Republic of Congo
Corporate Income Tax (CIT)
Who and what is liable?
Taxation principle is territoriality, and place of registration
- As a result, Congolese companies carrying on a trade or business outside Congo are not taxed in Congo on the related profits.
- Congolese companies are those registered in Congo, regardless of the nationality of the shareholders or where the company is managed and controlled.
- Foreign companies engaged in activities in Congo are subject to Congolese corporate tax on Congolese-source profits only.
On the other hand, an economic activity is considered to be carried out in the Congo, when there is a usual exercise of that activity either in the context of a permanent establishment, either through representatives without independent professional personality or when this activity results in transactions that form a complete business cycle.
CIT tax highlights
The simplified regime (Deemed profit)
It is a derogation to common regime. It is granted on request, valid for one year renewable 5 times maximum.
- Local companies and branches that realize more than 70% of their annual revenue with oil companies and oil service companies (in this case, the tax is considered as final).
- If their revenue goes under 70% they are taxed under common regime.
- Catering activities carried out or delivered on oilfields
- Foreign companies that are qualified for the simplified tax system specifically without having a registration in the Congo and that carry out legally authorized commercial activities upon issuance of Temporary Authorization to Operate(TAO)
- The Income before tax is deemed, at 22% of revenue to which applies the CIT common rate of 33%
- Or a single rate of 22% x 33% = 7.26% of revenue.
- The dividend tax (DT) is set at a rate of 15% on a lump sum basis up to 70% of the Net Income considered as distributed.
- This corresponds to: (22% – 7.26%) x 70% x 15% = 1,548% of revenue
- Or in total 7.26% + 1.548% = 8.808% approximately for the CIT, and the DT.
The common regime
Applicable on Income Before tax
- 25 % applicable to microfinance enterprises and private educational establishments constituted as company.
- 28 % applicable for mining and real estate companies and all other types of enterprises, other than the oil sector
- 33% for companies subject to the flat-rate tax on revenue according to Article 126b of the CGI.
- 1% of annual revenue and not less than 1 million (XAF 500,000 if annual revenue is less than 10 million)
- The minimum tax is not deductible for the determination of the final CIT
- In case of loss for the first fiscal year, the minimum tax is deductible for the determination of the final IS at 50%
CIT Tax regime applicable are: Regime Revenue (XAF) Type Activity Lump sum Less than or equal to 60 million VSC Trading Less than or equal to 40 million VSC Craft industry Less than or equal to 30 million VSC Services Between 60 and 100 million SC Trading
Between 40 and 100 million SC Craft industry
Between 30 and100 millions SC Services
Actual simplified Greater than 100 million and less than 2.000.000.000 billion Actual Normal Over 2.000.000.000 billion
Less than or equal to 60 million
Less than or equal to 40 million
Less than or equal to 30 million
Between 60 and 100 million
Between 40 and 100 million
Between 30 and100 millions
Greater than 100 million and less than 2.000.000.000 billion
Over 2.000.000.000 billion
VSC: Very small companies
SC: Small companies
- CIT is paid in four installments by 20 February, 20 May, 20 August, and 20 November. Each installment must be equal to 20% of the previous year’s tax.
- Final Tax being Maximum between four installments, 1 or 0.5 million lump sum minimum, and CIT rate payable latest 20th of May when filing the tax return
- A 50% penalty is assessed for late payment of tax.
- Taxable income is based on financial statements prepared according to OHADA (organization for the harmonization of business law in French-speaking Africa) accounting standard.
- Companies subject to real income tax are required to have their year-end financial statements certified before filing with the tax authorities.
- Fiscal year starts from January 1st to December 31st
- Branch CIT rate is as per rate above. 70% of the net profits made by branch offices and foreign companies carrying out business are automatically considered as distributed profits and subject to tax on dividends at the rate of 15%.
- Double Tax Treaty (with France, Italy Mauritius, and CEMAC) reduces or exonerates Branch dividend tax
- Capital Gain is under CIT taxation, but can be deferred or eliminated in case of reinvestment.
- Companies registered during the six-month of the second half of the year can extend their fiscal year up to December N+1
- Losses are carried forward for 3 years
- Losses attributable to depreciation may be carried forward indefinitely.
- Losses may not be carried back.
- The statute of limitations period for CIT is 4 years following the year in which the tax was due.
Business expenses deductibility
Business expenses are generally deductible unless specifically excluded by law.
Here are some major restrictions and/or limitations:
- Head office overhead or remuneration for services paid to nonresidents that exceeds 20% of taxable income before the deduction of such items, or must not exceed 2% of turnover for companies engaged in building and public works, by engineering firms and by accounting firms.
- Royalties from patents, brands, models, or designs paid to a nonresident corporation participating in the management of, or owning shares in, the Congolese corporation, are not deductible.
- Interest paid to a shareholder at a rate for current account advances on Central Bank State Fund of more than two points, if the shareholder is responsible to management, interest on the portion of the loan exceeding half the share capital, is not deductible.
- Commissions and brokerage fees exceeding 5% of purchased imports
- For companies under the control, of companies or groups situated outside the Republic of Congo, payments made by whatever means to their profit are considered as transfer of profits and subject to CIT
- Most liberalities, gifts and subsidies are not deductible. Some of them are limited to 0.5% or à 0,5‰, of revenue.
- Goods costing less than XAF 500,000 per item may be written-off at purchase as deductible expenses.
- Expenses or payments of any kind, made in cash for an amount greater than or equal to FCFA 500,000 per beneficiary, are not also deductible from taxable income.
- Fixed assets may be depreciated using the straight-line method at rates specified by the tax law (minimum, 5% to 33.33% Maximum)
- Exceptional accelerated depreciation may be authorized in certain circumstances for heavy equipment with a value of more than XAF 40 million.
Last Update : 27 of November 2023