Congo, Democratic Republic of the
Corporate - Income determinationLast reviewed - 31 December 2022
Taxable income consists of profits from any industrial, commercial, agricultural, or real estate operations entered into by a taxpayer in the Democratic Republic of the Congo, as well as any increases in the net assets as a result of such activities and any increases derived from capital gains, either realised or not, of any nature and origin.
Since adhesion of the Democratic Republic of the Congo into the Organisation for the Harmonisation of Business Law in Africa (OHADA) law treaty effective from 12 September 2012, or as from 1 January 2015 as far as accounting matters are involved, the inventory valuation methods permitted are as follows:
- The weighted average cost method.
- Last in first out (LIFO).
There is no specific tax regime applicable to capital gains in DRC Tax Law.
Capital gains are included in the corporate taxable basis of the local entity benefitting from the capital gain and, as such, subject to the 30% CIT.
However, new rules have been enacted by the updated Mining Code as regards capital gain realised by non-resident entities when selling shares. Indeed, capital gain recognised at the level of the legal entity that sold shares and is deemed to be of Congolese origin to the extent that the assets of the legal person whose shares were sold are located in the Democratic Republic of Congo. The tax is deducted at source by the assignee legal person who pays it according to the terms of payment of taxes due to the Treasury.
Local-sourced dividends received by a local company are subject to a 20% income tax rate under standard law. Of the gross dividends received by resident companies, 90% are excluded from the CIT base, provided that such dividends have been subject to the 20% WHT.
Local-sourced interest received by local companies is subject to the standard CIT regime.
The DRC Tax Law defines royalties as any kind of remuneration paid for the use, or for the concession, of a copyright on art works, scientific works, film works, brands, charts, any design or formula, or any secret process or recipe, as well as for the use of industrial, commercial, or scientific equipment and for intellectual property (IP) in any industrial, commercial, or scientific field.
The net amount of royalties is subject to WHT at the rate of 20%.
The tax base of royalties is calculated by deducting 30% from the royalties invoiced (i.e. the taxable basis will be 70% of the royalties invoiced).
If an income is considered as foreign-sourced, by application of the territoriality principle, it is not taxable in the Democratic Republic of the Congo.