DR Congo Government Calls for Reduced Operating Costs of State Institutions

The government of the Democratic Republic of Congo has been pressuring major telecommunications operators in the country to significantly increase their tax payments. In December 2021, officials from President Felix Tshisekedi's administration summoned executives from Vodafone, Orange, Airtel, and Africell to the presidential mansion in Kinshasa. There, they were informed of plans to raise their companies' tax bills.

A Belgian consultant named Philippe Heilmann, who had previously worked with the government on tax strategies, was present at the meeting. He told the telecom executives that they would have to comply with the increased tax demands. This led to a standoff between the companies and the government, with the CEOs having their passports confiscated and their operating licenses threatened.

While the initially proposed tax increase did not materialize, the telecom operators and the government ultimately reached a different agreement. Under this deal, the companies collectively agreed to pay an additional $5.8 million per month to the telecoms regulator through 2030. The Congolese government has long accused the telecom companies, which are among the largest multinationals operating in Africa, of hiding earnings and dodging taxes, allegations that the companies deny.

The push for higher taxes on the telecom sector reflects the DR Congo government's desire to increase revenue from what is seen as an important part of the country's economy. The Democratic Republic of Congo has one of the lowest broadband internet access rates in the world and a large untapped market potential. The high tax burden on telecoms in Congo, which is among the highest in sub-Saharan Africa, is part of the government's efforts to supplement its budget.

The pressure on major telecom operators to pay more in taxes comes as the DR Congo government calls for a reduction in the operating costs of state institutions. By seeking to raise more revenue from the private sector, particularly large foreign companies, the administration aims to free up funds to support its own operations and services for the Congolese population. "The telecoms sector is an important revenue source for the Congolese government," a government official stated, emphasizing the focus on extracting more tax dollars from the industry.

Key Takeaways

• DRC govt pressuring major telecom firms to increase tax payments significantly.
• Telecom CEOs had passports confiscated and licenses threatened over tax dispute.
• Telecoms agreed to pay $5.8M extra per month to regulator through 2030.
• DRC has low broadband access, sees telecoms as key revenue source.
• Govt aims to raise more from private sector to fund its own operations.