To avoid a dispute, management offers XOF 500,000. Not all of this sum is exempt.
Severance pay is calculated on average monthly pay over the last twelve months: 20% per year for the first five years, 25% from the sixth to the tenth, 30% beyond (Labour Code, article L.53). The CGI, article 3, and Order No. 99-0892, article 5, exempt it from ITS "within the limit of the amounts set by the Labour Code". The retirement payment follows the same basis (Labour Code, article L.55).
Example. The team leader has eight years' service and average monthly pay of XOF 180,000.
First five years: 5 × 20% = 100%
Years six to eight: 3 × 25% = 75%
Statutory severance pay: 175% × 180,000 = XOF 315,000, exempt from ITS
Sum paid: XOF 500,000
Taxable portion: 500,000 − 315,000 = XOF 185,000
What remains taxable on departure
| Sum paid on departure | ITS |
|---|---|
| Severance pay (L.53) | Exempt up to the statutory amount |
| Retirement payment (L.55) | Exempt up to the statutory amount |
| Payment in lieu of notice | Taxable |
| Payment in lieu of paid leave | Taxable |
| Precarity payment at the end of a fixed-term contract (D.24-1) | Taxable |
| Long-service payment (L.54) | Not listed: treat as taxable |
Notice, paid leave and the precarity payment appear in no exemption list: they follow the general rule of CGI, article 1. The long-service payment, due to an employee who resigns after ten years, is not listed either; without a written position from the tax authority, treat it as taxable. The topic is covered in depth in our article on the taxation of severance pay.
The most common mistake
Exempting the whole final settlement. Only statutory severance or retirement pay is exempt, and only up to its statutory amount. A more generous contractual payment is taxable on the excess.
The law sets the exempt amount. Whatever you give on top, tax takes its share.
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7. Social benefits: what the INPS pays is not salary
A Bâtir Sahel worker was injured on site. He receives INPS benefits during his time off, and his family allowances continue. These sums are not taxable.
- Family allowances paid by the State and social security bodies (CGI, article 3, 1°).
- Annuities and temporary benefits paid to victims of work accidents (CGI, article 3, 5°).
- Family supplements paid by the employer, on one condition: all employees receive the same amount for the same family situation (CGI, article 3, 2°).
The most common mistake
Varying the family supplement by job or seniority. As soon as two employees in the same family situation do not receive the same sum, the condition fails and the supplement becomes taxable.
The family supplement is exempt if it is equal for all in the same situation.
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8. On the contributions side: one test only, reimbursement of expenses
Bâtir Sahel's accountant has applied the ITS exemptions correctly. One question remains: are the same sums subject to INPS contributions? The answer follows another text.
INPS contributions are based on all remuneration, "including benefits in kind and various allowances", with the sole exception of sums in the nature of a reimbursement of expenses (Social Security Code, article 187). The tax list does not apply. A site bonus exempt from ITS therefore remains subject to INPS contributions.
AMO follows a third rule. Decree No. 10-601/P-RM, article 5, calculates it on basic salary and "taxable" bonuses and allowances, excluding business expenses, reimbursements and family benefits. Read literally, this text removes ITS-exempt bonuses from the AMO base. See our article on the AMO contribution base.
| Sum | ITS | INPS | AMO |
|---|---|---|---|
| Documented business-trip expenses | Exempt | Excluded | Excluded |
| Transport (within the 10% cap) | Exempt | Subject, unless actual documented expenses | Excluded (reading of the decree) |
| Special-conditions bonus | Exempt | Subject | Excluded (reading of the decree) |
| Benefit in kind | 50% | Subject | To be confirmed with the INPS |
| Statutory severance pay | Exempt | To be confirmed with the INPS | Excluded (reading of the decree) |
| Family allowances | Exempt | Not subject (benefit) | Excluded |
The most common mistake
Copying the ITS column into the INPS return. Payroll settings must separate at least three bases: ITS, INPS and AMO. A single "non-taxable" box for all three leads to under-declared contributions.
For the INPS, one question only: does this sum reimburse an expense?
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A closer look: employer payroll taxes have no exemption list
Bâtir Sahel pays three taxes on its payroll: the flat-rate employer contribution, General Tax Code article 160 (3.5%), the vocational training tax (2%, article 184) and the youth employment tax (2%, article 185-B). Their base is the gross amount of "remuneration, salaries, wages, allowances", including the real value of benefits in kind.
These articles do not repeat the list of ITS exemptions. Do not assume that an allowance exempt from ITS is also exempt from these taxes, and have your tax office confirm how your allowances are treated. For the calculation of the tax itself, see our article on calculating ITS.
Key takeaways in 6 points
- Treat every sum paid to the employee as taxable, unless a precise text exempts it (CGI, article 1).
- Check the condition and cap of Order No. 99-0892 for each allowance: 10% of basic salary for transport and cash handling, actual expense for travel.
- Cap executives' job-related expenses at XOF 80,000 or 60,000 per month, and expatriation at 15% of earnings.
- Record benefits in kind on the payslip: 50% for ITS, real value for employer payroll taxes.
- Exempt severance or retirement pay only up to the statutory amount under article L.53, and tax notice, leave and precarity payments.
- Calculate INPS contributions on every bonus that does not reimburse an expense, even when exempt from ITS.