DRC Court of Auditors Reveals Turnover Underreporting by Mining Companies
Court of Auditors Uncovers Major Irregularities in Mining Sector’s Community Development Fund Contributions (2018–2023)
As part of its 2024 annual work program, the Court of Auditors conducted a comprehensive audit of the management of the mandatory contribution equal to a minimum of 0.3% of turnover for community development projects in the mining sector, covering the period from 2018 to 2023.
This compulsory levy, established under Article 258 bis of the Mining Code, requires mining companies in the production phase to allocate at least 0.3% of their turnover toward community development initiatives aimed at mitigating the adverse effects of mining activities on local populations.
The audit revealed serious irregularities undermining the proper functioning of this contribution system.
Specifically, the Court found that many mining companies have consistently understated their turnover figures reported to the specialist bodies responsible for managing these funds.
Data obtained from the General Directorate of Taxes (DGI) indicated significant discrepancies in turnover declarations.
Except for Kibali Gold Mine, Macrolink, and Jiayuan Mining, most companies reported lower turnover figures to the specialist bodies compared to what they declared to the DGI.
Notably, companies such as Om Metal Resources (OMR), Shituru Mining Corporation (SMCO), and Société de Traitement du Terril de Lubumbashi (STL) did not submit any turnover reports to specialist bodies. Similarly, there was no evidence of turnover declarations for New Minerals Investment and Kambove Mining SA to the DGI.
The Court’s report highlighted a staggering discrepancy: mining operators reported a combined turnover of approximately USD 81.4 billion to specialist bodies, while the amount declared to the DGI was about USD 98.2 billion.
This difference of roughly USD 16.8 billion translates into a shortfall of over USD 50 million in the 0.3% community development levy.
This widespread underreporting is facilitated by the lack of a formal verification mechanism within the Supervisory Committee, which oversees the allocation system. The report described this as a form of fraud aimed at reducing mandatory contributions.
In response, the Supervisory Committee stated that, due to the declarative nature of the Congolese tax system, it relied on the turnover declarations provided by mining companies since attempts to cross-verify data with the DGI were unsuccessful.
However, a joint mission involving the General Inspectorate of Finance (IGF), the General Inspectorate of Mines (IGM), and the Supervisory Committee has been scheduled to verify the accuracy of these turnover figures. The Court of Auditors has made its data available to support this effort.
The Court of Auditors emphasized that although the tax system is declarative, the Administration has the authority and responsibility to conduct post-declaration audits to verify the accuracy of taxpayer reports.
Therefore, the Court strongly recommended that the Supervisory Committee establish a robust verification mechanism.
This could involve closer collaboration with the General Directorate of Taxes or commissioning annual audits by the Court of Auditors to ensure the reliability of turnover data submitted by mining companies.
