The Democratic Republic of Congo's government has chosen not to collect 3,005.9 billion Congolese francs (CDF) in Value-Added Tax (VAT) revenue for 2024. This amount represents 43% of the country's total tax expenditures, estimated at 7,018.4 billion CDF, and 1.4% of the country's Gross Domestic Product (GDP). According to a report on tax expenditures for 2024, annexed to the 2026 budget bill, this forgone revenue is largely due to exemptions and favorable regimes granted to various sectors.
The mining sector accounts for the bulk of the forgone VAT revenue, with 1,878.1 billion CDF, or 62.5% of the total. This is primarily due to exemptions on imports of goods by mining companies, valued at 1,676.5 billion CDF. Other sectors that benefit from VAT exemptions include public procurement with external financing (348.2 billion CDF), imports of essential products (279.8 billion CDF), fuel (161.8 billion CDF), imports by associations and NGOs (141 billion CDF), imported electricity (69.3 billion CDF), and special economic zones (20.9 billion CDF).
However, experts note that the actual loss of revenue from the mining sector may be lower than reported. Mining companies export most of their production, and the VAT paid upstream by an exporter is in principle refundable. Without exemptions on imports, the state would collect this VAT before refunding a significant portion. The government is working to broaden the tax base and improve revenue collection. In 2023, only 8,895 enterprises collected VAT on behalf of the state, generating 2,776.2 billion CDF, or 23.7% of total tax revenues.
To increase revenue, the government has introduced a standardized invoice system, which requires the use of approved electronic invoicing devices. Finance Minister Doudou Fwamba expects this measure to generate an additional $200 million in revenue by the end of 2026. The ministry has distributed 4,000 devices to operators since March 1, 2026, and penalties have been in effect since May 15. The government aims to improve tax compliance and reduce the gap between potential and actual tax revenues.
The Congolese tax authority, the General Directorate of Taxes, plays a crucial role in collecting VAT and other taxes. In 2023, the authority collected 2,776.2 billion CDF in VAT, a significant portion of the country's total tax revenue. However, the tax base remains narrow, with only a limited number of enterprises contributing to VAT collections. The government is working to expand the tax base and encourage more enterprises to register for VAT.
The mining sector is a significant contributor to the Congolese economy, but its tax exemptions have a substantial impact on government revenue. While the sector's exemptions are largely justified by the refundable nature of VAT paid on exports, the government must balance the need to attract investment with the need to collect sufficient revenue to fund public services. The government must also consider the impact of tax exemptions on other sectors and the broader economy.
The government's efforts to improve tax compliance and increase revenue are ongoing. The introduction of standardized invoices and electronic invoicing devices is a step in the right direction. However, more needs to be done to broaden the tax base, reduce tax exemptions, and improve the efficiency of tax collection. The government must work with stakeholders, including businesses and civil society, to build a more equitable and efficient tax system that supports economic growth and development.
Key points
- The Democratic Republic of Congo's government has forgone 3,005.9 billion CDF in VAT revenue for 2024, mainly due to exemptions granted to the mining sector.
