Skip to content

DR of the Congo

Country Name: Democratic Republic of the Congo (DRC)
Currency: Congolese Franc (CDF)
Primary Tax Authority: General Directorate of Taxes (Direction Générale des Impôts, DGI)
Key Legislation:

  • General Tax Code (Code Général des Impôts)
  • Investment Code
  • Value Added Tax (VAT) Law
  • Customs Code

Fiscal Authority Allocation

Centralized Fiscal System:
The Democratic Republic of the Congo operates a centralized tax system. The General Directorate of Taxes (DGI) under the Ministry of Finance is responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties. Some local taxes may be imposed by provincial authorities.

Corporate Income Tax (CIT)

Standard Rate: 30%
DRC imposes a corporate income tax rate of 30% on resident companies and permanent establishments of foreign companies. The rate for companies in the mining sector is higher at 35%.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on DRC-sourced income.

Exemptions and Incentives:

  • Investment Incentives: The Investment Code offers tax holidays and customs duty exemptions for companies investing in priority sectors such as mining, agriculture, energy, infrastructure, and manufacturing. These incentives include CIT exemptions for up to five years.
  • Special Economic Zones (SEZs): Companies operating in SEZs benefit from CIT exemptions, VAT exemptions, and reduced customs duties on imported raw materials and capital goods.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 16%
DRC imposes VAT at a standard rate of 16% on most goods and services. VAT is applied to domestic production and imports.

Exemptions:
Certain essential goods and services, such as healthcare, education, and basic food products, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
The Democratic Republic of the Congo applies a progressive personal income tax system to residents’ worldwide income and non-residents’ DRC-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to CDF 1,944,000: 0%
  • CDF 1,944,001 to CDF 21,800,000: 15%
  • CDF 21,800,001 to CDF 43,600,000: 30%
  • Above CDF 43,600,001: 40%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 20% on DRC-sourced income.

Deductions and Allowances:
Taxpayers may deduct contributions to pension funds, healthcare expenses, and charitable donations.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to DRC’s social security system, which covers pensions, healthcare, and unemployment benefits.

  • Employer Contribution: 9% of gross salary.
  • Employee Contribution: 3.5% of gross salary.

Withholding Taxes

  • Dividends: 20%
  • Interest: 14%
  • Royalties: 14%
    The DRC imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. These rates may be reduced under the country’s double taxation agreements (DTAs).

Transfer Pricing Rules

DRC follows the arm’s-length principle for related-party transactions. Companies must ensure that cross-border transactions between related parties are conducted at market value. Transfer pricing documentation is required for companies engaging in significant related-party transactions.

Special Tax Regimes

  • Special Economic Zones (SEZs): Companies operating in DRC’s SEZs enjoy CIT exemptions for up to 10 years, VAT exemptions, and reduced customs duties on imported goods and raw materials. These zones are intended to encourage foreign direct investment in manufacturing and industrial sectors.
  • Mining Sector: DRC provides specific tax regimes for companies operating in the mining sector, including a higher CIT rate of 35%, lower withholding tax rates, and customs duty exemptions on equipment and materials used in mining operations.

Other Taxes

  • Customs Duties: DRC imposes customs duties on imports, with rates ranging from 5% to 20%, depending on the type of goods. Some raw materials and equipment for industrial use may benefit from reduced or zero customs duties.
  • Excise Taxes: Excise taxes are levied on goods such as alcohol, tobacco, fuel, and luxury items.
  • Property Tax: A property tax is levied on real estate, based on the market value or rental value of the property.

Double Taxation Agreements (DTAs)

DRC has signed several double taxation agreements (DTAs) with countries including Belgium, France, South Africa, and China. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in the DRC and other jurisdictions.

Local Taxes

Local governments and provincial authorities in the DRC may impose minor municipal taxes, such as property taxes and business license fees. However, most significant taxes, including CIT, PIT, and VAT, are centrally administered by the General Directorate of Taxes (DGI).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by April 30th of the following year. Personal income tax returns are generally due by March 31st. VAT returns are filed monthly or quarterly, depending on the size of the business.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The standard penalty for late filing is 10% of the unpaid tax amount, with additional interest at 1% per month.

Recent Developments

Focus on Mining Sector:
The mining sector is a major contributor to the DRC’s economy, and the government continues to promote investment in this area. Companies in the mining sector benefit from reduced customs duties and withholding taxes, along with special tax incentives for exploration and production activities.

Infrastructure Development Initiatives:
DRC is working to attract investment in infrastructure projects, such as roads, energy, and telecommunications. Tax incentives are available for companies involved in these projects, including CIT exemptions and customs duty reductions on imported construction equipment.

Renewable Energy and Sustainability:
To diversify its energy sources, the DRC is promoting renewable energy projects, especially hydropower and solar energy. Tax incentives include CIT holidays, VAT exemptions, and customs duty reductions for companies investing in renewable energy infrastructure.

Subscribe to my free newsletter for regular updates on law, taxation and business worldwide.

Tags: