Payroll costs
Transportation Allowance
1. Definition
The transportation allowance is the amount paid to an employee due to the distance between their home and their workplace.
It does not compensate for an occasional business trip, but rather for a daily and ongoing burden: that of having to commute to work every day at the employee’s own expense.
2. Legal Basis
It is established by Decree No. 99-0892/MF-SG, which sets forth the procedures for deducting bonuses and allowances paid in addition to salary from the taxable base.
3. Who is eligible
It is granted to all employees, provided that the employee does not receive transportation provided by the company.
Two characteristics, to be considered together.
3.1 A General Allowance
It applies to all employees, regardless of category, position, or seniority. The commute affects everyone equally: both managers and workers must travel to work.
3.2 An Exclusion Condition
| The employee’s situation | Is the allowance payable? |
|---|---|
| The employee arranges their own commute | Yes |
| He uses transportation provided by the company | No |
The rationale behind this exclusion: we do not compensate twice for the same thing.
The company can address the commute in two ways: in kind, by arranging transportation, or in cash, by paying an allowance. These are two solutions to the same problem, and they cannot be combined.
An employee transported by the company incurs no travel expenses: the allowance would no longer serve a purpose.
4. Tax Treatment
It is tax-deductible up to 10% of the base salary.
| Note | Note |
|---|---|
| Nature of the tax benefit | A deduction from the taxable income base |
| Calculation basis | Base salary |
| The cap | 10% of this base |
Example
| Monthly base salary | Deduction cap (10%) |
|---|---|
| 150,000 CFA francs | 15,000 CFA francs |
| 300,000 CFA francs | 30,000 CFA francs |
| 500,000 CFA francs | 50,000 CFA francs |
The cap applies to the percentage, not the amount paid. The company remains free to pay compensation exceeding 10% of the base salary. However, beyond this threshold, the excess amount is no longer eligible for the deduction.
Why a percentage rather than a flat rate? The cap is based on the base salary, and thus on the employee’s job level. This mechanism avoids the need to set and revise a single amount for the entire workforce, while maintaining a limit that is proportional to each employee’s compensation.
5. What You Need to Be Able to Document
| Supporting documentation | |
|---|---|
| 1. | That the employee does not receive company-provided transportation |
| 2. | The base salary used to calculate the 10% cap |
| 3. | The amount paid, and how it compares to this cap |
Key Points in 5 Steps
- The transportation allowance compensates for the distance between the employee’s home and the workplace.
- It is established by Decree No. 99-0892/MF-SG, regarding the deduction from the taxable base of bonuses and allowances paid in addition to salary.
- It is granted to all employees, regardless of category.
- It is not applicable when the employee receives transportation provided by the company: transportation in kind and the allowance cannot be combined.
- It is deductible up to 10% of the base salary; any amount exceeding this limit is not eligible for the deduction.