Congo, Republic of

Corporate - Tax credits and incentives

Last reviewed - 13 January 2021

The current investment regime in the Republic of Congo was set out by Law No. 6-2003 of 18 January 2003, which established the investment charter. The charter's application, Decree No. 2004-30 of 18 February 2004, established modes of business registration.

  • Scope: The following may be registered under the investment charter:
    • Businesses wishing to pursue an activity in the Republic of Congo, except for activities such as brokerage, trade, import, and production of arms, and import or processing of toxic waste and by products.
    • Under certain conditions, commercial activities linked to collection, storage, distribution, and export of locally produced products, except alcoholic beverages and tobacco.
    • New activities (as opposed to pre-existing activities).
    • Forestry businesses benefiting from a forestry permit called the forestry development unit.
    • New companies coming from the redemption of a registered company.
  • Conditions of eligibility for the investment charter: To be eligible, a company must satisfy the following conditions:
    • Be registered with the Trade and Personal Credit Registry in the Republic of Congo.
    • Create permanent employment, to be carried out over a minimum of 280 days per year.
    • Maintain company share capital equal to or greater than 20% of investments.
    • Primarily use local principal materials necessary for the production of the finished or semi-finished product, when available, with equal conditions concerning price, quality, and time of delivery to outside, in the case of industry.
    • Primarily use local business services, when available, with equal conditions concerning quality, price, and time of realisation regarding payments to external businesses, for the case of service businesses.
    • Be registered at the Congolese National Welfare Fund.
    • Open an account at a local bank or any other financial, savings, or credit establishment.
    • Primarily use a local workforce, when available, with the same expertise as the foreign workforce.
  • Registration procedure: Entitlement to the benefits prescribed by the charter is subject to obtaining a registration agreement, provided by the National Investment Commission.
  • Fiscal and customs benefits set out by the Investment Charter: These benefits vary according to privileged regimes, motivation measures, and in a general manner.

The goods eligible for the customs incentives from the investment charter are those which have a direct link with the fiscal year of the approved activity.

Any company admitted to one of the authorised derogatory regimes (i.e. the production sharing contract regime or the establishment agreement regime) may no longer, as from 1 January 2021, benefit from another privileged regime.

Privileged regimes

The charter sets out three privileged regimes:

  • General regime (G).
  • Special regime (S).
  • Preferential development zone regime.

General regime (G)

The general regime applies to businesses that fulfil the aforementioned general requirements and carry out investments greater than or equal to XAF 100 million.

Special advantages are conferred according to the period of activity of the registered business.

During the set-up period and the first three exploitation tax years, the company receives several benefits, as follows:

  • In customs matters, the company benefits from the provisions of the CEMAC customs code relative to asset improvement mechanisms for export activity and from the suspension of customs duty in the form of temporary admission or franchise for natural resource research activities.
  • In fiscal matters, the company benefits from the 50% reduction of registration fees for business foundation, increases in capital, company mergers, and transfer of company stocks and shares.

For the three first exploitation tax years and from the first year of sale or first service, the following fiscal benefits are added with the aforementioned reduction of registration duties:

  • Total exemption from the tax on company earnings.
    • Companies that are subject to CIT because of their size or activity will be exempt from CIT.
    • Businesses that are subject to personal income tax (PIT) because of their size or activity will be exempt from PIT.
  • The authorisation to proceed to accelerated depreciation.
  • The authorisation to carry forward losses for the first three tax years.
  • The application of zero-rate VAT on exported products.

Special regime (S)

The special regime applies to businesses that fulfil the aforementioned general requirements and carry out investments between XAF 30 million and XAF 100 million.

In addition to the advantages of the aforementioned (G) regime, businesses registered under the (S) regime benefit during the set-up period and the first three exploitation tax years from the moderation of registration duties for the incorporation of the business, increases in capital, company mergers, and transfer of company stocks and shares.

This moderation of registration duties is granted exclusively by decree of the Minister in charge of the Economy and Finances upon a decision of the National Investment Commission.

Preferential development zone regime

All exporting businesses registered under the investment charter are eligible for the preferential development zone system, including free-trade zones.

The institution, organisation, and function of the preferential development zone are fixed by a specific text.

Incentives to set up in remote areas

All new businesses registered under (G) or (S) regimes that are located in a remote area benefit from a reduction of 50% on the tax on company earnings in the fourth and fifth year following the first three tax years for which the business benefited from total exemption from the tax on earnings or PIT.

The business is considered as belonging to a remote area from the moment its production units are set-up and 90% of the production unit workforce is working in the remote location.

The appraisal of a zone's location results from the exclusive competency of the National Investment Commission.

Incentives for social and cultural investment

All new businesses registered under (G) or (S) regimes carrying out investments of a social and cultural character may benefit from a fiscal reduction by ministerial decree of the Minister in charge of Finance and the Economy, upon the decision of the National Investment Commission.

These benefits may not, however, be added to those mentioned above and allocated to remote areas, even if the business concerned is set-up in such a location.

General measures

For the duration of the privileged regime, and subject to current texts, the company shall enjoy fiscal stability in terms of local and state taxes.

Privileged regimes (G) and (S) are allocated only once and are not renewable. The business may receive fiscal and customs advantages pertaining to the set-up period.

Fiscal advantages concerning the exploitation period are applicable only after the set-up period.

The end of the set-up period is certified by decision of the Minister in charge of Finance and the Economy after the adoption of the verification report by the National Investment Commission.

Respect of the aforementioned general requirements set out by the charter is a prerequisite for benefiting from these motivation measures.

Export incentives

A measure is reserved for businesses that export at least 20% of their production.

The benefits are as follows:

  • The provisions of the CEMAC customs code, relating to asset improvement mechanisms.
  • Exemption from customs duties and taxes on manufactured products, except computing fees and statistic tax.
  • Application of a zero-rate VAT on exported products.

Non-manufactured goods remain subject to the common law export system.

Incentive to reinvest earnings

A measure is reserved for businesses that carry out new investments of at least one-third of existing assets.

The benefit conferred consists of a 50% reduction of the tax on company earnings for the three years following the realisation of the investment.

Notwithstanding, this benefit is granted upon the following conditions:

  • The business declares to the permanent secretary of the National Investment Commission its investments, planned investment, and the state of existing capital assets.
  • The National Investment Commission, on the report of checking teams, verifies if the new investments correspond to one-third of the preceding capital assets.
  • All investments are realised within one year.
  • Investments generate new employment.
  • Investments increase capacity of production by at least 10%.
  • The business has sound ethical concerns.

Institution of preferential tax regime for special economic and industrial zones and health free zones

The 2014 Finance Act provides for incentives in special economic zones as follows:

  • CIT and dividend tax exemptions for six years.
  • From seven to ten years: CIT and dividend tax rate of 5%.
  • Beyond ten years: CIT rate of 15% and dividend tax rate of 10%, permanently.
  • Single tax on remuneration rate of 2.5%, permanently.
  • Exemption from registration fees for company creation and 50% reduced rates on transfer deeds.

The 2014 Finance Act provides for incentives in industrial zones as follows:

  • CIT and dividend tax exemption for five years.
  • From six to ten years: CIT rate of 10% and dividend tax rate at 5%.
  • Beyond ten years: CIT rate of 20% and dividend tax rate of 10%, permanently.
  • Single tax on remuneration rate of 2.5%, permanently.
  • Exemption from registration fees for company creation and 50% reduced rates on transfer deeds.

The 2014 Finance Act provides for incentives in health free zones, as follows:

  • CIT total exemption.
  • Dividend tax rate of 5%.
  • Single tax on remuneration rate of 2.5%.

It should be noted that eligibility requirements for the preferential regimes described above have not been set yet.

Foreign tax credit

There are no specific rules relating to foreign tax credits in the Republic of Congo.