• XAF30 million for sales of goods;
The VAT system was introduced in the Congo on 12 May 1997 to replace turnover tax.
• XAF10 million for service providers; and
In principle, nonresident businesses are required to appoint a tax representative in order to register for VAT in the Congo.
• XAF20 million for craftsmen.
The VAT authority in the Congo is the Directorate of Large Businesses (‘la Direction des Grandes Entreprises’), divided into the Unit for Large Businesses of Pointe-Noire and the Unit for Large Businesses of Ouesso.
Rates and scope
The standard rate of 18% applies to all taxable operations not covered by the zero rate or the reduced rate that can apply to categories of goods specified in Annex V to the Congolese VAT Law. Additional tax is payable, to the advantage of local communities, at the rate of 5% of the amount of VAT.
VAT is a tax that consumers pay on the importation of goods or the consumption of goods and services. For taxpayers, it would be a neutral tax. In general, all economic activities conducted for consideration by a taxpayer in the Congo are subject to VAT, regardless of their purpose.
Both legal entities (in the private and public sectors) and individuals can be considered liable for VAT if they carry on 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 where annual turnover exceeds the following thresholds:
The following businesses and professions are automatically liable even if their annual turnover does not exceed the above thresholds:
public works enterprises;
An operation consisting of imports, delivery of goods or the provision of services forming part of an economic activity carried on for a consideration by a taxpayer is taxable if it is an operation falling under an economic activity and is carried out for a valuable consideration by individuals or entities.
The performance of an operation for a consideration implies that the acquirer of the goods or the beneficiary of the services provides a consideration, regardless of its nature (money, goods, services, etc.) and value. In this respect, it is irrelevant whether the operation is carried out for profit or speculatively, or whether it results in a profit or loss. Thus, the delivery of goods or provision of services is liable for VAT even if made at cost.
Voluntary registration is not allowed if a business’s annual turnover does not exceed the threshold for compulsory registration.
Group registration is not allowed. Legal entities that are closely connected must register individually for VAT.
The application of the territoriality criteria defined by the law means that services provided by a foreign company on Congolese territory are liable for VAT. The foreign service provider must designate a single tax representative liable for VAT in order to prepay, declare and transfer the tax due on the service on the service provider’s behalf. The VAT must be paid by the tax representative of the liable foreign company, which records it in a VAT account on behalf of third parties, declares it and transfers it.
A foreign service provider cannot be sued for payment of the tax due on taxable operations performed in the Congo, which must be construed as meaning that the foreign service provider’s tax representative, or its customer in the absence of designation, will have sole liability for payment of the tax on the operations conducted with this person.
The single 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.
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 Temporaire d’Exercer des activités commerciales’) must register for Congolese VAT.