How a foreigner can open a company in DR Congo

The Democratic Republic of Congo (DRC) has the potential to soon become Africa's richest economy due to its abundance of mineral deposits such as copper, cobalt, gold, diamonds, zinc, iron and uranium. The DRC is also home to the second-largest freshwater river after the Amazon, as well as the second-largest rainforest in the world.

Advantages of Doing Business in the Democratic Republic of Congo

The Congolese government has implemented programs to attract foreign investment, including:

• Under the Investment Code, companies will be allowed a full tax exemption for up to 5 years if they invest between US$10,000 and US$200,000 in a project approved by the National Investment Promotion Agency (ANAPI) and contribute at least 35% of the added value to that activity;
• Logistics companies established in the DR Congo enjoy certain tax incentives, including VAT exemption on intermediate and finished goods, import duty exemption on raw materials and equipment, and the availability of preferential tariffs on energy consumption for at least 4 years;
• Mining companies based in the DR Congo participating in the projects approved by the government will not be required to pay customs duties when exporting products to other countries. In addition, other fiscal benefits are also available, including exemption from land tax, vehicle tax, and road traffic tax;
• Companies importing or exporting electricity to the DR Congo will benefit from exemption from customs duties and VAT on imports of inputs for the production process, exemption from duties and VAT on imports of electricity, and a reduced rate of 1% on energy exports.

Types of Companies in the DRC

Society Limited by Liability (SARL). This legal structure is an option for foreign investors looking to do business in the DRC, which is regulated by the OHADA (Organization for the Harmonization of Business Law in Africa) system. Foreigners may register a limited liability company with only one shareholder investing a minimum of US$1, appointing one director who does not have to be a resident of the country.

Limited liability companies in the DRC are classified into different categories depending on their structure and purpose. Common types of limited liability companies include:

• Private Limited Liability Company. A private limited liability company, designated as “Ltd.”, is a separate legal entity with limited liability for its owners. It limits the transferability of shares and requires a minimum number of shareholders.
• Public Limited Liability Company. A public limited liability company, designated as “Plc.”, allows the general public to purchase shares and trade them on the stock exchange. This requires a higher level of compliance and transparency.
• Non-profit company.Non-profit companies, often called associations or foundations, operate for charitable, religious or social purposes. They have specific rules governing their operations and financial management.

Public limited liability company (SA).A company that requires at least three shareholders, who may be of any nationality and do not have to be residents of the DRC, a minimum paid-up capital of US$20,000, a statutory auditor's office, and a minimum of 100,000. Although one director may be appointed, a three-member board is usually appointed. Like other business entities, SAs are required to file financial statements and tax returns with the Ministry of Finance annually. Financial statements must always be audited.

Simplified Joint Stock Company (SAS). Since 2014, foreign and local investors can create simplified joint stock companies, which follow the French business entity of the same name. This legal entity is similar to the SARL, but offers much more flexibility in terms of the management of the company, especially with regard to the transferability of shares.

Like the SARL, the simplified joint stock company can be registered with one shareholder with a minimum paid-up capital of US$1, which must be paid in before the company is registered. The appointment of one director is a requirement, but the director does not have to be a resident of the DRC.

Unregistered Company (Société en Participation). A company that is not officially registered and is recognized only by its partners.

A de facto company. A company that results from the actual conduct of two or more persons acting as partners, without forming a legal entity.

Branch. A subsidiary of a foreign organization that carries out part of its activities in the DRC.

DRC Free Zone Company.A company can be registered in an industrial park or special economic zone after review and approval by the relevant authority. The National Investment Promotion Agency (ANAPI) follows certain criteria for registration of a Special Economic Zone (SEZ) program, which vary significantly depending on the project. They generally include a minimum investment (at least US$200,000 is recommended) and the creation of at least some jobs in the DRC to train nationals.

Companies registered in a free zone enjoy an exemption from corporate tax, provided they meet the criteria appropriate to their main activity.

Foreigners can register a company in one of the special economic zones of the Democratic Republic of the Congo if they plan to manufacture and export the majority of their products. Key sectors welcoming foreign investment:

• hydropower;
• oil and bauxite mining;
• marine manufacturing;
• heavy industry based on copper and cobalt;
• forestry;
• agribusiness.

Steps to Starting a Business in the DRC

Step 1: Decide on the Type of Company

There are two main options for registering a company in the Democratic Republic of the Congo:

Option 1: Register a branch of your foreign company. This branch will operate as an extension of your foreign company. To do this, you will need to provide a notarized certificate and other registered documents from the parent company. Remember that the downside is that your foreign company will be directly liable for any liabilities that the branch incurs in the DRC.

Option 2: Register the company as a subsidiary or as a fully independent entity. To do this, you will need to provide the following documents:

• three preferred names for the new company
• a description of the activities
• copies of the passports of the directors and shareholders
• passport-size photographs of all directors and shareholders.
• postal, physical and email addresses, phone numbers and occupations of all shareholders and directors
• percentage of shares

Step 2: Choose a unique company name

Choosing a unique and distinctive name for your company is an important step. The name should reflect the personality of your business and be easily recognizable to your target audience.

Step 3. Approve the draft Articles of Association

The Articles of Association set out the internal rules and governance of the company. It includes details such as the company's objectives, share capital, management structure, and shareholder rights.

Step 4. Have the Articles of Association notarized

Once the Articles of Association have been prepared, they must be notarized by a licensed notary in the DRC. The notary verifies the authenticity of the document and confirms its legality. When submitting the Articles of Association, be sure to bring all necessary identification documents, company details, and payment of notary fees.

Step 5: Obtain a Tax Identification Number (TIN)

Every registered company in the DRC must have a Tax Identification Number (TIN). You can obtain a TIN by contacting the relevant tax office. Provide the necessary documents, such as proof of identification, company details, and Articles of Association. The TIN will be used for tax purposes and must be stated in all official business transactions.

Step 6: Register with the Trade Registry

To legalize your company, you must register with the Trade Registry. Provide the necessary documents, including notarized Articles of Association, proof of payment of registration fees, identity cards of shareholders and directors, and any additional forms specified by the Trade Registry. Once your application has been processed and approved, you will receive a Certificate of Registration.

Step 7: Open a Bank Account

Once you have received the Certificate of Registration, open a corporate bank account in the DRC. Provide the necessary documentation, including the Certificate of Registration, proof of company address, identification documents, and proof of residence.

Taxes

The tax regime in the Democratic Republic of the Congo is quite simple: the personal income tax rate ranges from 0 to 30%, corporate tax is 30% for mining companies, corporate tax is 35% for other companies and VAT is 18%.

Mining

To open a mining trading post, you must simultaneously apply to the Ministry of Mines and the Department of Mining Services. The application must contain the following elements:

For sole proprietors:

• Copy of applicant’s ID or residence permit
• Three copies of the biographical data page of the applicant’s passport
• Certified copy of the Trade and Personal Credit Register (RCCM)
• A valid fiscal certificate confirming tax records
• Bank references
• Deposit of US$50,000 for diamond trading, US$25,000 for gold trading
• Evidence of ability to pay the DRC Treasury an annual royalty of US$200,000 for diamond trading and US$50,000 for gold trading
• Certificate of criminal record from the country residence

For corporations:

• RCCM certification
• Notarized articles of association with proof of deposit
• National identification number
• Fiscal certification
• Bank references
• Proof of deposit of US$50,000 for diamond trading post and US$25,000 for gold trading post
• Proof of ability to pay the DRC Treasury an annual royalty of US$200,000 for diamond trading and US$50,000 for gold trading

Terms and conditions for diamond and gold trading

• Trading post may only operate in Kinshasa or in the immediate vicinity of the mine.
• The agreement is valid for one year and may be extended.
• All buyers must have official identification cards issued by the Ministry of Mines.
• Exporters of diamonds and gold must pay a tax of 1.25% of the export value.
• The minimum purchase for the gold trading point is 25 kilograms per month.

The minimum purchase amount for the diamond trading point is:

• First quarter: US$10,500,000
• Second quarter: US$12,000,000
• Third quarter: US$15,000,000
• Fourth quarter: US$10,500,000 USA