Congo, Democratic Republic of the
The following DRC-sourced payments are subject to a WHT in the Democratic Republic of the Congo:
- Interest. Note that if the interest is paid to a local company, the WHT does not apply since the interest is included in the taxable income of the company charging such interest.
- Directorship fees.
- Service fees paid to foreign individuals or entities not established in the Democratic Republic of the Congo.
WHT rate and payments
The standard rate of WHT on dividends, royalties, interest, and directorship fees is 20%, which is based on the gross amount of sums paid.
If the payee does not withhold the tax from the amount invoiced and pays the tax of 20% directly, then the tax authorities consider that the basis of the 20% tax is composed of the amount invoiced plus the amount of the tax.
Consequently, in the case that the DRC company takes in charge the corresponding WHT, the WHT rate will be 25% (20/80) and the amount of tax will not be tax-deductible.
For royalties, the WHT is charged on the net amount of the royalties paid. The tax authorities consider that the net amount of royalties is calculated by deducting 30% from the royalties invoiced (i.e. the taxable basis will be 70% of the royalties invoiced).
The rate of WHT on amounts paid as compensation for services provided by foreign individuals/entities is 14%, which is based on the gross amount of sums paid.
The tax treaties for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on incomes between the Democratic Republic of the Congo and South Africa, and between the Democratic Republic of the Congo and Belgium, have been effectively implemented.
These treaties provide for reduced rates for dividends, interest, and royalties. It is also generally agreed that, by application of treaty, services furnished by providers being tax resident of those countries and being not established in the Democratic Republic of the Congo should not be subject to the 14% services fees WHT.
The table below provides a summary of different WHT rates:
|Non-resident (not established)||10/20||0/20 (3)||20||14|
|South Africa||5/15 (2)||0/10||10||0/14 (4)|
- A reduced 10% WHT rate for dividends is applied in the mining sector.
- The WHT charged shall not exceed 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that directly holds at least 25% of the capital of the company paying the dividends; 15% of the gross amount of the dividends in all other cases.
- Interest paid by mining companies for loans borrowed in foreign currency abroad are exempt from WHT.
- The term ‘permanent establishment’ likewise encompasses: the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the contracting state for a period or periods exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned.
- As for the Treaty with Belgium, it is provided that interests shall be exempted from tax in the state of origin in the case of interests on commercial receivables, as well as interest on receivables or loans not represented by bearer securities.