Benin report - Institut Africain de la Gouvernance

CHAPTER FIVE: CORPORATE GOVERNANCE__________________________________________________________________________cases of commercial disputes. The CRM is of the view that a separateCommercial Court should be set up in Cotonou, with agencies in the othertowns.639. The deficiencies of Benin‟s legal framework and the fear of getting stuck incourt forces some businesspeople to settle their disputes by turning to thenetwork of family or traditional authorities deemed more reliable, faster andless corrupt than the „modern‟ networks.640. The CRM met the department of the newly established OPM. The body has abroad mandate that includes mediating between the government and theprivate sector. Recourse to the body is free of charge. It uses the procedures ofarbitration and reconciliation to negotiate with the two parties to a dispute. TheCRM noted that enterprises‟ use of the OPM will be meaningful in findingsolutions to disputes concerning the payment of suppliers by governmentservices and local authorities.641. The CCIB also recently set up an arbitration body (the arbitration, mediationand reconciliation centre), which could avert judicial red tape and delays forenterprises. Finally, there is a third arbitration body not mentioned bystakeholders and which seems quite remote from the concerns of citizens andcorporate executives. This is the Common Court of Justice and Arbitrationinstituted by OHADA.642. Fiscal obligation: weight and impact of taxes on enterprises. WithinWAEMU, only budgetary policy is in the hands of leaders to enable them toconduct their economic policy. This constraint is even greater for the state ofBenin, whose budget continues to depend mainly on taxes. In fact, althoughthe acceptable rate of tax in WAEMU is 17% (14% in Benin), commercialtaxes in Benin account for more than half of the tax revenue and about 50% ofthe state‟s revenue. The CRM also noted, wherever it had discussions withstakeholders, that: (i) the tax system in Benin is cumbersome and verycomplex for taxpayers; (ii) its administration suffers from arbitrary practicesby tax officers; and (iii) the tax system is the root cause of the corrupting ofcivil servants by taxpayers wishing to elude state control over a substantialpart of their income sources.643. Taxes constitute a heavy burden on the formal sector, which is still notconvinced of the fairness of the exercise. Thus, among the reproaches levelledby some stakeholders against the tax administration, the CRM notes thefollowing main points:The tax burden in Benin is the root cause of the expansion of the informalsector: whereas the informal sector pays SPT, the formal sector pays 38%tax on profits.An entrepreneur is obliged to pay tax in advance, even before startinghis/her business.220