Congo, Democratic Republic of the
Finance Law for 2022
The Finance Law for 2022 entered into force as of 1 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 new VAT penalties.
Corporate income tax (CIT)
- With the new Finance Law, henceforth, in accordance with the provisions of article 14 of the Ordinance-Law n°69 /009 of 10 February 1969 applicable to the income tax, where income is deemed to have been distributed and other reinstatements relate to omissions or dissimulation of income and, in general, to all deductions of expenses that 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 CIT.
- The list of deductible professional expenses for CIT is extended to include the following:
- 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 (R&D) expenses, provided that they relate to clearly individualised projects.
- The list of non-deductible expenses for CIT is extended to include confiscations, penalties of any kind, as well as the professional portion of 50% of communication fees and 60% of representation fees.
- 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 will also be deductible.
- The filing deadline of the movable tax by foreign companies is amended. 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 realised. 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 realised.
- Preliminary transfer pricing agreements are clarified. Under article 24c of the current tax procedure, companies established in the Democratic Republic of the Congo (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 of Finance.
- There is a new provision on tax audits for the benefit of the taxpayer. The legislator has now amended and supplemented the provisions of 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.
- There is a 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. 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 and inform the taxpayer within 45 days.
- There is an amendment of the provisions on adjustment in the event of a dispute arising from an interpretation of the law. 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 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 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.
- A new title relating to the calculation of time limits for the preparation and transmission of administrative acts has been introduced. 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. 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, 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.