Financial Crime World

Congo, The Democratic Republic of: New Finance Law Brings Changes to Regulatory Reporting Requirements in Financial Sector

Introduction

The new Finance Law for 2023, effective from January 1st, has introduced significant changes to regulatory reporting requirements in the financial sector of the Democratic Republic of Congo. The law aims to improve tax compliance and transparency among taxpayers, including banks, companies, and individuals.

Changes to Regulatory Reporting Requirements

Banks

  • Banks are now required to notify the tax authorities of their customers’ details within ten days of opening a bank account or changing those details.
  • This move is intended to enhance customer due diligence and prevent money laundering.

Companies

  • All companies are now mandated to have their financial statements certified by an ONEC chartered accountant, failing which the financial statements will be rejected.
  • This requirement aims to ensure that companies provide accurate and reliable financial information to tax authorities.

Penalties for Non-Compliance

  • Taxpayers who fail to comply with the new law’s requirements face penalties ranging from 50 million to 100 million Congolese francs (CDF).

Simplification of Audit Process

  • The law clarifies that tax authorities carry out documentary audits without sending prior notices or requests for information to taxpayers.
  • This move is intended to simplify the audit process and reduce administrative burdens on taxpayers.

Other Key Changes

  • Obligation for taxable persons to issue standardized invoices generated by electronic fiscal devices or a document in lieu thereof, and to have their invoicing system approved.
  • Introduction of a reduced rate of 8% for the sale of domestic airline tickets and an extended list of essential goods.
  • Abolition of the legal requirement to enter formation expenses on the assets side of the balance sheet under ‘formation expenses’.
  • Clarification that provisions set up by credit and microfinance institutions in accordance with their specific rules are deductible only if they are certified by the auditor.

Conclusion

The new Finance Law is expected to improve tax compliance and transparency in the Democratic Republic of Congo’s financial sector. Its implementation will be closely monitored by the authorities, ensuring a smoother transition for all stakeholders involved.