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Congo - Indirect Tax Guide

Congo - Indirect Tax Guide

Explore the requirements and rules that apply to indirect taxes in Congo.

Explore the requirements and rules that apply to indirect taxes in Congo.

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General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

18 percent.

Are there any reduced rates, zero rates or exemptions?

A reduced rate of 5 percent applies to some consumer goods listed in the VAT legislation and diesel and lubricants imported from Cameroon by forestry companies based in the Congo.

Zero-rated supplies include:

  • exports
  • international transports and related accessories (zero-rate will be applied if declared through customs)
  • local sale of lumber.

Exempt supplies include:

  • goods for farming, fishing, breeding and hunting — social, educational, sports, cultural, philanthropic or religious operations by non-profit organizations
  • revenue and postage stamps and banknote
  • imports of certain exempt goods
  • medical and paramedical services
  • school books, certain medicines, and agricultural and plant fertilizers
  • payments by the Treasury to the Central Bank and proceeds in connection with the issue of banknotes
  • specific operations by oil companies
  • operations subject to specific taxes such as mining products, banking, insurance and reinsurance, property transfers, interest on loans made abroad, random games and entertainment.

What are the general and specific place of supply rules, if applicable?

Goods are supplied where they are delivered and services are supplied where the service rendered is used. Thus, goods delivered and services used in the Congo will be subject to VAT in the Congo.

VAT/GST registration

Who is required to register for VAT/GST?

All economic activities conducted in the Congo are subject to VAT, regardless of purpose, profitability or legal status of the business performing such activities and irrespective of whether such activities are habitual, occasional or originate in the Congo or from a foreign country.

Therefore, any person, natural or legal, engaged in an industrial, commercial or professional activity is subject to VAT unless specifically exempt by law.

Is voluntary VAT/GST registration possible for an overseas company?

No.

Does an overseas company need to appoint a fiscal representative?

Yes.

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Monthly between the 10th and 20th of each month with the exception of August when VAT returns are submitted between the 15th and 25th of the month.

What are the exchange rate rules?

Exchange rates are determined by the Central Bank. The exchange rate for the Euro (EUR) and the Central African CFA franc (XAF) is fixed: XAF655,957=EUR1.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Are there any exemptions with the right to reduce or deduct input VAT?

Input tax is denied with respect to:

  • housing, accommodation and entertainment (including meals)
  • imports of goods and services that are re-exported without any modification
  • purchase of petroleum products except fuels
  • purchased for resale by importers or wholesalers, or purchased for the production of electricity
  • passenger vehicles, except if used for staff transport (more than eight seats), and fixed assets of vehicle hire and public passenger transport companies
  • goods (unit price greater than XAF5,000) supplied for no consideration or for much less than the normal price
  • VAT paid on any invoice in cash with an amount equal to or greater than XAF500,000.

Invoices

Is a business required to issue tax invoices?

Not ‘tax’ invoices, but invoices (details should appear on invoices in French).

Is it possible/mandatory to issue invoices electronically?

No.

Is it possible to issue recipient-created tax invoices?

No.

Audits

Do tax audits take place on a regular basis?

Yes.

Tax audits are announced by a letter from the tax authorities to the entity concerned of their intention to audit, while stating the period to be audited and the taxes that will be covered by the audit.

The tax authorities may organize meetings with the taxpayer to inform them of the preliminary outcomes of the audit and the taxpayer has the opportunity to reply.

Thereafter, the tax authorities notify the taxpayer, in writing, of their proposed tax adjustments. The taxpayer can make counter remarks in 30 days from date of receipt of the tax adjustment notice.

Are audits done electronically in your country/territory (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

The following penalties may be applied:

  • return filed late: 5 percent of the tax due or XAF50,000 if no tax is due. If filed after an 8-day formal notice period: 15 percent of evaded tax per month or part thereof up to a maximum of 50 percent or XAF200,000 if no tax is due
  • late submission of returns: interest of 5 percent per month of tax due. If no tax due, a penalty of XAF50,000 plus other sanctions if any
  • any inaccuracy, omission or failure found in returns: 50 percent of evaded tax or adjustments made when good faith of the taxpayer is established, otherwise, 100 percent of tax due. In case of corruption or opposition to tax audit, the penalty is 200 percent
  • late payment of tax due: 5 percent per month or part thereof limited to a minimum of 50 percent of tax due if taxpayer acted in good faith, otherwise, 100 percent of tax due 
  • omission or inadequacy in monthly returns: 2 percent per month of between 10 and 50 percent of evaded tax if the taxpayer has acted in good faith, 100 percent if the taxpayer has not acted in good faith or 200 percent for fraudulent acts
  • declaration of existence filed late or not filed: loss of the deduction right for undeclared period and XAF200,000
  • late declaration or no filing of changes in the conditions of conduct of profession: XAF200,000 per month
  • sales without issuing invoices: 200 percent of tax due or 400 percent in case of a second offence 
  • fabricated invoices: 200 percent of tax due
  • failure to reply to queries: assessed at 25 percent with a minimum of 1 percent of revenue
  • obstruction of audit or failure to produce records: automatic assessment
  • failure to translate records into French: XAF2 million
  • a taxpayer still not complying with requirements after being notified to do so may be penalized with further actions such as seizure, sale, suspension of business licenses, exclusion from public contracts and a prison term of 5 to 15 days.

Special indirect tax rules

Are there unique country/territory-specific indirect tax rules that differ from 'standard' indirect tax rules in other jurisdictions?

The standard rate of VAT is 18 percent. Additional tax, of advantage of local communities, is payable at 5 percent of the VAT amount payable.

Does a reverse charge mechanism apply?

Yes.

If services are supplied by a supplier situated outside of the Congo and not VAT registered to a taxable person established in the Congo, the recipient of such services must account for the VAT when the invoice is paid.

Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?

Yes, there are tax incentives on VAT as follows: A reduced VAT rate of 5 percent is applicable on some primary consumption goods and 0 percent on export and international transportation. The 0 percent rate on exportation is only applicable for goods declared and approved by customs.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

Informal advance rulings are issued after a tax audit.

Are rulings and decisions issued by the tax authorities publically?

No.

Other indirect taxes

Are there other indirect taxes not commented on above?

Yes, other indirect taxes include:

  • customs duty (rates from 5–30 percent)
  • excise duty
  • transfer duty
  • stamp duty.

For further information please contact

Ursula Dutoziet
Senior Manager
KPMG in Congo
T: +242 04 430 84 33
E: udutoziet@kpmg.cg

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

Disclaimer

All information contained in this document is summarized by KPMG in Congo, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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