Staggered tax payment: what changed under Congolese tax law?

Prof. Dr. Carlos KANINDA MUKENA

August 2023 · 6 min read

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Staggered payment lets a debtor in difficulty obtain, from the competent Tax Director, a suspension of enforcement action in exchange for a commitment to settle the tax debt — plus penalties — under a plan spread over time. But since Finance Law No. 22/071 of 28 December 2022 for fiscal year 2023, this mechanism no longer applies indiscriminately to every reassessed or regularized tax. A seemingly minor addition of a few words to Article 74 of Law No. 004/2003 carries considerable practical weight.

1. Setting the context

Spontaneous taxes are paid through self-assessed returns, presumed accurate and truthful. Assessed duties, on the other hand, are recovered on the basis of the Notice of Enforcement (Avis de Mise en Recouvrement, AMR) and, for older cases, the Roll and the Extract-of-Roll Notice. The Law grants the tax administration the exclusive power to conduct on-site and desk audits, in order to assess ex officio where no return was filed, or to correct understatements of duties owed to the Public Treasury found in returns filed by the taxpayer, whether an individual or a legal entity.

At the close of a desk audit, irregularities found are notified to the taxpayer through a Regularization Notice; an on-site audit, for its part, concludes with a Reassessment Notice or, where no irregularities are found, a No-Grounds Notice — an innovation of the 2023 Finance Law, which replaces the former No-Assessment Notice.

After notification of the reassessment or regularization, and as part of the adversarial procedure, Article 37 of Law No. 004/2003 grants the taxpayer twenty days to send the Tax Administration either reasoned observations or confirmation of the assessments. The multi-purpose auditor, in the context of an on-site audit, or the account manager, then notifies either a revised notice or confirmation of the assessments.

2. Staggered payment: what you need to know

It follows from the first paragraph of Article 74 of Law No. 004/2003 of 13 March 2003 on the reform of tax procedures that, where a debtor is unable to pay a tax debt given the state of its treasury, a suspension of enforcement action may be granted by the competent Director or their delegate, in exchange for the debtor's commitment to settle the debt — plus penalties — under a staggered plan.

Article 53 of Finance Law No. 22/071 of 28 December 2022 for fiscal year 2023 amends and supplements that paragraph: the suspension of enforcement action remains possible under the same conditions, but now applies only to tax debts "relating to taxes for which [the debtor] is the real party liable."

2.1. What actually changed, given it is visibly the same text?

The change made by Article 53 comes down to a handful of words: "relating to taxes for which it is the real party liable." It also demonstrates that not every reassessed or regularized tax can benefit from a staggered payment agreement, even where the debtor is in hardship or indigent.

Where this payment method is requested, the applicant company may, in the case of a general reassessment, split its notice and request staggering only for the tax or taxes reassessed or regularized for which it is, in light of the Law, the real party liable. That leaves the central question: if the "real party liable" clarification introduced by the 2023 Finance Law changes everything, who is a real party liable?

Real party liable, legal party liable: the distinction that governs everything

In simple terms, a real party liable is the one who bears the tax burden — in other words, who ultimately carries the tax.

To illustrate, the Law requires every tenant to withhold 10% at source on rent paid, in order to remit it to the Treasury account. The tenant here is a legal party liable: it is tasked by the Tax Administration with (1) withholding 10% of the rent at source and (2) remitting it to the urban Treasury account.

The landlord, on the other hand, who bears the weight of that tax, is the real party liable — since it is the landlord's rental income that was reduced.

For which taxes can a company, an individual or a legal entity, actually be the real party liable? We will return to this shortly.

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