(Business in Cameroon) - Cameroon will raise an additional XAF20 billion revenue during the 2022 finance year thanks to the tax on money transfers, the Directorate General of Taxation estimates. According to an authorized source at the directorate, to make sure the expected resources are effectively raised, tax authorities partnered with operators who have the technical capabilities to trace all the money transactions carried out by companies offering money transfer services.
Enacted in the 2022 finance law and effective on January 2022, the tax on money transfers is equivalent to 0.2% of the value of transactions carried out via any traceable technical platform (like internet, mobile phone, wire order, telex, fax). The tax is also applicable when electronic money transferred through mobile money or financial institutions is withdrawn in cash.
In a correspondence dated January 4, 2022, the Directorate General of Taxation informed various money transfer operators that they are required to collect the said tax. The correspondence also reveals that the tax is not applicable for transactions carried out to pay tax and customs duties or even for bank transactions. Also, “cash deposits in electronic portfolios are outside the scope of that tax,” we learn.
“To mitigate the socio-economic impact of the money transfer tax, sending and withdrawal charges are not included in the tax calculation basis,” the correspondence explains adding that the charges are also excluded from the VAT calculation basis. For instance, to withdraw XAF50,000 from a mobile money account, a user will incur a XAF100 money transfer tax (0.2%) plus the VAT tax and the withdrawal charges imposed by operators.
Despite the explanations provided by the tax directorate, there is still controversy around that tax approved by parliamentarians and passed by the President of the Republic. Part of the public opinion questions the appropriateness of the tax in a difficult economic context. Others point at a double imposition risk because the tax is levied both on deposits and withdrawals.
As for the government, it sees electronic money transfers as a profitable tax niche given the growth of the electronic money segment over the past ten years. According to data published by the Bank of Central African States (BEAC), in 2020, Cameroon was accounting for 19.5 million out of the 30.1 million Mobile Money accounts identified in the CEMAC region. This represents 64.8% of the overall accounts. At the same time, it is three times higher than the number of accounts opened in Congo (7.1 million) and 10 times higher than the number of accounts identified in Gabon (2.7 million). “As far as the number of transactions is concerned, payment service providers operating in Cameroon accounted for 73.13% of the numbers recorded in the community [CEMAC],” the BEAC adds.
Brice R. Mbodiam