Democratic Republic of the Congo (DRC) suspends import VAT exemption of mining companies

SMM: Democratic Republic of the Congo (DRC) budget minister said that the suspension of import VAT exemption for mining companies is aimed at increasing national revenue.

Jean-Baudouin Mayo, the budget minister, told the finance minister that he would implement the government's decision to suspend the exemption of VAT, which was agreed by the cabinet last week. The Democratic Republic of the Congo (DRC) is the largest copper producer in Africa.

Since 2016, the Democratic Republic of the Congo (DRC) has exempted mining companies from VAT on imports to help them weather the price downturn.

Louis Watum, president of the Democratic Republic of the Congo Mining Association, said: "Mining companies were not consulted before the government agreed to re-tax. He said the move would affect corporate cash flow. "

"We want the government to understand that if they start to make a complete retrogression in legal agreements, it will not help the business environment in our country," he said. "

"this measure will particularly hit projects under development that rely on imported equipment and materials," Watum said.

Among the small and medium-sized miners in the Democratic Republic of the Congo (DRC), Chinese enterprises account for a large proportion.

Large mining companies include Glencore (Glencore), China Molybdenum (China Molybdenum), Barrick Gold (Barrick), Anglo Gold (AngloGold Ashanti), Ivanhoe Mining (Ivanhoe Mines) and Eurasian Resources Group (Eurasian Resources Group).

The novel coronavirus crisis has hit demand for copper and other commodities and affected the economy of the Democratic Republic of the Congo, which is expected to contract by 2.4 per cent this year.

The International Monetary Fund ((IMF)) has approved more than $731 million in grants over the past year to support the country's economy.

According to central bank data, as of the end of July, the foreign exchange reserves of the Democratic Republic of the Congo (DRC) were only 836 million US dollars, just enough to meet the import demand for a little more than three weeks.

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