Congo, Republic of
Corporate - Income determinationLast reviewed - 24 February 2023
Taxable income is based on financial statements prepared according to standard statements of the OHADA treaty.
Business expenses are generally deductible, unless specifically excluded by law.
Stocks are valued at cost price. However, if the market price is lower than the cost price, the undertaking shall make provisions for depreciation of inventory.
Capital gains are treated as ordinary business income and are taxed at the standard CIT rate of 28%. However, a capital gain realised on the disposal of a fixed asset in the course of trading is excluded from income for a period of three years if the taxpayer reinvests the gain in new fixed assets for the business.
If the business is totally or partially transferred or discontinued, only half of the net capital gain is taxed if the event occurs less than five years after the start-up or purchase of the business and only one-third of the gain is taxed if the event occurs five years or more after the business is started or purchased. However, the total gain is taxed if the business is not carried on in any form.
Capital gains realised by non-residents on transfers of shares of Congolese companies are subject to taxation at the rate of 20%. This tax shall be paid upon registration of the deed of transfer of the considered shares. Under such sale transactions, the seller, the buyer, and the company whose shares are transferred are jointly and severally liable for the levied tax.
Net capital gains realised as part of a direct or indirect transfer of social assets and/or rights resulting in a change of control of a Congolese company become subject to CIT.
Capital gains realised on the sale of rights and obligations arising from oil contracts are subject to a flat tax of 10%.
Dividends are treated as ordinary business income and are taxed at the standard CIT rate (after 15% WHT tax).
Dividends received from a Congolese company (DivCo) by a commercial company incorporated in the Republic of Congo (HoldCo) are exempt from CIT and subject to a final 15% WHT if the following conditions are met:
- HoldCo and DivCo are incorporated in the CEMAC.
- HoldCo holds 25% of the capital of DivCo.
- HoldCo holds the shares for at least two years from the date of purchase.
However, 10% of dividends that are deemed to represent the share of cost and expenses are included in the taxable profits of HoldCo and liable for the CIT.
If the above conditions are not met, dividends received from a Congolese company by another Congolese company are subject to a 15% WHT.
Interest received constitutes taxable income subject to CIT at the rate of 28%.
Subject to any specific provisions, interest paid or deemed to be paid is subject to a WHT at the rate of 20% of the interest paid.
The interest paid is deductible for CIT purposes for the Congolese company to the limit of 20% of the taxable profit before deduction of the expenses in question. For interest paid to non-CEMAC residents, the deduction is subject to the respect of CEMAC foreign exchange provisions.
Subject to the provisions of international tax conventions, interest on loans paid to foreign natural or legal persons by oil companies established in the Republic of Congo, when these loans concern acquisitions directly intended for studies, research, exploration, development, and oil exploitation, are subject to a 5% WHT.
Royalties received constitute taxable income subject to CIT at the rate of 28%.
Subject to any specific provisions, royalties paid or deemed to be paid are subject to a WHT at the rate of 20% of the royalties paid.
The royalties paid are deductible for CIT purposes for the Congolese company to the limit of 20% of the taxable profit before deduction of the expenses in question.
The average WHT rate of 10% is applicable to remuneration for one-off services paid to companies not domiciled or not resident in the Republic of Congo. This reduced rate is applicable to remuneration paid for the use of concession, the publishing of television channels, television and radio programme offers, or the provision of access to audio-visual services with digital content.
Resident companies are taxed only on income (except for dividends received abroad) derived from their activities carried out in the Republic of Congo.