3 DESCRIPTION OF THE TAX SYSTEM FOR FORESTRY IN THE DEMOCRATIC REPUBLIC OF CONGO

As a system, the tax system for forestry in the Democratic Republic of Congo is founded on the orders, laws and ministerial and inter-ministerial decrees of administrative regulations, which organise the collection of forestry taxes. The orders are signed by the President of the Republic and the decrees by the minister responsible for forestry. We will present here the name of each tax followed by the legal texts (order or decree) regulating it.

3.1 Surface area taxes

This tax is levied by the Office for Forestry Management and Hunting under the Ministry responsible for forestry, in conformity with order number 86-114 of 10 April 1986. It is levied annually at no given period in the year and is currently USD 0.147 per 100 ha in concessions granted in a Supply Guarantee (decree number 042 of 7 February 1994).

3.2 Tax on felling permit

Levied in accordance with decree number 009 of 7 September 1985 by the FRFC, this tax is paid annually when a felling permit is issued. Its value is currently USD 2.00 per hectare.¹

3.3 Tax on felled wood

This tax falls into the domain of decentralised entities, that is, provincial coordinating bodies who levy and use it according to decree number 011 of 27 December 1985. Its calculation is based on information provided by wood harvesters themselves.

3.4 Tax on non-wood products (Forestry Products Menus)

In the Democratic Republic of the Congo, non-wood products are linked to forestry products menus (FPM). This tax is applied to the purchase of firewood and charcoal, as well as to the harvesting and export of medicinal plants (for example: rauwolfia vomitoria, decorative roots, copal, wood bark etc. in accordance with decree number 42 of 7 February 1994). It is applied as follows:

A. Construction wood (logs and poles)

Category 1 from 0 to 0,010 m at : 0.28$US/m3
Category 2 from 0,11 to 0,30 m at : 0.28$US/m3
Category 3 from 0,31 to 0,050 m at : 0.084$US/m3

B. Tax on Forestry Products Menus

• At harvesting

• Rauwolfia
• Voacanga and digitalia
• Decorative roots
• Gums, lacs, copal and other

• For export

• Rauwolfia
• Voacanga and digitalia
• Decorative roots
• Gums, lacs, copal and other

3.5 Tax on transformed wood

The consumer/buyer of sawnwood and plywood on the local market pays this tax in the form of Tax on Turnover, at 6.75% and which is then forwarded by the seller to the tax services in his area.

3.6 Tax on export of logs and transformed products

The Fund for the Reconstitution of Forestry Capital (FRFC) levies this tax ad valorem to export in conformity with decree number 91 of 29 August 1988 which sets out the means of application as follows:

4% on logs
2% on sawnwood
1.5% on other products

3.7 Tax on export revenues

This tax is levied by the Customs and Excise Office (CEO) in conformity with order number 86-044 of 8 July 1986. It is 6% of currency brought back into the country.

Tax on Turnover (TOT) - also levied by the Customs and Excise Office, this tax is instituted by order number 86-044 of 8 July 1986. Its rate was set in order number 69-058 of 5 December 1969. Another tax of the same name is levied at 18% by tax service agencies in the country. The basis for calculation is based on TOT Model “E” and the product sales contract.

3.8 Export taxes

Tax on exit duties only apply to untreated roundwoods, even logs roughly hewn with an axe or adze, and following species named below:

Table 2 Codification of species for export (tax on exit duties)

3.9 Remunerative tax

This tax is levied by five State companies: the National Transport Office (NTO), the Maritime Freight Management Office (MFMO), the Customs and Excise Office (CEO), the Congolese Monitoring Office (CMO) and the Central Bank. It is fixed by order number 80-256 of 12 November 1980 and is applied in conformity with decree number 003/83 of 17 January 1983 which determines the amounts of commission to collect by MFMO for its intervention in loading and unloading freight operations. Table 3 summarises this information for each State company levying this tax as well as the services granted by them to economic operators who export wood.

Table 3 Companies benefiting from remunerative tax

3.10 Tax on equipment and workers

It is a tax based on harvesting and wood transformation equipment and the number of expatriate workers and the workforce. Paid annually, this tax is 30% of the equipment value.

3.11 Tax on revenue

As for all other companies running in the country, forestry businesses pay tax on revenue to the State. This tax is 50% of gross revenue.

3.12 Historical information on these taxes

Surface area tax. In spite of the flexibility of Zaire’s currency throughout 1992, this tax remained fixed at Z 100/ha (that is USD 0.47/ha) (Decree number 10 of 6 April 1993) until the changeover of Zaire’s currency to NZ in 1994. It was at this time that it was brought up to date and fixed at NZ 5 per 100 ha (decree number 42 of 7 February 1994).

Tax on felling permit. It is one of the rare taxes which underwent change even though it stayed for a long time at NZ 100/ha before rising to NZ 350/ha in 1988 (that is USD 1.64/ha). It finally rose to USD 2.00/ha since 1996 (decree number 013 of 28 February 1996).

Tax on wood for export (proportional taxes). These taxes also underwent change compared to their level before the setting up of the FRFC in 1985:

	Before 1985	After 1985
Logs:	Z 400/m3	4.0% FOB value
Sawnwood:	Z 75/m3	1.5% FOB value
Veneer:	Z 200/m3	2.0% FOB value

CEO tax on exit duties. This tax dropped from 7% to 6%.

TOT and MFMO tax. They remained successively fixed at 6.75% and 0.5%.

3.13 Other taxes

There is another form of tax undefined by the State, but which is paid in cash or in kind to decentralised bodies, more precisely to the traditional chiefs called “ land chiefs”, resident in forests designated for harvesting by the State.

This “tax” called “Royaliste” in the Democratic Republic of Congo can vary from a motorised pirogue to a hunting rifle even to the setting up of a socio-economic infrastructure such as a bridge on a river, a village dispensary or a school shelter. It is the expression of a contradiction latent for a long time between land ownership law and the traditional vision of the notion of land ownership. This conflict will soon be resolved with the new forestry bill from the last forum organised in May 2000 with the aid of FAO and the UNDP in the Democratic Republic of Congo.

There are also purchasing licences and the sale of firewood and charcoal whose costs are collected by the urban councils, which are offshoots of the forestry administration. It should also be mentioned that felling permits are issued to small-scale harvesters, called pit sawyers, whose surface areas do not exceed 50ha per permit per year.

Even though harvesters of firewood and charcoal and pit sawyers regularly receive their licences and felling permits for industrial roundwood for processing, their harvesting activities totally escape the forestry administration out of a lack of monitoring and follow-up. It is the category of harvesters which makes up what is called the “informal forestry sector” because it goes untaxed. Nevertheless, the volumes of wood taken annually by this category of harvesters are, in the perspective of demand, two to three times higher than those taken by the formal forestry sector.

Table 4 summarises the main forestry taxes in the Democratic Republic of Congo.

Table 4 Summary of taxes

¹ According to decree number 042 of 7 February 1994, taxation is set based on the rate of exchange of USD 1.00 = NZ 35.00.