DRC Abolishes 20% Withholding Tax on Interest Effective January 1, 2026

The Democratic Republic of the Congo (DRC) has enacted a significant fiscal reform with direct implications for international lending and cross-border financing. Following a decision by the Congolese Parliament, the 20% withholding tax on interest income (“Impôt mobilier”) applicable to loans granted to borrowers located in the DRC will be abolished, effective January 1, 2026.

This reform removes a long-standing structural friction in the DRC’s capital markets framework. By eliminating withholding tax on interest paid to lenders, the DRC materially improves the economics of cross-border lending and sends a clear signal to international creditors, development finance institutions, export credit agencies, and private capital providers regarding its intent to modernize and align with international investment standards.

Scope and Implications for International Capital

The abolition of the withholding tax on interest has tangible, transaction-level implications for both lenders and borrowers operating in or financing the DRC:

• Improved after-tax returns for lenders

Interest payments will no longer be subject to a 20% tax at source, materially improving net yields for international creditors and strengthening the risk-adjusted return profile of DRC-linked transactions.

• Lower effective cost of capital for borrowers

Withholding taxes are typically priced into lending terms. Their removal creates room for more competitive interest rates, longer tenors, and improved financing structures for Congolese borrowers.

• Enhanced bankability of long-term projects

Capital-intensive sectors such as energy, infrastructure, mining, and agriculture, which rely heavily on long-tenor debt, stand to benefit from improved project finance feasibility and stronger lender appetite.

• Greater alignment with international lending standards

The reform brings the DRC closer to jurisdictions that do not penalize cross-border interest flows, facilitating participation by institutional investors bound by strict tax and compliance constraints.

• Positive signaling to private credit and structured finance markets

Beyond its immediate tax effect, the measure signals regulatory intent to create a more predictable, lender-friendly environment, an essential condition for scaling private capital flows into frontier and emerging markets. While the reform is scheduled to take effect on January 1, 2026, lenders and borrowers should assess its application across existing and future financing arrangements, as well as any implementing regulations or guidance that may further define its scope. Transaction-specific tax structuring and documentation will remain essential during the transition period.

CIG continues to monitor regulatory and fiscal developments impacting capital deployment in the DRC and advises lenders and investors on structuring transactions under evolving market conditions.