A foreign company wishing to establish a business in the Democratic Republic of Congo has an option between registering as an external company and forming a subsidiary in Congo. The choice between the one and the other hinges mainly on issues of convenience, privacy and tax. Sometimes, the issue of risk, or rather the limitation of risk, also comes into play. The decision at the end of the day is really a commercial one.
I. Establishing a Business in the D.R. of Congo
From experience, most foreign firms choose to form a private company rather than registering as an external company.
In fact, a foreign company may establish a permanent business in Congo by essentially two means:
a. by registering here as an external company; or
b. by creating or acquiring a subsidiary in Congo.
1. External Company
Firstly, a foreign company or entity may choose to register as an external company in Congo. Such a registration even becomes an obligation if the foreign company establishes a "place of business" in Congo, without at the same time forming a subsidiary.
2. Company Subsidiary
Rather then registering as an external company, a foreign firm may decide to form a new company in Congo or to acquire an existing company, which would then become its subsidiary in Congo.
Such a company may be a private company or a public company. In practice, a subsidiary in Congo of a foreign entity is almost invariably a private company. If this scenario is followed we will have two separate legal entities or companies, namely the holding company abroad and the subsidiary in Congo.
II. Registration as an External Company or Formation of a Subsidiary in Congo?
The question of course is to determine which of the external company or subsidiary in Congo should be chosen by a foreign firm wishing to establish a business in Congo.
The answer to this question depends largely on two factors: convenience and tax. Sometimes a third factor, namely risk or rather the limitation of risk, also comes into play. Broadly speaking concerning the Convenience Factor, registering and operating as an external company is somewhat of a cumbersome administrative process.
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