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.
Types of indirect taxes (VAT/GST)
What is standard VAT/GST rate?
Are there any reduced rates, zero rates or exemptions?
The zero-rate only applies to exports.
Exempt supplies include:
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.
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?
Does an overseas company need to appoint a fiscal representative?
Is VAT/GST grouping* possible?
How frequently are VAT/GST and other indirect tax returns submitted?
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.
Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?
Is it a prerequisite that output tax be charged before input tax can be claimed?
Are there any exemptions with the right to reduce or deduct input VAT?
Input VAT cannot be deducted on the following:
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:
Is a business required to issue tax invoices?
Is it possible/mandatory to issue invoices electronically?
Yes. It is possible but not mandatory.
Is it possible to issue recipient-created tax invoices?
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?
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).
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?
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?
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?
Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?
Yes. From time to time, the government will publish some tax holidays.
Is it possible to apply for formal or informal advance rulings from the tax authority?
Are rulings and decisions issued by the tax authorities publically available?
Are there other indirect taxes not commented on above?
Yes, other indirect taxes include customs and excise duties.
KPMG in the Democratic Republic of the Congo
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*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).
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.