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Congo

his suppliers but is allowed to claim for a refund of VAT paid (except in relation to private and domestic use). Failing to receive a refund of VAT from the Tax Administration, the foreign contractor is allowed to deduct the VAT credits from any other tax payment, especially corporate income tax or personal income tax. The foreign contractor must set up a bank account in the Congo.

Zero-rated supplies

The zero rate applies to the eucalyptus sector, to local sale of produced woods, exports and international transport and accessory international transport. Exports are considered as goods consignments beyond 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 exporter appending the customs references of the goods that it has exported during the month up to the declaration. International transport is defined as all transport to or from a foreign country, whether passenger or goods transport and irrespective of the means used (air, sea, road, etc.).

In addition, in practice the authorities accept that operations incidental to the international transport of goods made in the Congo are zero-rated, provided that the goods are exported.

Zero-rated operations are considered liable for VAT and therefore grant an entitlement to the deduction of paid VAT. Likewise, these operations are taken into account in the calculation of the taxable turnover and must therefore be included in both the denominator and numerator of the calculation of any deduction percentage.

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.

In order to observe this concordance, taxpayers who have opted for the debit system must specify this option on their invoices so that their customers can exercise their deduction right as soon as they receive the invoice instead of when it is paid.

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

  • generally – invoices issued by suppliers legally authorised to enter them;

  • for imports – import documents; and

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

As soon as the deduction right is created, the taxpayer may exercise it and enter the amount of deductible VAT on the monthly return filed by the 15th of the following month.

Input tax expressly denied

Tax paid on the purchase of goods and services not directly intended for economic activity does not generally give an entitlement to deduction.

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 wholesales in order to sell or produce electricity for sale;

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

    • utility road vehicles (i.e. not private cars) used by companies exclusively to transport their staff, where the vehicle has more than eight seats in addition to the driver’s seat;

    • fixed assets of vehicle hire companies and public passenger transport companies; and

    • goods transferred without payment or for payment well below the normal price, apart from low-value goods, including goods transferred as commission, salary, 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 XAF5,000).

Partial exemption

Under the allocation rule, taxpayers exercise their deduction right according to the allocation of the goods (depreciable fixed assets) for which the VAT has been paid.

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

PricewaterhouseCoopers 33

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