Worldwide VAT, GST and Sales Tax Guide
Non-established businesses. A “non-established business” is a taxable person that has no permanent establishment in the territory of the DRC. Non-established businesses must designate a resident representative based on a legalized or notarized letter. This resident representative is liable to declare and pay the VAT on behalf of the non-established business. If no tax representative is nominated, the VAT due should be assessed and paid by the customer (if the customer is a taxable person for VAT purposes).
Tax representatives. Non-established businesses are required to appoint a representative resident in the DRC. The non-established business may appoint only one representative for all its operations in the DRC. In the absence of a representative, the tax and the penalties relating to them are payable by the resident beneficiary of services on behalf of the non-established business.
Reverse charge. The reverse-charge mechanism is applicable whenever a non-established business fails to nominate a VAT representative. In such a case, the local taxable person (the customer) will be liable for VAT on the supply made by the non-established business. As part of the VAT reverse-charge mechanism, the VAT shall be declared as output and input tax in the same tax return. Therefore, there will be no cash impact for the customer, to the extent there is a full right of deduction.
Domestic reverse charge. There are no domestic reverse charges in the DRC.
Digital economy. Nonresidents providing electronically supplied services for business-to-consumer (B2C) supplies are only required to register and account for VAT if its supplies are greater than the registration threshold. If a nonresident’s supplies exceed the registration threshold, it must appoint a representative in the DRC for accounting for and paying the VAT due and filing the subsequent VAT returns on their behalf.
Nonresidents providing electronically supplied services for business-to-business (B2B) supplies are only required to register if their supplies are greater than the registration threshold. The rules as outlined above on appointing a representative apply. However, if the nonresident does not appoint a representative in the DRC, the beneficiary of the services in the DRC (i.e., the customer) is required to self-account for the VAT due on the supply via the reverse-charge mechanism (see the subsection Reverse-charge above). This reverse-charge VAT should appear on the monthly VAT return of the beneficiary.
There are no other specific e-commerce rules for imported goods in the DRC.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in the DRC.
Registration procedures. A taxable person with an annual turnover of CDF80 million (approx. USD28,085) must within 15 days file a VAT registration form with the tax authorities. Each taxable person should be identified by a VAT number. In practice, the specific VAT number is not yet allocated to the taxable person, and the general tax ID is used currently instead.
The tax authorities consider the same general tax ID as the VAT number. However, the taxable person must send a letter to the tax authorities for the VAT registration and the tax authorities will then provide the taxable person with the acknowledgment receipt. The taxable person must apply for VAT registration by paper.
Deregistration. Deregistration from VAT in the DRC is mandatory for any taxable person ceasing to trade in the DRC. For the deregistration of a taxable person, it should provide the trade court with the decision made by the taxable person to cease the activity or declare the taxable person as dormant. With the acknowledgment receipt from the trade court while waiting for the deregistration, the taxable person will notify the tax authorities by providing them with a copy of the
Partial exemption. If a taxable supply to, or an import of goods by, a taxable person is partly for a taxable use and partly for another use, the amount of the input tax allowed as a credit is the part of the input tax that relates to the taxable use. This scenario is known as “partial exemption,” and as such an apportionment percentage will be applied to the taxable person’s input tax.
The apportionment percentage is equal to the sum of revenues (revenue from the items for which the deduction of the VAT is allowed, which includes exports and related transactions) then divided by the total of revenues realized (all revenues included) during the current tax year.
A partially exempt business should calculate their apportionment to find the correct percentage of apportionment to be applied and regularize the VAT due by 31 March of the following year. If all items are VAT deductible and full VAT has been applied, no regularization should be made.
Approval from the tax authorities is not required to use the partial exemption standard method in the DRC. Special methods are not allowed in the DRC.
Capital goods. The input tax incurred on the acquisition of capital goods for a taxable purpose is deductible. There are no special time limits or rules for the recovery of input tax incurred on capital goods.
Refunds. If for the same month, the amount of input tax exceeds the amount of output tax of the same period, the taxable person has a right to the VAT refund, which is a tax credit to be carried forward to the next taxable period(s). The tax credit cannot be refunded to the taxable person.
Except for exporters, companies making heavy investments, mining and oil companies in phase of research or development and construction of the mining or petroleum project, those who cease activities and public enterprises in which the state owns all of the share capital and whose VAT has been invoiced and has been subject to withholding tax, may get the refund of their tax credit on VAT resulting from the acquisition of movable property and services.
Heavy investment means acquisition of new property, plant and equipment in which the value of the project is not less than CDF1 billion.
Pre-registration costs. Input tax incurred on pre-registration costs in the DRC is not recoverable.
Bad debts. The output tax accounted for on supplies that are subsequently canceled or remain unpaid may be recovered by imputation on the tax due for subsequent transactions.
For unpaid transactions, when the claim is actually and definitively unpaid, the rectification of the invoice consists in sending a duplicate invoice with regulatory indications with the mention that the amount of the invoice remained unpaid at the price excluding VAT and of the amount of the corresponding VAT that cannot be deducted.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in the DRC.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in the DRC is not recoverable.
H. Invoicing
VAT invoices. A VAT invoice must be issued for each transaction made and include all the mandatory information including the amount excluding VAT, the amount of VAT and the total including VAT.
Credit notes. For canceled transactions, the related invoice and VAT should be canceled. Therefore, a credit note should be raised to cancel the original invoice. The recovery of the VAT to be
for the next month. No refund is paid back directly to taxable person (apart from mining companies). In practice, even the mining companies don’t receive the refund easily or readily.
Periodic payments. The VAT is paid no later than the 15th of the month following the delivery of the goods (invoice) for the goods and payment received for the services.
Electronic filing. Electronic filing is mandatory in the DRC for certain taxable person. Electronic filing is mandatory for all taxable persons that are registered with the Direction des Grandes Entreprises. For the remaining taxable persons that are registered with the Centre des Impôts and the Centre des Impôts synthétiques, they must file VAT returns manually.
Scope of electronic invoicing. All taxable person subject to VAT must use electronic invoicing. All services are covered by the electronic invoicing rules.
Payments on account. Payments on account are not required in the DRC.
Special schemes. Cash accounting. Cash accounting is allowed in the DRC. For service providers, the VAT is due when they receive the cash. By the 15th of the following month, they should proceed with the payment of the VAT and join the proof of payment to the VAT return and file the return with the tax authorities.
Purchase invoice scheme. For purchasers of goods, the VAT is due when receiving the invoice for the goods.
Annual returns. Annual returns are not required in the DRC.
Supplementary filings. Statement of deductions. In the DRC a detailed statement of deductions is required to be filed alongside the monthly VAT return. Also, in March, taxable persons are required to file a confirmation of the annual pro rata. This is for taxable persons that are partially exempt. These need to calculate the apportionment to find the correct percentage to be applied and to regularize the VAT by 31 March of the following year. If all items are VAT deductible and full VAT has been applied, no regularization should be made.
Correcting errors in previous returns. To correct any errors or omissions from prior periodic filings, the taxable person must send a letter to the tax authorities to communicate the errors or omissions. These will then be corrected in the next VAT return, which should be filed by the 15th of the following month as normal.
Digital tax administration. There are no transactional reporting requirements in the DRC.
J. Penalties
Penalties for late registration. Failure to register for VAT with the DRC tax authorities within the required period is subject to a fine of CDF500,000 (approx.USD175)
Penalties for late payment and filings. The absence or late filling of VAT returns is subject to a penalty of 25%. In the case of discretionary taxation for lack of declaration, the penalty is equal to 50% of the amount of the tax due. In the case of recidivism, the penalty will increase to 100% of the same amount.
In the case of a tax audit, the penalty equals 20% of the amount of tax due. In the case of recidivism, the penalty will increase to 40% of the same amount.
Penalties for errors. When supplying goods or providing service without invoice, the taxable person will be liable for the penalties amounting to twice the VAT due. In the case of recidivism, the taxable person will be liable for the penalties amounting to triple of the VAT due.
There are no specific penalties associated with the late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details. For further details, see the subsection Changes to VAT registration details above