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Democratic Republic of the Congo (DR Congo or DRC) - Indirect Tax Guide

DR Congo - Indirect Tax Guide

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

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

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General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

16 percent.

Are there any reduced rates, zero rates or exemptions?

The zero-rate only applies to exports.

Exempt supplies include:

  • sales of used materials
  • sales made by legal NGO (non-governmental organization)
  • acquisitions and sales made by the state
  • sale and importation of stamped paper
  • importation of bank bills, banknotes or of equipment for their fabrication made by an authorized institute
  • sale and importation of agricultural equipment
  • sale of buildings made by a non-property developer
  • importation and delivery of human organs and blood from medical institutes
  • importation and sale of fishing nets and mosquito nets
  • importation and acquisition of medicines (pharmaceutical products) made by pharmaceutical industries, or acquisition of medical materials
  • importation and acquisition of equipment, materials, reagent or chemicals for prospection, exploration, research, construction or developing of mining or petroleum projects before exploitation
  • samples without commercial value
  • private property of a person who comes to stay in the DRC (the DRC becomes their country of residence)
  • goods received by succession, by a person who at their death date lived in the DRC
  • reward given to a resident in the DRC in relation to the importation of goods (the resident should present the supporting documents deemed necessary by customs during the importation, otherwise, the reward will not be exempted)
  • coffin packaging with the deceased and funeral urn containing ashes if cremated
  • importation and sale of coffins
  • products for trial runs
  • donation, legacy or materials given for free to state and provincial governments
  • luggage of passengers is non-taxable per custom legislation
  • sales of original works of an artist
  • importation of wheat, maize, wheat flour and corn flour
  • sale of wheat, bread, maize, wheat flour and corn flour.

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

VAT is levied on all goods and services consumed in the DRC, no matter where the supplier is based.

VAT/GST registration

Who is required to register for VAT/GST?

All persons with an annual turnover equal to or more than 80 million Congolese francs (CDF) (+/–90,000 US dollars (USD)).However, companies whose annual turnover is less than the qualifying threshold for VAT can opt for the VAT regime. This option is granted by the express request to the DRC tax administration.

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

No.

Does an overseas company need to appoint a fiscal representative?

No.

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

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

Monthly.

Can returns be filed and payments be made electronically?

Returns are to be filed manually and payments are to be made electronically.

What are the exchange rate rules?

Transactions can be invoiced both in local currency and USD. Government encourages invoicing in CDF, the local currency. Where USD is used, the rate is published by commercial banks. For tax payments, the exchange rate is published by the tax administration.

VAT/GST recovery

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

No.

Is it a prerequisite that output tax be charged before input tax can be claimed?

No.

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

Input VAT cannot be deducted on the following:

  • expenditure on housing, catering, hospitality, entertainment, passenger vehicle leasing and transport of persons excluding expenses incurred for the purposes of making taxable supplies, tourism professionals and catering services
  • goods and services acquired by the company but used by third parties, leaders or company personnel, excluding working or protective clothing, premises and equipment assigned to the collective satisfaction of the needs of staff and free housing on the workplace for salaried employees specifically responsible for the supervision or custody of these places
  • petroleum products, except fuel for resale by wholesalers or acquired for production of electricity for resale or for being used as combustible by manufacturing firm
  • goods and services delivered for free or at a price less than cost.

For what period of time may input tax not previously claimed be claimed (i.e. prescription)?

Until 31 December of the year following the period in which entitlement arose.

Where a VAT return reflects a refund due to the taxpayer, is the refund paid to the taxpayer or is the taxpayer required to utilize the refund as a credit against future payments?

In general, refunds are utilized as credit against future payments. Refunds are, however paid out to certain companies:

  • an exporting specialized company where output VAT cannot be compensated by collections
  • a petroleum or mining company in development or research phase
  • a company realizing heavy investments on new equipment.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Yes. It is possible but not mandatory.

Is it possible to issue recipient-created tax invoices?

Yes.

Audits

Do tax audits take place on a regular basis?

Yes. A minimum of once per year.

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?

Penalty of 25 percent for late, incorrect or incomplete declarations (may increase to 50 or 100 percent in case of assessment or recurrence). Interest of 2 percent per month (starting on the day following legal deadline payment date).

Special indirect tax rules

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

VAT on bad debts can’t be claimed as a deduction.

Does a reverse charge mechanism apply?

Yes.

Can VAT on reverse charges be claimed as input tax, to the extent that the expense on which the reverse charge VAT is accounted for, is used for taxable purposes?

Yes.

Can non-residents appoint local agents in order to avoid reverse charge VAT by virtue of charging standard rate VAT and accounting for such VAT through the agent?

Yes.

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

Yes. From time to time, the government will publish some tax holidays.

Rulings

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

Yes.

Are rulings and decisions issued by the tax authorities publically available?

Yes.

Other indirect taxes

Are there other indirect taxes not commented on above?

Yes, other indirect taxes include customs and excise duties.

For further information please contact

Louison Kiyombo
Partner
KPMG in the Democratic Republic of the Congo
T: +243 81 888 1115
E: lkiyombo@kpmg.cd

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 Democratic Republic of the Congo, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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