Overview
VAT on ESS was introduced in the Democratic Republic of Congo (“DRC”) by Ordinance Law no. 10/001 on 20 August 2010, and Decree no. 011/42 of 22 November 2011, which included implementing procedures.
Under this law, foreign ESS providers must appoint a tax representative in the DRC, otherwise, VAT is collected and paid by the service consumer based in the DRC.
In such cases, the reverse charge mechanism is available, allowing service consumers to charge for VAT declared on behalf of foreign service providers who do not have a tax representative in the DRC and automatically take an input VAT deduction.
The law makes no distinction in the application of legal provisions concerning services to individual consumers (B2C) or to businesses (B2B). However, it is difficult for the tax authorities in the DRC to collect VAT on services supplied by foreign providers to local consumers.
If a foreign supplier does not appoint a tax representative, the VAT burden shifts to the local customer. However, individuals usually do not meet the VAT‑registration threshold under the VAT law. Which means they are not VAT‑registered and cannot file VAT returns to declare the tax. As a result, the VAT due on these transactions often goes uncollected.
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Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | B2B and B2C |
| Liability to remit VAT | A non-resident without a permanent establishment in the DRC providing electronic services to DRC resident customers (B2B or B2C) is required to appoint a tax representative to comply with VAT regulations. If no tax representative is appointed, a reverse charge mechanism applies, where the local customer is required to declare the VAT on behalf of the foreign supplier and deduct. |
| VAT rate | 16% |
| Taxable value | Price payable by the recipient of the supply |
| Effective date | 20 August 2010 |
| VAT registration threshold | Non-resident providers of ESS are not subject to a VAT registration threshold. |
| Tax invoice | VAT must appear on an invoice or any other supporting documents in place of an invoice in order to be deducted. Non-resident ESS providers without local representatives are allowed to issue invoices without VAT. However, VAT must be accounted for using the reverse charge mechanism in order to be claimable as a deduction. In all situations, the foreign service provider must issue an invoice that allows the local customer to justify the expenditure. Otherwise, the deductibility of the item may be called into doubt with regards to CIT. |
Services in scope
Electronic services supplied online include:
- The supply and hosting of computer sites
- The online supply and updating of software
- The supply of images, text, and information
- The provision of databases
- The supply of music, films, and games
- The supply of digitised books and publications
- The supply of distance learning services, and the remote maintenance of programs and equipment.
Registration and compliance
Foreign service providers with no permanent establishment in the DRC are not required to register for VAT in the DRC. Instead, they are required to appoint a tax representative resident in the DRC. The representative must be designated by means of a legalised or notarised letter addressed to the tax authorities and will then be approved by the tax authorities. If no fiscal representative is appointed, VAT should be accounted for by the local customer as per the reverse charge mechanism.
VAT on ESS in the DRC must be filed and paid monthly, with both the return and the payment are due by the 15th of the following month.
Invoicing
According to Order No. 23/10 of 3 March 2023, economic operators are required to provide standardised invoices and use electronic fiscal equipment to issue bills. However, these requirements are not applicable to non-resident suppliers.
VAT on costs
Foreign companies charged with VAT on goods or services consumed in the DRC are not allowed to reclaim this VAT. However, if the goods or services are not meant to be consumed in the DRC, they are not subject to VAT.
Other considerations
A levy of 14% is charged on payments made to non-resident service providers. This tax is withheld by the service consumer at the payment of the bill. The tax must be declared and paid to the tax administration not later than the 15th of the month following the month of payment.
VAT on cryptocurrency/digital assets
Currently, the DRC does not have specific VAT rules or regulations relating to cryptocurrency-related activities or digital assets.
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