Republic of Congo

Scope of VAT

Value Added Tax (VAT) is a tax on goods and services. VAT is charged on the supply of goods or services made, provided or used in the Republic of Congo and on the importation of taxable goods.

Both legal entities (in the private and public sectors) and individuals can be considered liable for VAT if they carry out taxable operations within the scope of VAT on an independent basis, habitually, within the economic activity for a valuable consideration.

Apart from the general principle of liability, which must be applied to each case, liability is automatic no matter the amount of the annual turnover for all activities. 

Private legal entities are automatically subject to VAT, irrespective of their annual turnover. 

Individuals whose annual turnover, excluding taxes, exceeds XAF 100m, are subject to VAT, regardless of their industry. Individuals whose turnover does not exceed XAF 100m may opt to be subject to VAT.

VAT rate

Taxable supplies — standard rate

The standard rate of VAT in Congo is 18%. The rate applies to all standard rated supplies of goods and services not covered by the zero rate or the reduced rate.

Taxable supplies — reduced rate

A reduced rate of 5% is applicable to certain listed consumer goods, diesel and lubricants imported from border countries by companies in the forestry sector registered in Congo.

This reduced rate is also applicable on the sale of cement produced in Congo.

Taxable supplies — surtax rate

A surtax is payable, to the advantage of local communities, at the rate of 5% of the amount of VAT.

Zero-rated supplies — 0%

Zero-rated VAT applies to exports, international transport and their accessories. For exports, the zero rate applies only to those declared and endorsed by customs and for local sales of lumber.

VAT registration

Compulsory registration

There is no express requirement to register for VAT purposes only. A taxpayer can only be considered as having registered for tax purposes after registration and allocation of a Tax Identification Number (NIU).

Both legal entities (in the private and public sectors) and individuals can be considered liable for VAT if they carry out taxable operations within the scope of VAT, on an independent basis, habitually, within the economic activity for a valuable consideration.

Apart from the general principle of liability, which must be applied to each case, liability is automatic for all private legal entities, irrespective of their annual turnover and sector of activities.

Voluntary registration

Private legal entities are now automatically subject to VAT, irrespective of their annual turnover.

Group or branch registration

Group registration is not allowed. Legal entities that are closely connected must register individually for VAT.

A branch belonging to a foreign company and non-established businesses (carrying on their activity under the short-term licence regime, the so-called ‘Autorisation d’Exercice Temporaire des activités commerciales’) must register for Congolese VAT.

Non-residents

Non-resident businesses cannot register for VAT purposes. Non-residents are required to appoint a solvable tax resident representative in order to register for VAT in the Congo.

Application for registration

If the liability threshold is reached during the financial year or is envisaged for future years in the case of new businesses, the parties concerned are obliged to carry out all the administrative registration formalities at the ‘Unité des Grandes Entreprises or at the Unité des Moyen Entreprises’ in order to comply with the statutory provisions.

The main formalities, which must be performed within a fortnight of the start of the activity, are the drawing up and filing of a declaration of existence and applying for VAT liability. This application, on a prescribed form, accompanies the declaration of existence and application for VAT liability (companies or individuals). The VAT department acknowledges receipt of the application, issues a registration certificate making the party liable for VAT and allocates a Tax Identification Number (NIU) to the taxpayer. The NIU of the entity is subject to the NIU of its legal representative.

New taxpayers undertaking a commercial activity in the Republic of Congo are required to apply for a NIU. Failure to get this ID number results in the company not being entitled to deduct the VAT paid to its suppliers, to proceed with clearance at the customs house or to receive payment from the Tax Administration. The application for the NIU is free of charge.

Deregistration

All taxpayers must inform the Tax Administration about the termination of their businesses. As there is no standard form, this declaration must be made on plain paper by the taxpayer within 15 days from the end of business.

Input tax

Input tax allowed

VAT charged in advance on the price of a taxable operation is deductible from the VAT applicable to such operation. The concordance between the payment and deduction of VAT implies that the deduction right is created when the tax becomes payable by the taxpayer.

Taxpayers who have opted for the debit system must specify this option on their invoices.

To be deductible, the VAT must be shown on the following accounting documents:

• generally — invoices issued by suppliers legally authorised to issue them

• for imports — import documents

• for self-deliveries — a special declaration made by the taxpayer itself

• for rental leasing — invoice of purchase of equipment by approved leasing companies.

The right of deduction arises when the tax becomes payable by the supplier of the goods and services.

VAT levied for pre-payment on goods or services not expressly excluded from the right of VAT deduction is deductible in the proportion of 2/3 of the expenses incurred if the services or goods are for professional use.

The right of deduction shall be exercised until the end of the first tax year following that in which the VAT became due.

Input tax expressly denied

Input tax is specifically denied in respect of:

• housing, accommodation, and meal and entertainment expenses, including all expenses relating directly or indirectly to the taxpayer’s residence, e.g. caretaking expenses

• imports of goods and services forwarded ‘as is’

• purchase of oil products, except oil purchased by importers and wholesalers in order to sell or produce electricity for sale

• services in respect of goods excluded from the right to deduct

• false invoices and false customs declarations

• vehicles and craft designed or fitted out for passenger transport or for mixed use that constitute fixed assets, except:

  • expenditure on transport of vehicles rented by tourism professionals for their clients

  • dealer vehicle inventories and test or demonstration vehicles

• VAT paid following tax audits

• VAT paid in cash, on invoices exceeding or equal to CFAF 500,000

• taxpayers that fail to provide an excerpt of their trial balance of each account on VAT in accordance with the accounting system used by the company

• goods transferred without payment or for payment well below the normal price, apart from low-value goods, including goods transferred as commission, salary, and a gratuity or gift, regardless of the capacity of the beneficiary or the form of the transfer (except where the unit price excluding taxes is below CFAF 5,000)

• the VAT paid on behalf of foreign suppliers if the related services have not been taxed in Congo, subject to DTT.

Partial exemption

Under the allocation rule, taxpayers exercise their deduction right according to the allocation of the goods (depreciable fixed assets) on which the VAT has been paid. In principle, an entrepreneur is entitled to credit the VAT paid on his purchases of goods, equipment and services for use in his business (input VAT) against the total of the tax he charges to his customers for deliveries made and services rendered by him (output VAT).

Taxpayers not exclusively carrying out transactions giving them a right to VAT deduction shall deduct VAT proportionally on the portion of the income pertaining to taxable transactions and not at a flat rate as was previously the case. This deduction applies to fixed assets and to goods and services and is calculated on the turnover pertaining to the taxable transaction.

Change-of-use adjustments

The adjustment system consists of payment by the taxpayer of a fraction of the tax initially deducted for fixed assets if the asset concerned is removed from the balance sheet or if its position with respect to the deduction right changes. However, the tax department has specified that there is no need for an adjustment in the event of deliberate destruction or scrapping of the asset.

A deduction of 100% of the VAT on the purchase of a fixed asset is subject to the asset being retained as such by the company until the end of the third year following its acquisition.

Post-deregistration VAT

All taxpayers must inform the Tax Administration about the termination of their businesses. As there is no standard form, this declaration must be made on plain paper by the taxpayer within fifteen days of the event concerned in the case of individuals and three months in the case of entities.

Recovery of VAT by non-residents

VAT incurred by non-resident is not refunded.

Output tax

Exempt supplies

The following operations, if subject to specific taxation, are exempt from VAT:

• transactions aiming at transferring buildings when the transfer is made by a person who is not a real estate developer and liable to registration fees

• interest on loans contracted abroad

• interest on deposits made by non-professionals to credit or financial establishments

• transfers of buildings, transfers of rights in rem in immovable property and transfers of business assets if the transfer is subject to transfer duties or equivalent taxation.

• financial and banking operations

• assurance and reassurance transactions

• gambling and leisure games

• sales of extractive products.

The exempt supplies include, but are not limited to:

• mineral water produced in the Congo

• butane gas packaged in Congo

• raw products obtained in the context of activities carried out in Congo by hunters, stock breeders and farmers

• imported or duty-free goods within the CEMAC (UDEAC) rules

• social, educational, sports, cultural, philanthropic or religious operations conducted for their members by organisations operating in a non-competitive sector, not for profit, and that are managed on a voluntary and disinterested basis

• operations involving stamps (revenue and postage) or the issue of banknotes

• services covered by the legal conduct of the medical and paramedical professions

• certain medicines

• renting of real property for housing purposes

• regulated activities of microfinance establishments

• monies paid by the Treasury to the Central Bank, which has the exclusive issuing right, and income from the Bank’s operations, generating the issue of banknotes.

Zero-rated supplies

A zero-rated supply is treated as a taxable supply and no VAT is charged on such supply.

The zero-rated supplies include:

• exports

• international transport and their accessories.

For exports, the zero rate applies only to those declared and endorsed by customs and for local sales of lumber.

Reduced rate supplies

A reduced rate supply is treated as a taxable supply and VAT is charged on such supply at the rate of 5%.

Reduced rate supplies include:

• certain listed (annex V tax law) consumer goods

• diesel and lubricants imported from border countries by companies in the forestry sector based in the REpublic of Congo

• glass products made in Congo

• sale of cement produced in Congo.

International trade

Goods

VAT is payable on the importation of goods when cleared for home consumption. The tax base varies as follows:

• For goods imported inside CEMAC, the tax base is the ex-works value minus transportation expenses.

• For goods imported outside CEMAC, the tax base is the customs value plus excise duties and other taxes.

To be deductible, the VAT paid on imports must be shown on the import documents, the customs declaration must show the Tax Identification Number (NIU) and a receipt issued in the name of the taxpayer by the tax recovery services must indicate the amount of VAT paid.

Goods exported from the Congo are zero-rated. Exports are considered as goods consigned beyond the Congolese customs territory. The zero rate applies whether the goods are delivered directly by the exporter or via an agent. However, the application of the zero rate is subject to the export being the subject of a declaration approved by the Customs Department and the exporters appending the customs references of the goods that it has exported during the month prior to the declaration.

Services

Services provided abroad and used in the Republic of Congo are subject to VAT. When a taxable person established in the Congo receives services from a supplier domiciled abroad that is not registered for Congolese VAT, the recipient of the supply must account for the VAT when the invoice is paid.

The provision of services by a Congolese company to a foreign company is subject to VAT if the service is used by the foreign company for an activity conducted in the Congo, whereas a service provided in the Congo but used abroad is not subject to VAT.

Place, time and value of supplies

Place of supply

VAT should apply to all business conducted in the Congo, i.e. with respect to sales, under the conditions for the delivery of goods in the Congo and, with respect to services, where the service rendered is used in the Congo.

As a result of these statutory provisions, the place of establishment of the parties to the contract, the place of invoicing or conclusion of the operation and the place of performance of the service do not have any effect on the application of VAT. Only the place of consumption of the operation should be considered.

Time of supply

The time of supply can be summarised as follows:

• goods — when the right to dispose of the goods as owner is transferred. If the sale contract stipulates that the supplier retains ownership of goods, the VAT is due when the goods are handed to the buyer

• imports and oil products — when they are made available for consumption

• services — when the consideration is received. For self-deliveries and self-provision of services, the time of supply is the first use or first commissioning

• other cases — collection of the consideration.

Value of supply

The taxable value of a supply is the total of all monies, funds, goods or services received in return for the operation, including subsidies and all expenses, taxes and deductions of any nature, excluding the VAT itself, which in practice means all payments in cash or in kind received by the supplier or service provider in return for the goods or the service concerned.

The taxable value of supply must be determined according to the nature of the taxable operation performed, particularly considering the elements summarised below:

• goods deliveries — all sums or benefits, goods or services received by the supplier forming the consideration for the delivery, as well as all expenses, taxes of any nature, excluding VAT itself

• deliveries to oneself — cost price of mined, produced or manufactured goods

• provision of services — all monies and benefits received, and the value of any goods incorporated in the provision of the service

• swaps — value of the products or services received as payment for the goods delivered or services supplied, plus any money received

• second-hand goods trade — the vendor’s profit margin

• property works — contract, invoice or bill price

• travel agency services (provided by transport companies, hoteliers, restaurateurs entertainment companies and other taxpayers who physically provide the services used by the customer) — difference between the total price, demanded from the customer and the price actually billed to the organisations concerned by suppliers and service providers contributing to the physical provision of the service received by the customer

• state contracts financed by national budgets, contracts concerning public sector industrial, commercial, scientific, technical and administrative corporations, semi-public companies, public sector authorities and organisations with or without legal personality — contract price including all taxes, except for VAT itself

• imports inside CEMAC — ex-works value, excluding transportation fees

• imports outside CEMAC — customs value of the goods plus customs or excise duties.

However, in principle, all operations where the consideration is not taxable should be excluded from the tax base, such as the following:

• price discounts, rebates and reductions

• outward payments

• tips

• operations carried out by agents or brokers

• payments not made in return for a taxable operation

• payments received as deposits for recoverable packaging.

VAT compliance

Accounting basis and tax period

The accounting and tax period is the calendar year. The closing date of the financial year is December 31 of each year. The tax period is based on the results obtained over a period of twelve (12) months corresponding to the accounting period.

Businesses which start during the six months preceding the mandatory closing date can close their first balance sheet at the end of the financial year at the end of the accounting year following that in which they started their activities.

Returns and payment of VAT

The monthly VAT return is a VAT summary statement for the month concerned showing the taxpayer’s debit or credit position with respect to the Treasury. The return for a given month must be completed on a special form by the 20th of the following month, accompanied by the payment instrument. If no operations are carried out during a particular month, the form of the return still must be filed but will be marked ‘nil’.

E-filing returns have been introduced to replace the physical tax filing.

Adjustments concern additional deductions made as a result of errors or omissions in a previous return, refunds can be requested until exhaustion and without limitation (whether or not the refund has been granted by the tax department) or refunds made for VAT wrongly deducted on a previous return.

The VAT to be paid is equal to the difference between the gross VAT paid during the month (tax base x 18%) and the deductible VAT, plus any VAT credit recorded for the previous month. This comparison, therefore, produces net VAT payable or a VAT credit. In the first case, the net VAT payable must be paid when the return is filed. In the second case, the VAT credit should be entered on a special line on the return for the following month. Alternatively, in certain specific cases, it may be the subject of a refund application.

Taxable businesses that make productive investments of more than XAF 1,000,000,000 in a plan drawn up and approved by the tax authorities may defer the payment of VAT on the importation of these goods. This is until the date of submission of the monthly return for the month following the month of importation.

Interest and penalties

The penalties which may be applied by the Tax Department, depending on the offences committed, are summarised below:

• declaration of existence filed late or not filed — loss of the deduction right for the whole undeclared period and CFAF 200,000

• late payment of the tax due for a month — 5% per month overdue (or part thereof), with a maximum of 50% of the tax due if the taxpayer has acted in good faith, otherwise 100% of the tax due

• monthly return filed after the eight-day formal notice period — 15% of the evaded tax per month (or part thereof) up to a maximum of 50% or CFAF 200,000 if no tax is due

• omission or inadequacy observed in monthly returns — 50% of the evaded tax if the taxpayer has acted in good faith, or 100% if the taxpayer has not acted in good faith or 200% for fraudulent manoeuvre.

• sales without issuing invoices — 200% of the tax due, and 400% of the tax due in case of a second offence

• false invoices — 200% of the tax due; the offender is responsible for paying the tax due and the penalty of 200% of the tax due

• failure to reply to requests for clarification or substantiation — automatic taxation, and 50% penalties of the amount due

• obstruction of a tax audit — arbitrary taxation, and penalties of 200% of the tax dues

• taxpayer’s inability to produce all books, exhibits, documents and supporting items making it possible to determine the business’s revenue accurately — arbitrary taxation.

• failure to translate books or other documents into French — CFAF 2m

• failure to comply with obligations regarding declarations, invoicing or spontaneous payment of VAT is subject to the following penalties after formal notices to comply and pay: seizure, sale, publication of defaulters’ names in a legal notices paper, temporary suspension of the business licence (plus a bar on conducting business during the period), temporary exclusion from public contracts and closure of the company.

• in the event of a repeated offence, the Tax Department can order the taxpayer’s definitive exclusion from public contracts, attachment and a prison term of five to 15 days.

Refunds

• Certain categories of professions and certain types of operations are entitled to refunds, such as oil businesses and exporters of goods that realise more than 80% of turnover on sales abroad.

• Industries that have made investments following an establishment agreement.

• Diplomatic or consular missions, subject to reciprocity.

• Companies in cessation of activity are equally entitled to VAT refunds.

• The VAT credit can be offset indefinitely.

Objections and appeals

Taxpayers’ monthly returns are audited by employees at the ‘Unité des Grandes Entreprises’ or ‘Unité des Moyennes Entreprises’ or Unité de la Fiscalité Pétrolière’ with at least the grade of inspector. These audits, conducted on the basis of documents or on site, may lead to an adjustment. Taxpayers may be assisted at these audits by a third party, a tax adviser of their choice, which can be initiated at any time without notice.

The audit of the returns may lead to a notification of an adjustment by the Department which must inform the taxpayer, in addition to the errors discovered, of the amount per tax and per year of the duties, taxes and penalties resulting from the proposed adjustments.

Taxpayers who receive an adjustment following an audit have a period of 30 days to make their comments.

The Department must give its definitive response within 60 days upon receiving these comments and must provide grounds for any elements that it rejects.

Time limits

The limitation period for rectifying errors and omissions in the tax base is four years from the year for which the tax is due and ten years for refunds.

The deduction right must be exercised within 12 months following the fiscal year during which the VAT became payable. This 12-month period applies solely to exercising the deduction right and not to VAT credits.

Thus, a VAT credit generated during a given month may be set off against the VAT collected in subsequent months without any time limit, provided that the credit has been carried forward on the return filed with the tax authorities.

Withholding VAT

Appointment of withholding VAT agents 

Non-resident businesses are required to appoint a solvable tax resident representative in order to register for VAT in the Congo.

A foreign service provider and his resident tax representative will be jointly liable for payment of the tax due on taxable operations performed in the Congo.

Withholding VAT exemption

Withholding VAT exemptions would apply where the transaction is VAT exempt.

Withholding compliance

A foreign service provider and his resident tax representative will be jointly liable for payment of the tax due on taxable operations performed in the Congo.

The resident tax representative must, subject to the penalties specified in such matters, both declare the operations performed by the service provider in its favour and ask the service provider about any operations performed in the Congo in favour of one or more third parties. A foreign service provider cannot claim any right to deduct the VAT charged to it.

Reverse charged VAT withheld, remitted by the beneficiary of the services, is deductible.

VAT refunds

When are VAT refunds due?

• Certain categories of profession and certain types of operations are entitled to refunds, such as oil businesses and exporters of goods that realise more than 80% of turnover on sales abroad.

Operations carried out with oil companies or between approved subcontractors are generally exempt from VAT. In return, the latter are entitled to reimbursement of the VAT that they have paid for exempt operations.

Provided that the oil company lists the foreign contractor as an oil services contractor, the latter will benefit from an exemption from VAT for deliveries of goods and services related to the oil industry.

For deliveries of goods and services that are not related to the oil activity, the foreign contractor must pay VAT to his suppliers but can claim a refund of VAT paid (except in relation to private and domestic use).

If he fails to receive a refund of VAT from the Tax Administration, the foreign contractor (in practice, only oil companies) can deduct the VAT credits from any other tax payment. The foreign contractor must set up a bank account in the Congo.

• Industries that have made investments following an establishment agreement.

• Diplomatic or consular missions, subject to reciprocity.

• Companies in cessation of activity are equally entitled to VAT refunds.

For tax credits that have been approved by the tax authorities, the competent public accountant may allocate to the payment of taxes, duties, fees, penalties or interest for late payment due by a taxpayer, VAT refunds, rebates or refunds of taxes, duties, fees, penalties or interest established, for the benefit of the latter.

VAT records

Tax invoices

All taxpayers must issue invoices for the goods that they deliver or the services that they provide to another taxpayer and for advances received for the provision of services where tax is payable as a result. The invoice, written in the French language, must have the following information:

• the name, address and single identification number of the taxpayer issuing the invoice

• the name, address and the single tax identification number of the customer

• the trade register number, bank account number

• the date of the invoice and serial number of the invoice

• a description and the quantity of the goods or the extent of the services

• the tax rate and the corresponding tax, the price excluding tax and the total amount with taxes included

• the tax system and the tax department on which it depends for its professional tax obligations.

Electronic invoicing is not yet allowed in the Congo.

Credit notes and debit notes

A supplier must issue a credit note or a debit note in the following cases:

• if the amount payable for a supply has changed because the supply is cancelled, the nature of the goods or services has been fundamentally changed or the accepted price has been changed, or

• if part of or all the goods are returned to the supplier

• If a tax invoice has already been issued for the supply, which is now incorrect.

Record-keeping

Taxpayers must keep regular accounts, including a paginated and initialled journal, a general ledger, a purchases journal and an inventory book.

The accounts must be available in the Congo, presented in French and made out in CFA Francs (subject to an exemption). Accounting documents and supporting documents for operations performed by the taxpayer must be retained for ten years from being recorded.

Specific VAT rules

Land and buildings

Insofar as transfers of real estate assets are subject to registration duties, VAT is not applied to the sale of a house.

Rental of empty residential houses between individuals, between legal entities and between individuals and legal entities is not subject to VAT. However, rental of all types of premises for use as commercial, business or residential premises by real estate professionals and rental of fully fitted premises (e.g. furnished residential premises), regardless of who the landlord is, is subject to VAT. In practice, tenancies are subject to VAT if the landlord is already liable for VAT for his/her/its other activities.

VAT applies to rent, rent supplements and advance rent. The deposit is not subject to VAT unless it corresponds to rent paid in advance. Service charges for which the tenant is billed in addition to the rent are exempt from VAT if they correspond to simple reimbursement of expenses but are subject to VAT if a flat sum is charged.

Transfer of a business

The transfer of a business (transfer of goodwill), which is subject to registration fees, is exempt from VAT.

Leasing

Leasing is a service subject to VAT. VAT applies to rent billed by the supplier of such services.

Promotional gifts

Goods transferred without payment or for payment well below the normal price, apart from low-value goods, do not give an entitlement to deduction. This includes goods transferred as commission, salary, or a gratuity or gift, regardless of the capacity of the beneficiary or the form of the transfer. However, the deduction is allowed for goods of which the unit price without taxes does not exceed CFAF 5,000.

Secondhand goods

Sales of second-hand fixed assets by professionals are subject to VAT on the difference between the purchase and sale prices.

Sales of second-hand goods by non-professionals are not subject to VAT and must therefore be declared as non-taxable operations in the monthly return.

If such goods are sold within three years of their acquisition, the taxpayer must pay an adjustment. As an exception to this rule, all operations carried out by dealers in second-hand goods come within the scope of VAT under ordinary conditions. The exemption for sales of second-hand goods is not applicable to sales made by professional second-hand traders.

Other indirect taxes

Import duties

Customs tax rates vary according to the category of the imported goods, and are as follows:

• Category 1: Goods of primary necessity — 5%

• Category 2: Raw materials and construction equipment — 10%

• Category 3: Intermediary products — 20%

• Category 4: Common consumer goods — 30%

• For products coming from other CEMAC member countries (Cameroon, Central African Republic, Equatorial Guinea, Gabon and Chad), the general preferential rate is 0%.

Additional entry taxes apply on importation of goods:

• Computer royalty: from to 2% on customs taxable value of the good imported/exported

• CEMAC integration tax: 1% on CIF value

• Statistic tax: 0.2% on CIF value

• OHADA contribution: 0.05% on CIF value

• CEEAC Contribution: 0.04% on CIF value

• African integration tax (for imports from outside the African Union): 0.2%.

Excise duties

The following products are subject to excise duties:

• alcoholic beverages (17.5%*)

• cigars, cigarettes and other tobacco (22.5%*)

• passenger motor vehicles, motorcycles with a cylinder capacity of more than 250 cm³ (15%)

• luxury food, perfumes and cosmetic products, arms and ammunition, jewellery (25%)

• gambling and amusement devices (25%)

• other products subject to to excise duties (17.5%*)

*Applicable from the second quarter of 2023.

Stamp duty

The normal stamp duty in the Congo is currently CFA F 1,300 per page of the document subject to registration. The stamp duty is applied in addition to the registration fees. There are various rates of registration that depend on the legal status of the assets transferred, for example goodwill: 10%; movables: 3%; real assets: 10%; registration of authorised capital: 3%; transfer of shares: 5%; transfer of rights and obligations: 5%.

Transfer duty

A money transfer made from the Congo to foreign countries (outside the CEMAC zone) is subject to the tax on transfer at the rate of 1.5% of the total amount.

A digital hub tax at the rate of 1% and capped at XAF 1,000,000 on each financial electronic transaction.