Tax Focus

Democratic Republic of Congo

By:
Jean-Louis Dattie,
Charles-Alexandre Koffi
02 Aug 20222 min read
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The fiscal year 2022 started in DRC with the entry into force of Law No. 21/029 of 31 December 2021 on the finance law for 2022.
Contents
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Authors
  • Jean-Louis Dattie Senior Partner, Grant Thornton DRC Email
  • Charles-Alexandre Koffi Lead Tax Associate, Grant Thornton DRC Email

Among the new measures, we note:

  • The deliveries of Fuel Oil Internal Market are now exempt from VAT.
  • A VAT reduced rate of 8% applies to certain food products (husked rice, herring, cod, anchovy, tilapia, beef, iodized salt, ...)
  • Penalties for failure to submit a VAT return on time. The fine is 1,500,000
  • Congolese Francs (712€) to which is added the loss of a quota of 10% of the amount of credit. As regards the nil declarations, the fine is 500
    000 Congolese Francs (238 €)
  • Extension of the professional income tax due on foreign suppliers’ services to professional activities exploited or used in DRC.
The list of deductible professional expenses for Corporate Income Tax has been extended to:
  • Expenses incurred in connection with operations that condition the existence or development of the company but whose amount cannot be related to specific productions of goods and services. These expenses appear on the assets side of the balance sheet under the name “ establishment fees “.
  • Applied research and development expenses provided
    that they relate to clearly individualised projects.

Establishment fees and research and development expenses must be amortized on a straight-line basis over a period of 3 years.

  • Regarding Corporate Income Tax, the list of nondeductible
    expenses are now extended to confiscations, penalties of any kind (including transactional fines) as well as 50% of professional communication expenses and 60% of professional representation expenses.
Provisions made for losses, expenses or impairment of assets are not deductible, except for:
  • Provisions for reconstitution of mining deposits
  • Mandatory provisions for receivables are established by credit and microfinance institutions in accordance with banking regulations. These provisions must be confirmed by the auditor.
  • Provisions are constituted, within the framework of regulated commitments, by insurance and reinsurance companies in accordance with insurance regulations.

These provisions must be confirmed by the auditor. Extension of the scope of dividend tax to income deemed distributed and other reinstatements into the taxable profit. The tax basis is equal to the sum of reinstatements less income tax.

In terms of tax procedures, various measures have been adopted to clarify and simplify audit procedures:
  • The tax authorities are now obliged to notify the taxpayer in the event of dismissal following an audit, using a notice of
    dismissal.
  • The tax authorities now have 45 days to notify the taxpayer of its decision to abandon all or part of the notified adjustments when the taxpayer’s observations have been formulated within the deadline.
  • Clarification relating to the rule prohibiting double checks tax audit only concerns accounting tax audits.
  • From now on, the conclusion of public contracts, obtaining certain administrative documents and the benefit of certain services are subordinated to the presentation of a tax clearance delivered by the Tax Authorities.

The thresholds for ordering tax relief in the context of a tax claim are now set as follows: