The DRC Government initiated the last few years a set of reforms in order to improve the business environment which has been extensively deteriorated over the years. From these reforms, we can particularly raise the adhesion of the DRC to the OHADA, the simplification of payments of duties due to the State by the implementation of a single window, etc.
These actions are a result of recurrent reports from the World Bank published in the context of ‘’Doing Business’’ which ranked the Democratic Republic of the Congo ("DRC") at the 181st position out of 185 countries listed in this report.
Indeed, these studies by the World Bank are essentially based on the conditions offered by each country to do business which through ten (10) indicators that deal with the regulation and practices in each country and are selected according to essential steps of a medium-size company from creation to liquidation. These are:
- The creation of companies;
- Transfer of ownership of immovable properties;
- Permission to build;
- Access to the electrical connection;
- Access to credit;
- Payment of taxes and duties;
- Cross-border trade;
- Investors’ protection;
- The enforcement of contracts;
- The regulation of insolvability ;
Regarding the indicator "payment of taxes and duties" that measures the payments, time and total taxes and duties paid by a medium-sized company over a year. The DRC is ranked 171th among the 185 States while other African countries such as Rwanda and Malawi are respectively the 25th and 58th of the 158 listed countries. In this regard, it has often been criticized for the Congolese tax authorities, among others, to achieve a high number of payments due during a year, a relatively long period for the payment of taxes and duties as well as the costs of taxes or excessively high tax rates.
Thus, in order to remedy this situation, the Government of the DRC, having requested and obtained the habilitation of its Parliament by Law No. 13/007 of 22 January 2013 on the accreditation of the Government, took on 23 February 2013 a series of fiscal reform measures through ordinances-law :
- No. 13 /001 establishing the nomenclature of taxes, duties, and royalties due to Provinces and the decentralized territorial entities as well as their allocation,
- No.13/002 establishing the nomenclature of duties, taxes and royalties due to the Central Government,
- No. 13/003 on the reform of proceedings relating to the tax base, control and modalities of the collection of non-tax income,
- No. 13/004 repealing some provisions of law No. 006/03 of 13 March 2003 laying down detailed rules of calculation and collection of advance payments and withholding at source of tax on gains and profits,
- No. 13/005 amending and supplementing some provisions of Law No. 004/2003 of 13 March 2003 on the reform of taxation procedures,
- No. 13 / 006 concerning tax regime applicable to small businesses in connection with tax profits and gains,
- No. 13/007 amending and supplementing some provisions of Ordinance-law No. 10/001 of 20 August 2010 on the establishment of the Value added tax
- No. 13/008 amending and supplementing some provisions of Ordinance-Law No. 69/009 of 10 February 1969 on the scheduled taxes on income
Among multiple progresses made through the tax legislation, ordinances, we can retain the particular response of the Congolese state to the criticisms expressed towards it, especially in regard to "payment of taxes and duties" indicator as noted above. It concerns the Introduction of payment at a distance by electronic means, the standardization of declarations into a single form, as well as the unification of the tax deadlines.
Indeed, the declaration at distance by electronic means is organized by the Ordinance-Law No. 13/005 of 23 February 2013 amending and supplementing some provisions of the Law No. 004/2003 of 13 March 2003 on the reform of tax procedures which provides in Article 1 that: "They (the declarations may be done either on paper or by electronic means. They determine, in these declarations and at their own responsibility, the tax bases and the amount of taxes and other duties, in accordance with legal provisions”.
The tax returns made on papers, duly completed, dated and signed by the taxpayers or their representatives shall be filed with the competent Tax Administration.
Subscription terms of tax returns made electronically shall be determined by the order of the Minister having Finance in his duties. "
The innovation of the declarations and payment of taxes at distance by electronic means has the objective of avoiding the queue observed at the relevant departments of the tax administration. Such situation does not often enable taxpayers to meet their requirements within the legal timeframe; hence they are exposed to penalties thereto. In this way, individuals and legal entities may, from their Personal Computers carried out this duty without difficulty. At first, only large companies will benefit from this innovation, the Government should endeavor to extend it to all companies subject to the payment of the relevant taxes.
The unification of the tax declarations in one form and the unification of tax deadlines are set by the same article 1 revising article 17 of the former text which provides: "every individual or legal entity liable to Professional tax on the remuneration and special tax as salaries of expatriate personnel is required to submit a declaration every month, within ten days following the month in which remuneration have been paid or made available to the beneficiaries. (...)".
In addition, various reforms are going to be set up, including in particular the simplification of forms and procedures for paying taxes on profits, the merger of taxes and duties calculated on a common basis, and the consolidation of tax declarations on a single form and unique payment of the taxes.
Also, several practices deemed best around the world shall be set up in the DRC, including in particular:
- The use of New Technologies of Information and Communication ("NTIC");
- Simplification of tax compliance;
- The reduction of the frequency of tax declarations;
- The establishment of a tax by tax basis;
- The rationalization of monitoring;
- Reduction of tax rates;
- The declaration and payment of several concurrent taxes, etc.
Furthermore, the implementation of the reforms mentioned above shall require the mastery of a great number of relevant infrastructures. This includes a good quality of fast and reliable transmission of data, a trained personnel, a permanent flow of electric power avoiding any breaks in the transmission of data to the tax authorities, etc. This is a matter of concern for the economic operators grouped within the Federation of Congolese Enterprises ("FEC") and who has expressed this concern during a meeting.
In conclusion, the Congolese Government should therefore proceed efficiently and forthwith in making effective the tax reforms conducted some years ago in order to improve the business environment, especially since it is public knowledge that “the more the tax system is complicated, the more there are tax evasions and the more the tax rate is reduced, the more the tax basis is extended; such situation leads to a progressive reduction of the informal sector”.