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5.1. Tax Base for Resident Entities

The Republic of Congo applies a territorial corporate tax system whereby companies are taxed on income derived from activities / operations carried out in the Republic of Congo. Income from activities / operations carried out outside Congo is exempt from tax in Congo.

Expenses incurred for the needs of the business are deductible provided they are adequately justified, are reasonable and their non-deduction is not expressly disallowed by tax law provisions. Interest on indebtedness is normally deductible, but the deduction of interest paid to shareholders is subject to limitations (See Sec. 13.2.).

Capital gains are considered as ordinary income and taxed at CIT rate. However, tax can be deferred if the sale proceeds are reinvested in purchase of new fixed assets within three years of sale.

Capital gains on transfer and discontinuation of business are taxed in different manner (See Sec 11 below).

Dividends are considered as ordinary income and taxed at the CIT rate. Profits credited to a non-compulsory reserve after a period of 3 years is also considered as dividends and liable to withholding tax.

Inter-company dividends are exempt from CIT subject to certain conditions. (See Sec. 8.1.1. below for tax rates).