Congo, Democratic Republic of the
Value-added tax (VAT)
The VAT base includes whatever sums, amounts, goods, or services that are received as compensation for an operation; this involves subsidies as well as any other costs, taxes, rights, or any related levies, whatever their nature, excluding the VAT itself. For imports, VAT is normally charged on the customs value of the goods concerned, plus the customs duty and import-related expenses. There are two rates:
- A standard rate of 16%.
- A rate of 0% on exports and assimilated transactions.
The main exempted activities include some banking and financial services, education, medical services, charitable and social activities, and transactions that are subject to a specific taxation.
The import of wheat flour, corn, and corn flour; the local sale of bread, wheat flour, corn, and corn flour; the domestic sales of animals; and the import and sale of inputs for agriculture are also VAT-exempt.
Application to non-residents
A non-resident having no PE in the Democratic Republic of the Congo but who raises an invoice on a DRC resident is required to appoint a VAT representative who is based in the Democratic Republic of the Congo and who will be accountable for the payments and collections that rest with the non-resident supplier. Failing to appoint a representative will result in the authorities holding the DRC resident customer liable for the payment of VAT that is due by application of a reverse-charge mechanism.
Mechanisms of VAT
An entrepreneur is entitled to offset VAT paid on purchase of goods and services used for business purposes against VAT charged on sales of goods and/or services. Businesses exempted from VAT on part of their sales are, in principle, entitled to deduct VAT paid on a pro rata basis (i.e. the ratio between the turnover related to VATable activities and the global turnover).
No VAT credit is allowed for expenditures not necessary for business purposes, nor on some specific expenditure (e.g. except in some specific circumstances, fuel, accommodation or entertainment for directors and employees, gifts, company cars).
VAT returns must be filed by the 15th day of each month in respect of transactions made the previous month. The net amount of VAT payable must be remitted to the tax authorities together with the return. If VAT paid exceeds VAT charged, the resulting VAT credit can be carried forward.
Refund of VAT can only be requested in some very specific circumstances.
Customs duty on imports
Customs duty on imports is calculated on the cost, insurance, and freight (CIF) value of the goods. The customs tariff on imports is the following:
|Example of goods||Customs tariff rate (%)|
|Material for transport of merchandise|
|Petrol, diesel, kerosene|
Imported goods are also subject to the following levies at the time of border crossing:
- VAT on imports (wheat flour, corn, and corn flour are exempt from VAT).
- For certain goods, consumption and excise duties.
- Various para-fiscal levies.
Customs regulation also allows for certain suspensive rates, such as temporary admission.
Customs duty on exports
Customs duty on exports applies to certain categories of products produced locally, which are:
- Crude coffee.
- Electric current.
- Mineral products and their concentrates.
- Mineral oils.
- Scrap metals.
The bond value on exports of the said goods is fixed either by ministerial decree upon suggestion of the customs administration, or in the absence of a decree, by reference to the value of the goods when they leave the Democratic Republic of the Congo.
The rates of customs duties on exports are the following:
|Example of goods||Customs duty rate (%)|
|Diamond (small-scale mining)||1.5|
|Gold (small-scale mining)|
|Diamond (industrial mining)||3.0|
|Gold (industrial mining)|
|Minerals (copper, nickel, lead, etc.)||5.0|
Consumption and excise duties
The following goods are affected by consumption and excise duties:
- Alcohol and alcoholic drinks.
- Carbonated drinks.
- Mineral oils (petrol, oil, jet A1, diesel, etc.).
- Lubricating oil and lubricant.
- Liquid for hydraulic brakes and other liquids for hydraulic transmissions.
- Cosmetics and make-up products.
- Hair preparations.
- Soaps, organic surface-active agents, lubricating preparations, polish, and creams for footwear.
- Plastic articles.
- Rubber articles.
- Telecommunications industry’s products, etc.
Applicability and tax base
Consumption and excise duty is applicable to:
- the production in the Democratic Republic of the Congo of consumer goods subject to duty and
- the import of these products to the Democratic Republic of the Congo.
Consumption and excise duties accrue on imports, as do customs duties and VAT.
On imports, the tax base on consumption and excise duties is the raised CIF value of the customs duties, except for mineral oils, for which the tax base is the average fiscal threshold price.
The rates of consumption and excise duties vary from 5% to 80%.
Various para-fiscal taxes shall be collected at the time of the import and/or export of goods in the Democratic Republic of the Congo.
The main applicable levies include the following:
- Administrative payment: 2% of the CIF value.
- Congolese Control Office (OCC) payments: 1.5% of the CIF value, plus various other administrative charges (Laboratory and analysis charges: 30 United States dollars [USD] maximum per test).
- Office de Gestion du Fret Maritime (OGEFREM) payment: 0.58% of the CIF value.
- Funds for the Promotion of Industry (FPI) charge: 2% of the CIF value.
- Cost of inspection from the Bureau of Inspection, Valuation, Assessment, and Control (BIVAC): 1.5% of the free on board (FOB) value.
Property tax (IF)
IF is applicable to constructions (i.e. villas, apartments, and other buildings) and land located in the Democratic Republic of the Congo.
The person subject to this tax is the owner (bearer of title deed, holding, long leasehold, mining) of the construction on 1 January of the tax year.
The following types of property are exempt from IF:
- The public administrations of states, provinces, and towns, and public businesses disposing of no other resources than those coming from budgetary grants.
- Licensed religious, scientific, or philanthropic institutions.
- Private non-profit-making organisations involved in religious, scientific, or philanthropic works and having obtained civil personality.
- Foreign states as far as embassy offices, consulates, or lodgings of diplomats or consuls are concerned (upon condition of reciprocity).
Some constructions and land are, notwithstanding, exempt from IF, notably depending on the status of their owner. From this perspective, the following are exempt from the property tax on goods:
- Constructions and land allocated by the owner exclusively for agriculture or farming, including constructions serving to prepare agricultural or farming products, on the condition that at least 80% of these derive from the farming of the property owner concerned.
- Constructions and land allocated by the owner for non-profit purposes:
- for the execution of a public service, teaching, scientific research, the setting up of hospitals, hospices, clinics, free clinics, or other similar charitable institutions
- for chambers of commerce having obtained civil personality, or
- for social activity of mutual companies and professional unions (syndicates) having obtained civil personality, with the exception of locales providing accommodation, a public house, or any business.
The tax rates vary according to the nature of the goods (villas, buildings of more than one floor, flats, and other buildings) and locality ranks.
For villas, rates are fixed per square metre of area (between USD 0.3 and USD 1.5), while for other taxable items the contribution is determined on an inclusive basis (by floor, by flat, by unused land - in Kinshasa, the rate for one floor is USD 75).
The transfer of a building in the Democratic Republic of the Congo gives rise to the payment, by the purchaser, of a registration duty amounting to 3% of the building's value for a normal sale.
There are no stamp taxes in the Democratic Republic of the Congo.
The tax on wages is withheld at source by the employer.
Professional salaries tax (Impôt professionnel sur les remunerations or IPR)
Any remuneration paid by a third party, whether public or private, provided it is not part of a service contract, and remuneration paid to executive shareholders, other than those involved in joint stock companies, are subject to payroll taxes and social contributions.
These remunerations includes salaries, wages, fees, benefits that do not represent reimbursement of professional expenses, gratuities, bonuses, and all other payments, fixed or variable, whatever their qualification.
All benefits, except for housing, transport, family allowances, and medical expenses, to the extent that they are legal or reasonable, are added to remunerations.
The taxable basis of the IPR for expatriate employees must not be lesser than the equivalent minimum wage applied in their home country.
The IPR is computed by applying a progressive tax scale. The overall tax shall not exceed, in any case, 30% of the taxable income.
It should be noted that there are other applicable rates depending on the activity or the nature of the compensations paid as remuneration:
- Proportional (10%): Applicable on severance pay.
- Proportional (15%): Applicable on income of casual or temporary workers.
A rebate of 2% applies on the tax amount in terms of the number of the dependants.
Exceptional salaries tax (Impôt exceptionnel sur les rémunérations or IER)
Employers of expatriate employees are subject to a tax of 25% on the expatriates’ remuneration (10% for mining companies). This amount is not deductible for corporate tax purposes, except for mining companies. This tax was established to discourage employers from hiring expatriate staff. Expatriate staff are comprised of employees from countries other than those bordering the Democratic Republic of the Congo.
Filing and payment obligations for IER are identical as for IPR. Employers are required to file a return for payroll taxes on the 15th day of the month following the payment of the salaries. An annual payroll tax return also needs to be submitted on the 15th day of the year following the year of the payment of the salaries.
Failure or default or delay in paying due taxes gives rise to:
- Tax penalties: 20% to 40% of the tax amount due.
- Tax interest: 2% per month of the tax amount due for late payment.
Social and employment contributions
Social and employment contributions are as follows:
- National insurance fund (Institut National de Sécurité Sociale or INSS): 5% for the employees' share (withheld at source by the employer) and 13% for the employer's share.
- National office for professional training (Institut National de Préparation Professionnelle or INPP): INPP contribution is paid only by the employer at:
- 3% for state-owned companies and private companies with up to 50 employees.
- 2% for private companies with 51 to 300 employees.
- 1% for private companies with over 300 employees.
- National office of employment (Office National de l’Emploi or ONEM): ONEM contribution is paid only by the employer at 0.2%.
The deadline to file and pay INSS, INPP, and ONEM return is the 15th day of the month following the month where the salary has been paid. In this regard, a single return is filed.
Business tax on pension capital
The Finance Act 2016 has introduced a business tax of 10% based on pension capital. This tax applies to companies that implement a supplementary pension scheme in favour of employees of a certain category. The tax is triggered by the actual payment of the pension to the retired person and not at the time of their constitution (administrative position).