TerraLex is pleased to announce its recent digital publication of a Cross-Border Guide to Business Investment in Africa. Africa’s emerging countries form an integral part of any successful global business strategy and offer tremendous growth opportunities for multinational companies and global entrepreneurs alike. The following guide provides important information businesses need to know while considering their investment into the region.
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A foreign investor can set up the following legal entities: • Limited liability company (SARL) • Public liability Company (SA) • Simplified joint stock company (SAS) • Limited partnership (Société en commandite simple) • General partnership (Société en nom collectif)
OHADA Uniform Act relating to commercial companies and economic interest groups of January 30, 2014.
All types of companies in the DRC are registered with the One-Stop Shop of Companies (Guichet Unique de Creation des Entreprises). The procedure is as follows:
There’s no minimum capital required, except for the public liability company (SA). The capital of the SA must be approximately 17.000 US dollars or its equivalent in CDF (Congolese Francs).
Under the Regulation No. 001/19 of 29 January 2019 amending and supplementing the exchange regulations of 25 March 2014 (the “Foreign Exchange Regulation”), any transaction involving the sending or receiving of primary or secondary income and capital of a value equal to or greater than USD 10,000, or its equivalent in other foreign currencies, requires the prior subscription of a Model RC Declaration which is form to be filled out by the sender with details of the transfer with an authorised bank.
For financial transactions (i.e., direct investments, portfolio investment, financial derivatives), a Model RC Declaration The subscription of a Model RC Declaration requires the presentation of any supporting document such as invoices, contracts relating to the transaction, etc. The intervening authorised bank is required to submit all supporting documents through the computer system set up by the BCC.
Further, for any transfer of funds abroad, whether for payment of a service or repatriation of funds to the investor's country, a foreign exchange monitoring fee of 0.2 % of the amount of the transfer is levied by the commercial bank carrying out the transaction, for the benefit of the BCC.
In addition, the repatriation of the export earnings from the services must take place no later than thirty (30) calendar days from the provision of the service.
There is no requirement to have local nationals as directors. However, there are sectors that require a company to have local directors, such as the subcontracting and banking sectors. In these sectors, the majority of the company management body must be run by Congolese individuals.
No. However, the DRC Constitution guarantees parity between men and women in public institutions (Article 14).
In addition, Act 15/013 of 1 August 2015 on the implementation of women's rights and parity calls on the private sector to promote the participation of women in decision-making bodies, without setting any mandatory quota (Article 7).
In principle, companies are required to file their activity reports and summary financial statements (balance sheet, income statement, financial table of resources and uses) with the Trade Registry at the end of the financial year. Companies whose shares are listed on the stock exchange are also required to publish these annually in an authorized newspaper, in accordance with article 847 et seq. of the Uniform Act on Commercial Companies and Economic Interest Groups. However, this obligation is sector specific. For example, mining companies are also subject to this obligation to communicate their activity reports to the bodies responsible for managing this sector.
The employment of foreign staff is subject to several restrictions. In addition, access to certain jobs is forbidden to foreigners and the Ministerial Order No. 12/CAB.MIN/TPS/112/2005 of 26 October 2005 sets a limitation by maximum percentages of foreign workers by category and type of activity. These percentages are set in relation to the total workforce of the company, and derogations may be obtained from the Minister of Labour and Social Security without exceeding 50 % of the authorised maximums.
From a tax standpoint, DRC law provides for a tax on the amount of remuneration paid by each employer to its expatriate staff. The rate of this tax is set at 25 % of the gross amount of remuneration. It is payable by the employer.
From an immigration perspective, foreign employees wishing to settle down for more than six (6) months in the DRC should obtain the following documents with the Administration:
A biometric working card for foreigners To obtain the new biometric work permit for foreigners, applicants must submit their application to the Technical Secretariat of the National Commission for the Employment of Foreigners (C.N.E.E.) in Kinshasa (Article 208 of the Labor Code), and to the Provincial Division of Employment and Labor in the provinces, for a fee.
A work establishment visa The embassy of DRC issues this document on payment of a fee.
A residence card
The administrative authority issues that document.
To obtain a work permit for foreign workers in the Democratic Republic of Congo, please follow the steps below:
Under Congolese law, land is the exclusive, inalienable, and imprescriptible property of the State (article 53 of law no. 73-021 of 20 July 1973 on general, land and real estate assets and on securities, as amended and supplemented by law no. 80-008 of 18 July 1980). The State only grants the right to use its land, not ownership. There are two types of concession: perpetual and ordinary. The ordinary concession is the right granted by the Congolese State to an individual of Congolese or foreign nationality, or to a legal entity under Congolese or foreign law, to enjoy a plot of land for a renewable period of 25 years, if the substantive and formal conditions laid down by the law are met.
Ordinary concessions are: emphyteusis, surface area, usufruct, use and lease. A perpetual concession is the right granted by the State to an individual of Congolese nationality to enjoy land indefinitely as long as the substantive and formal conditions laid down by this law are met.
The DRC Investment Code provides for the following incentives: - Exemption from import duties and taxes on machinery, materials, and equipment (excluding the 2 % administrative tax and VAT (to be paid upstream by the promoter, but reimbursed by the tax authorities));
Special Economic Zones (SEZs) have been established by the government for the local industry. SEZs offer incentives, including tax exemptions and simplified regulatory processes, to attract investors.
Bilateral Investment Treaties (BITs): The DRC has signed BITs with several countries, offering investors protections against discriminatory treatment, expropriation, and arbitrary measures.
The DRC levies taxes on resident companies and individuals on a territorial basis (or source basis) of taxation. Non-resident companies or individuals that carry out an activity in the DRC are taxable on profits they realise through permanent establishments (PEs) or fixed establishments that are located in the DRC.
The corporate income tax (CIT) is at the rate of 30 % applied to profits made, less only deductible professional expenses. The same rate applies to capital gains.
The standard rate of withholding tax (WHT) on dividends, royalties, interest, and directorship fees is 20 %, which is based on the gross amount of sums paid.
For royalties, the WHT is charged on the net amount of the royalties paid. The net amount of the royalties is understood to be their gross amount less the expenses or charges incurred for their acquisition or retention by the beneficiary of royalties. In the absence of evidence, the tax authorities consider that the net amount of royalties is calculated by deducting 30 % from the royalties invoiced (i.e., the taxable basis will be 70 % of the royalties invoiced).
The WHT rate on amounts paid as compensation for services provided by foreign individuals/entities is 14 %, which is based on the gross amount of sums paid.
The tax treaties for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on incomes between the DRC and South Africa, and between the DRC and Belgium, have been effectively implemented.
VAT rate is 16 %.
Law n°18-020 of July 9, 2018, relating to freedom of pricing and competition (Competition Act). This law prohibits any competitive agreement likely to limit market access to other players and hinder investment
Alternative dispute resolution mechanisms are recognised in the DRC. Arbitral awards are recognized as binding, but they can only be enforced by virtue of an exequatur decision rendered by the competent court (Article 120 of the law on the organisation, operation, and jurisdiction of the courts of the judicial system).
The DRC Code of Investments.
The DRC enjoys a favorable and promising investment climate. Growth indicators and the presence of a large number of consumers are favorable assets for private investment.
Agribusiness, mining, energy, fintech, insurance and financial services.
Transport, energy, water, and telecommunications infrastructures are inadequate and in need of significant improvement. This affects foreign investment in the following ways:
As a result, the state of infrastructure in the DRC may discourage some foreign investment, as it leads to high operational risk, increased costs, and reduced competitiveness.
However, to address these challenges, there are significant initiatives from the government, multilateral financial institution, and private sectors in public private partnerships to invest massively in robust communication, energy and transport infrastructure and equipment. Some foreign investors see this as an opportunity to participate in the country's development and benefit from the DRC's potential long-term economic growth.
Disclaimer: This guide contains summaries of general principles of law. It is not a substitute for specific legal advice and should not be relied upon in relation to the application of the law or subject matter covered.
