Congo, Democratic Republic of the
Finance Law for 2022
The Finance Law for 2022 entered into force as of 1st January 2022.
The main changes enacted are as follows:
Value-added tax (VAT)
- Addition of a new exemption to the list of exempted operations regarding the supply of goods and importation
- Introduction of a reduced VAT rate of 8% applicable to certain food products
- Introduction of a new VAT penalties
Corporate income tax (CIT) and WHT
- With the new finance law, henceforth, in accordance with the provisions of the article 14 of the Ordinance-Law n°69 /009 of 10 February 1969 applicable to the income tax, income deemed to have been distributed and other reinstatements relating to:
• omissions or dissimulation of income;
• and, in general, to all deductions of expenses which may result in an enrichment of shareholders;
The taxable base to be considered is equal to the sum of these reintegration’s net of the Corporate Income Tax.
- Amendment of the deadline for the debiting of the movable tax for foreign companies: Henceforth, for foreign companies, the debiting of the Movable tax is set at 30 April of the year following the one of the exercise.
- New criteria for taxation of income concerning personal income tax, especially withholding tax on foreign suppliers services: The article 27 of Ordinance-Law n° 69/009 dated 10 February 1969 relating to income tax is amended as follows “Subject to the provisions of international conventions, the personal tax is levied on the following income from professional activities carried out, exploited or used in the Democratic Republic of Congo, even if the beneficiary does not have his registered office, his main administrative establishment, his domicile or his permanent residence there: ....”
Henceforth, income will only be taxable when it is derived not only from professional activities carried out in the DRC, but also exploited or used in the DRC.
- Extension of the list of deductible professional expenses for Corporate Income Tax: The following will now be deductible:
• expenses incurred in connection with operations that condition the existence or development of the company but whose amount cannot be related to specific productions of goods and services. These expenses appear on the assets side of the balance sheet under the heading " establishment fees ".
• Applied research and development expenses provided that they relate to clearly individualized projects.
- Extension of the list of non-deductible expenses for the Corporate Income Tax: The following will not be deductible: confiscations, penalties of any kind, as well as the professional portion of the following expenses:
• 50% of communication fees,
• 60% of representation fees,
Will be also deductible, the compulsory provisions constituted, within the framework of regulated commitments, by insurance and reinsurance companies in accordance with the insurance regulations and confirmed by the auditors.
- Amends the filing deadline of the movable tax by foreign companies: Until now, foreign companies liable to pay the Movable tax declared in accordance with the article 20 of Law n° 004/2003 dated 13 March 2003 on the reform of tax procedures no later than 31 March of the year following the one in which the income was realized.
Indeed, with the new finance law this article has been amended. From now on, the return for the movable tax due by foreign companies must be filed by 30 April of the year following the one in which the income was realized.
- New filing requirement in relation to the Personal Income Tax “PIT”: As a preliminary matter, the legislator has inserted a point K entitled "Annual recapitulative return of the Personal Income Tax" in Chapter II entitled "Special Provisions" of Title I relating to "Declarative Requirements" of the Law on Tax Procedure, but also and above all added the article 22 ter.
Henceforth, natural persons remunerated by a third party under public or private law, without being bound by a company contract, will each have to submit, by 30 March at the latest, an annual recapitulative return of the personal income tax relating to the remuneration paid by their employer during the previous year.
Please note that the implementation modalities and the appropriate form will have to be communicated by regulation.
- Clarification of preliminary transfer pricing agreements: Under Article 24c of the current tax procedure, companies established in the DRC that are dependent, de jure or de facto, on companies or groups of companies located abroad may enter into prior agreements on the method of determining the prices of inter-group transactions for a period not exceeding four financial years.
However, the practical modalities of the conclusion of such agreements shall be determined by a decree of the Minister having finance in his attributions.
- New provision on tax audits for the benefit of the taxpayer: The legislator has now amended and supplemented the provisions of the article 37 of the Law on Tax Procedure by introducing a formal obligation on the part of the tax authorities to notify the taxpayer of any tax audit findings by means of a notice of dismissal.
- New obligation of the tax administration in relation to tax audits: Law n°. 004/2003 dated 13 March 2003 on the reform of tax procedures did not provide for a time limit for the tax authorities to respond to the taxpayer's observations. The article 38 of the aforementioned law has been amended and supplemented by the new finance law. Henceforth, when the observations formulated by the taxpayer within the deadline are motivated, the Tax Administration may abandon all or part of the notified adjustments. It informs the taxpayer within forty-five days (45 days).
- Amendment of the provisions on adjustment in the event of a dispute arising from an interpretation of the law: The article 39 of Law n° 004/2003 dated 13 March 2003 on the reform of tax procedures provides that no adjustment may be made if the cause of the adjustment is a dispute over the interpretation of a provision by the taxpayer in good faith, where this interpretation was formally accepted by the tax administration at the time of the facts.
This article has been amended and completed by the new finance Law. Henceforth, under these conditions, when the taxpayer has applied a tax text according to the interpretation that the Tax Administration had made known by ministerial circulars or published service instructions and that it had not postponed to the date of the transactions in question, it may not pursue any adjustment by arguing a different interpretation. In addition, the guarantee provided for in the first paragraph will be applicable where the Tax Administration has formally taken a position on the assessment of a factual situation with regard to a tax text.
- Introduction of a new title relating to the calculation of time limits for the preparation and transmission of administrative acts: A new article 110 bis has been added under the sole chapter “Counting of deadlines” of Title VI “Computation of deadlines” of the law n° 004/2003 dated 13 March 2003 on the reform of tax procedures, which reads as follows:
When the tax legislation expresses in terms of days or months the deadline in which a document of the Tax Administration or a reaction, communication or claim of the taxpayer must be established or transmitted, the date from which this deadline starts is the first working day following that of the acknowledgement of receipt.
If the last day of the period prescribed by the tax legislation for the fulfilment of an obligation or the exercise of a right is a non-working day, the date of fulfilment of an obligation or the exercise of a right shall be postponed to the next working day.
By way of derogation from the provisions of the preceding paragraph, the Tax Administration may, regarding the tax returns and payments, set the deadline for returns and payments at the working day preceding the date of the legal deadline.