Congo to suspend value-added tax exemption for mining imports
Democratic Republic of Congo is suspending the value-added
tax (VAT) exemption on imports by mining companies in an effort to bolster
state revenue, the budget minister said.
Jean-Baudouin Mayo told the finance minister to implement
the government's decision to suspend the exemption after cabinet agreed the
move last week, according to a letter dated July 31 and seen by Reuters on
Tuesday,
Congo, Africa's top copper producer, had exempted mining
companies from paying VAT on imports since 2016 to help them during a commodity
price downturn.
Louis Watum, president of Congo's chamber of mines, said
mining firms had not been consulted before the government agreed to reimpose
the tax, a move he said would hit cashflow.
“We want to make the government understand that if they
begin to row back entirely on legal agreements, it will not help the business
climate in our country,” he told Reuters.
The measure would particularly hit projects being developed
that rely on imports of equipment and materials, Watum said.
Chinese-owned companies make up a large proportion of the
smaller and mid-tier miners in Congo. Among the biggest mining companies are
Glencore, China Molybdenum, Barrick, AngloGold Ashanti, MMG Limited , Ivanhoe
Mines and Eurasian Resources Group.
Congo's economy, which has been damaged by the coronavirus
crisis that hammered demand for copper and other commodities, is forecast to
contract by 2.4% this year.
The International Monetary Fund has approved more than $731
million of disbursements in the past year to help the economy.
Congo's foreign exchange reserves were just $836 million at
the end of July, enough to cover just over three weeks of imports, according to
the central bank.
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