DEMOCRATIC REPUBLIC OF CONGO Law and Practice Contributed by: Salvatrice Bahindwa, Concorde Akonkwa and David Djunga, LegalterLaw
Limitations on Financial Expenses Thin capitalisation mechanisms limit the deductibility of interest paid to related enterprises when the debt ratio exceeds certain thresholds. This measure aims to prevent the erosion of the taxable base through excessive indebtedness to entities within the same group. Headquarters’ expenses and technical assis - tance fees invoiced by foreign companies are also strictly regulated. Withholding Tax System The DRC applies a system of withholding taxes on payments made to non-residents (20% on interest, royalties and service provisions), constituting a pre - ventive mechanism against the erosion of the taxable base. These measures are accompanied by enhanced reporting obligations aimed at improving the tax trans - parency of cross-border operations. 10. Employment and Labour 10.1 Employment and Labour Framework The legal framework governing employment in the DRC is primarily regulated by the Labour Code, enacted by Law No 015/2002 of 16 October 2002, and amended in 2016. This Code is inspired by the inter - national standards of the International Labour Organi - zation (ILO) and covers several essential aspects: • employment contracts; • the rights and obligations of employers and employees; It is supplemented by implementing decrees, sector- specific laws (such as Law No 007/2002 on occupa - tional health and safety), and international agreements ratified by the DRC. The enforcement of these regulations is overseen by the General Labour Inspectorate, a service under the Ministry of Labour and Social Welfare. Labour dis - putes fall within the jurisdiction of specialised labour courts. • working conditions; • social security; and • dispute resolution mechanisms.
Collective agreements are negotiated between trade unions and employers at the enterprise level. Such agreements may include provisions more favourable to workers than those provided by law, but they cannot derogate from mandatory legal provisions. The dura - tion of collective agreements is freely decided by the parties. A fixed-term collective agreement cannot be terminated before its expiry and is tacitly renewed as an indefinite agreement if not denounced. Conversely, an indefinite collective agreement may be wholly or partial - ly terminated by either party, subject to a written notice period of three months unless otherwise stipulated. There is also a National Interprofessional Collective Labour Agreement dated 30 September 1995, which applies to enterprises operating in certain sectors, including extractive and manufacturing industries, construction and public works, electricity, gas, water and sanitary services, commerce, banking, insurance, real estate, transport, warehousing, communication, and services. Trade union freedom is recognised; every worker is free to join or not join the trade union of their choice. Worker representation within enterprises is ensured through an elected delegation, which has competence over all matters relating to working conditions. The employer is required to consult this delegation on working hours, general criteria for hiring, dismissal and transfer of workers, remuneration and bonus systems, and the drafting or modification of company regulations. For foreign investors, several key points must be understood to ensure compliance and minimise risks. 1. Employment contracts must be in writing and of indefinite duration for permanent positions. Any indi - vidual dismissal must be justified. In the event of unfair dismissal, the employer is obliged either to reinstate the employee or to pay compensation equivalent to 36-months’ salary. 2. An employee may not enter into more than two fixed-term contracts with the same employer, nor renew a fixed-term contract more than once, except in certain cases such as seasonal work or activities in the mining, hydrocarbons, and hotel sectors.
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