(Business in Cameroon) - Taxation: balancing revenue growth and procedural streamlining

The Cameroonian taxation reforms provide us today with a powerful legal infrastructure. These reforms improve state revenue whilst protecting the rights of taxpayers against possible abuse or errors of administration.

At the heart of the Cameroonian tax machine is the Value Added Tax (VAT), the result of a reform that increased the tax on turnover. Since the Finance Law of 2005, the VAT rate in Cameroon increased from 18.7% to 19.25% (still lower than the regional standard).
In addition, there is excise duty on most beverages, tobacco, jewellery (25%) and vehicles (12.5%).
In recent years, the government has increased the tax collection on personal income. This is calculated according to a variable procedure of withholding tax, with rates ranging from 10% to 35% for the highest earners.
However, there is a deduction of 500,000 FCFA on the sum of categorical net income before calculating taxable income. The latter, which requires the removal of paid social security contributions, is also an allowance of 30% with the calculation of fees. This is aimed to alleviate the burden of income taxation and encourage expenditure.

Corporate tax

As for tax in the Cameroon corporate sector (currently at a rate of 35% excluding municipal surcharges), the amount is calculated on the traditional basis. Namely, the revenue minus the expenses incurred by the company for its operating expenditures. This is subject to certain items excluded by law from the scope of deductibles which is then reinstated to the total profit.
Companies associated with the construction of large infrastructure projects, for example roads, bridges, ports and energy sources benefit from significant tax advantages.
The company based in Cameroon must also bring their license with recorded revenues for municipalities in the same manner as municipal surcharges. This represent 10% of the VAT tax on corporations or on personal income.
Additionally, most transactions, including those with the State, require registration fees. These range from 0.25% to 10% depending on the nature and value of the transaction.

Incentives
In some respects, Cameroon offers tax exemptions favourable to French companies. This applies to the special tax on income for services billed abroad. The rate is typically 15%, but drops to 7.5% if the company is domiciled in France under the French-Cameroonian fiscal Convention.
There are also plans to benefit tax specific sectors such as timber, mining, gambling and even hydrocarbons. These schemes are designed to create both a greater incentive for investors, and where appropriate, to optimize and secure the resources of the State in certain strategic areas without overburdening the earnings of investors.

In recent years, these incentives were mainly developed for structuring projects to modernize the economy and stimulate private investment. Thus, companies which are involved in the construction of large infrastructure projects for roads, bridges, ports or energy sources benefit from these significant tax advantages:

• Exemption from tax on licenses for the first two years of operation;

• Fixed registration fee of 50, 000 FCFA for constitution papers;

• Extension and increase of capital and real estate transfer directly linked to the implementation of the project;

• VAT exemption on local purchases of construction materials and for imports related to the implementation of the project;

• Application of accelerated depreciation tax of 1.25% as a standard rate for specific assets acquired during the installation phase of the project; and

• Extension of the duration of deficit from four to five years.

List of taxes and fees:
1. Direct taxes;
- Corporate tax;
- Personal income tax;
- Patent fees;
- License fees; and
- Property tax.

2. Indirect taxes
- Value Added Tax (VAT);
- Registration fees and stamp duties;
- Special Tax on Petroleum Products (TSPP); and
- Special income tax.

3. The parafiscals
- Audiovisual tax (RAV);
- Contribution to the "Crédit foncier";
- Contribution to National Employment Fund;
- Municipal taxes; and
- Social contributions.