DRC orders oil firms to pay taxes in dollars

DRC President Joseph Kabila

Mining and oil firms in Democratic Republic of Congo must pay taxes and import duties in U.S. dollars, from this weekend, rather than in the national currency, the Central Bank of the Congo said.

The decision is part of an attempt by authorities to increase reserves of foreign currency, weakened by a slump in global mining and oil prices that has hit government revenue.

It reverses a policy established in 2014 to require companies to pay taxes in francs as part of a drive to wean the central African country off dollars.

Congo is Africa’s top producer of copper, and mining is key to an economic boom that has seen growth rates of 8 percent for five years, among the highest in the world, according to International Monetary Fund figures.

Mining and oil companies contribute more than $2 billion per year to government revenue, according to the Extractive Industries Transparency Initiative, which sets a global standard for accountable management of natural resources.

The measure would enable the Bank to “get a grip on some of the currency supply” and allocate it rationally to the public and private sector, said Governor Deogratias Mutombo.

Kabila is due to step down after presidential elections set for November, when his second term ends.

The central bank said in February it would buy francs and increase the percentage of deposits banks must lodge with it, in an early move to prop up the currency.

Congo’s exchange rate has held steady and stands at 936.95 to the dollar, according to the central bank. Inflation last year was less than 1 percent.

 

Reuters/UO