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6.5. Deduction of Cross-Border Payments and Non-Deductible Expenses

Expenses incurred for the purpose of business are deductible unless they are specifically disallowed.

Following payments made to non-residents is not allowed as deductible expenses:

  • Head office overheads or remuneration for services paid to non-residents in excess of 20% of taxable income before the deduction of such items
  • Head office fees or remuneration for certain other services (studies and technical assistance) paid to non-residents by companies engaged in building and public works, and engineering firms exceeding 2% of the turnover
  • Royalties from patents, brands, models or designs paid to a non-resident companies participating in the management of, or owning shares in, the resident companies.

The disallowance of the above expenses is considered as paid benefits and subject to tax as dividends.

  • Commission or brokerages in respect of goods purchased on behalf of resident companies in excess of 5% of the purchase amount made by the central purchasing office, the head office, or the intermediaries

The following general expense types are not deductible or have limited deductibility for tax purposes in Republic of Congo:

  • Personal expenses
  • CIT and recoverable VAT
  • Penalties related to violation of regulations. All penalties and fines effective from 1 January 2019.
  • Interest paid to a shareholder in excess of the central bank annual rate plus two points. If the shareholder is in charge of management, interest on the portion of the loan exceeding one-half of the capital stock
  • Donations and gifts in excess of 0.5% for support and development of sport and 50% of donations made upon the occurrence of a natural disaster or accidental disaster
  • Certain specific charges, gifts, subsidies, and penalties
  • Payments that do not produce a compensatory benefit, such as excessive remuneration paid to a director