DRC government opts for a “reverse charge accounting VAT” for miners
The Council of Ministers of Friday, September 11 lifted the option, with regard to mining companies, for a “ reverse charge accounting VAT” on imports. Henceforth therefore, the import VAT of the miners will just be recorded at the customs level without the operators being able to pay it.
“Regarding the suspension of the collection of import VAT, the government is proposing a switch to an accounting VAT for reverse charge. The mechanism would allow mining companies to no longer pay VAT to Customs but to indicate it on their tax declarations, ”said the report of the Council of Ministers.
The measures taken by the government’s suspension of the exemption from payment of import VAT and suspension of compensation for VAT credits with the mini royalty era have provoked a wave of protests among mining operators.
In recent weeks, the miners have pleaded, before the President of the Republic and the Prime Minister, for the suspension of import VAT because they are not collectors of this tax in the DRC.
Concerning the abolition of compensations for VAT credits, the Council of Ministers decided to suspend it before an assessment.
However, as regards the VAT credits of mining companies, the government has undertaken to reimburse the mining companies for the VAT credits, after the joint audit on the real amount of the stock of VAT to be reimbursed.
A joint government / mining operator commission will be set up to determine the stock of debt and the terms of its repayment, according to the report of the Council of Ministers.
For advances on dividends, the Government has no problem with this issue being dealt with on a case-by-case basis.
As for the Notices to Third Party Holders launched by the DGRAD in accordance with the law which were felt by mining operators as annoying in that it led to the freezing of the accounts of certain miners, the government intends to instruct the DGRAD to suspend them. The execution and joint committee will examine the situation “on a case-by-case basis”.
The Ilunkamba government has not disbursed any rounds since the start of the year to reimburse the VAT collected from the miners, as required by law. On budget forecasts at the end of July 2020 of CDF 408 839 862 942 (242.347 million USD if we consider the average annual exchange rate of 1687 FC per US dollar), the Public Treasury has paid nothing to the miners for refundable VAT. However, for the whole of 2020 the government will have to reimburse up to CDF 700 868 336 472 (415.452 million USD), according to the forecasts of the 2020 Budget.
Faced with pressure from the miners, the President of the Republic, Félix Tshisekedi, received a delegation from the miners on Tuesday, September 8, to discuss this issue of VAT refund, in the presence of the Prime Minister, the Minister of Mines and the Governor of the Central Bank.
The value added tax or VAT is an indirect tax on consumption. Established in 2012 in the DRC, this reform has only encountered poor performance because the revenue collected is only decreasing. To the point that everyone wants a revision of the VAT in the DRC.
