Export incomes repatriation: No mercy for miners
Over the past few weeks, the Lubumbashi and Kinshasa teams of the Central Bank of Congo (BCC) are on a war footing. Indeed, they have conducted field visits to ensure that mining companies comply with the foreign exchange regulations, and more particularly the repatriation of their export earnings in the Democratic Republic of Congo.

Regulations

As foreseen by the new mining code, mining companies must repatriate 60% of their export earnings in the DRC during the investment phase and 100% thereafter, without the possibility of using these incomes for expenses other than local expenses.

In addition, the foreign exchange fee of 0.2% must be paid on all receipts upon full or partial repatriation.

Audit process

BCC has highly accomplished teams. They use all the data available to them and cross-check them to determine whether or not mining companies are complying with their obligations

For this purpose, they use, among other, the monthly reports of transactions occurred in the foreign bank account (where the export receipts arrive), the EB form declarations recorded by the local banks, the values recorded on the export documents recorded by the customs authorities (DGDA) in Sydonia as well as invoices issued by the miners.

At the slightest difference, the penalty is immediate and without appeal! And that's the rub.

For example, although entered as the "total amount invoiced", the values entered by the DGDA do not generally correspond to the amounts actually invoiced at the time of the sale of the ores. It seems that the DGDA does not take into account discounts granted or considers its own market value as selling price.

Sanctions

For the year 2019, the BCC has revised upward (of course) its tariffs in case of non-compliance with foreign exchange regulations.

Imagine that a BCC team goes to a mining company for performing an audit. If this company cannot be available within 2 business days, it incurs a penalty of $ 150,000.

During this audit, if a gap of one million dollars is highlighted between the invoiced amounts and those mentioned on the export declarations (DGDA), the BCC will consider that this million should have been declared as export receipts, although never cashed.

The sanctions could be as follows:

• 1.5% for non-declaration,

• 1% for non-payment of the foreign exchange fee,

• 0.5% of foreign exchange fee,

• 5% of 60% of 1 million for failure to repatriate.

While another company disclosing 1 million export receipts is required, in addition to the 60% repatriation, to pay only $ 2,000 in foreign exchange fees, our mining company will have to pay a total of 60,000 dollars, i.e. 30 times more.

Finally, if our company refuses to sign the closing minutes of this audit, she could be asked for $ 30,000 of penalties. 

Therefore, we advise to be very vigilant, to draw a particular attention to the monthly reports submitted to the BCC and to check the consistency of the different values used during these audit before being cornered.

What next?

Once the audit is closed and the taxpayer sanctioned, the BCC teams finish their mission.

But still the Ministry of Mines, thanks to the new mining code, can visit you...

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We are available to assist you.

PricewaterhouseCoopers Tax & Legal

Emmanuel Le Bras

PricewaterhouseCoopers Tax & Legal

Partner - Francophone Africa Energy Leader

Pointe Noire | République du Congo

[email protected]

+242 05 557 76 76

Lia Loumingou

PricewaterhouseCoopers Tax & Legal

Senior Manager

Lubumbashi | République Démocratique du Congo

[email protected]

+243 999 309 902

Elvire Denamur

PricewaterhouseCoopers Tax & Legal

Senior Manager

Lubumbashi | République Démocratique du Congo

[email protected]

+243 999 309 902

Samuel Cazes

PricewaterhouseCoopers Tax & Legal

Senior Manager

Lubumbashi | République Démocratique du Congo

[email protected]

+243 999 309 902

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