4 ADMINISTRATION OF TAX SYSTEM FOR FORESTRY

The tax administration for forestry in the Democratic Republic of Congo is made up of five services and public enterprises responsible for the collection of approximately ten taxes in relation to their areas of activity as the summary table presents them. Table 5 below presents the services and public enterprises as well as the taxes charged that they collect.

Table 5 Services and public enterprises responsible for tax collection in the Democratic Republic of Congo

N.B There is no mention made of the GOALR responsible for centralising all revenue from the State to the Central Bank.

4.1 Process of setting forestry taxes

The processes for setting forestry taxes are based on two methods as follows:

- the grade-related method; and
- the declaratory method

It is the latter which is most widespread in the Democratic Republic of the Congo. Indeed, it is the harvester himself who, in making the quarterly tax declaration, determines the elements liable for tax. The tax is then calculated by the service collecting the tax on the basis of the declaration undersigned by the harvester and taken to be exact and honest. There is no means of calling on competition and taxes are not regularly updated.

Information on taxes are published by means of ministerial decrees and put at the disposition of services that mobilise revenue, but are rarely published by the media. Taxes are decided by the Ministry responsible for forestry on proposals submitted by a permanent inter-ministerial commission composed of government experts and representatives of the Wood Profession and the Congolese Business Federation (CBF). This commission’s decisions are taken on the basis of consensus before being passed under the form of a decree by the ministry responsible for forestry. Taking into account the flexibility of local currency, taxes are supposed to be revised annually depending on the current rate but that has not always been the case.

4.2 Collection of taxes and supervision

In accordance with the texts of orders and various decrees regarding the setting of forestry taxes, public services and enterprises responsible for collection calculate taxes on the basis of volumes of wood felled in forests and declared by forestry harvesters. The evaluation of wood products and their grading according to their quality are done by harvesters themselves.

Central administration, decentralised bodies (provincial coordination, districts and territorial supervisors) have a means of follow-up and monitoring of forestry harvesting, but this process has not been in use for a long time, simply due to the lack of finance. Only a few management tools, such as quarterly declaration forms and felling notebooks, are the link between those involved in tax collection and the creation of primary statistical information. The absence of follow-up and supervision surely give rise to tax evasion.

Surface area tax is paid annually at the end of the year. Tax on felling permits is paid when the permit is being issued. It is the same for other remaining taxes which are paid when documents are issued ad hoc, the exception being proportional taxes (ad valorem) which are taken by the Bank when currency is brought back into the country.

4.3 Collection process

The revenue stamp is the only proof of having paid dues to the public treasury department. The revenue stamp can be obtained from the General Office for Administrative, Judicial, and Land Revenue and Contributions (GOAJLRC) at commercial banks or again at financial institutions and other registered organisations in cash or by cheque.

The person liable for tax obtains a collection or taxation document from the tax-collecting service concerned to know the amount to pay for the service, the document or the act which is required. The collection document established is transmitted by the service collecting the tax to a computer at the GOAJLRC allocated to each taxation service for a stamp with an order to pay. The order to pay confirms the amount to be paid and gives authorisation to the taxation service to receive the money.

All revenue received following the order to pay is channeled by the GOAJLRC to the State fund, the Central Bank. An amount equivalent to only 5% of revenue collected will be kept to cover the operating costs of the service collecting the revenue.

Tax on felled wood is supposed to be paid following a quarterly declaration, a copy of which is kept for the provincial coordination for this matter. However, given the absence of follow-up and monitoring, the wood harvester can make a declaration according to his conscience when he likes.

At all levels and for all taxes, payment is made in cash. Local communities intervene neither in collection nor in monitoring the levels of wood harvesting in forests.

4.4 Government intervention at different levels of tax administration

Government intervention in tax administration is dealt with at three main levels in the wood chain:

1. In the forests or in the provinces, this is done by provincial coordination concerning tax on volumes of wood harvested (felled).

2. At a central level, this is done by the OFMH, the FRFC and the Central Bank concerning successively surface area tax, tax on felling permits and proportional tax on exported wood products. There is also room here to mention tax on forestry products menus collected centrally by the OFMH.

3. At the port where exports leave the country (Matadi) by the MFMO, the CMO and the CEO concerning successively the costs of intervention during loading, remunerative tax, the TOT and exit duties.