Republic of the Congo: VAT on cross-border provision of digital services

The Republic of the Congo on 29 December 2023 published the Finance Act for 2024, which includes provisions requiring nonresident digital services providers to register for and collect value added tax (VAT). Although the Finance Act takes effect on 1 January 2024, the practical implementation of the rules awaits further clarification.

Scope

The regime imposes VAT (currently at 18%) on the provision of “digital services,” which includes the following non-exhaustive list of transactions:

• Online advertising services
• Provision of user data
• Online search engines
• Online intermediation platforms
• Social media platforms
• Digital content services
• Online games
• Online education services standardize Normal education services are exempted from VAT
• Software downloads
• Streaming services
• Digital books
• Mobile applications
• Rental and online service delivery services
• Electronic commerce
• Online data storage services
• Cloud computing services and social media platforms

Commissions earned by digital intermediaries, such as platforms, also fall under these rules.

B2B v. B2C

The regime applies to covered services made to both businesses (B2B sales) and final consumers (B2C sales) located in the Republic of the Congo.

Customer location

The Finance Act specifies that digital services are taxable in the Republic of the Congo if the service is performed there, generally understood as where the customer is located. However, the Act does not provide guidance on using specific geolocation identifiers to determine the customer's location.

Marketplace rules

The Finance Act appears to shift the VAT obligation from the digital services provider to digital intermediaries intervening in the sale of digital services. 

Registration

The Finance Act does not include a registration threshold. Once the activity falls within the scope, the nonresident must register for, collect, and remit VAT. Nonresidents can register using a simplified remote registration procedure via a simplified registration mechanism. The Finance Act instructs the governmental agency responsible for control and regulation of electronic communication to set up an online registration portal.  

While nonresident digital services providers do not need to appoint a local fiscal representative, nonresidents with a VAT registration portal due to other provisions of the Finance Act (e.g., if they sell goods located in the Republic of the Congo) must appoint a local fiscal representative. If such a local fiscal representative is not appointed, the local customer is held liable for VAT and any penalties against the nonresident vendor.  

VAT invoicing

Although the Finance Act does not currently clarify the invoicing requirements applicable to nonresident digital services providers, it states that any taxpayer registered for VAT must issue a VAT invoice. 

Penalties

Penalty provisions in the general VAT law apply.   

Contact us

For more information, contact a KPMG tax professional:

Philippe Stephanny | philippestephanny@kpmg.com

Chinedu Nwachukwu | chinedunwachukwu@kpmg.com

Serges Kouam | sergeskouam@kpmg.cg