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Cameroon to increase tax-to-GDP ratio by 1.3% in 2021 to reach its 2023 target

Cameroon to increase tax-to-GDP ratio by 1.3% in 2021 to reach its 2023 target
  • Comments   -   Monday, 20 July 2020 11:33

(Business in Cameroon) - Cameroon plans to increase its tax-to-GDP ratio by 1.3% during the 2021 fiscal year to be able to reach the 13.5% target set for the 2023 financial year. This is revealed in the Budget Orientation Document elaborated by the government to guide its next finance bill.  ”After being loosened to 11.4% of GDP in 2020- in connection with the economic and social support to economic agents as a response to the coronavirus health crisis-  the fiscal pressure should be increased to 12.7% of GDP in 2021 to reach the medium-term objective of 13.5% of GDP in 2023,” the document informs.

The fiscal pressure referred to here is the ratio between non-oil tax revenues and current GDP. This means that Cameroonian businesses and households would have to pay more taxes in 2021 and the following years. The taxes here do not include local taxation and social contributions. 

To achieve these objectives, the government will increase internal non-oil tax revenues (VAT, non-oil corporate tax, excise duties, payroll taxes, etc.) over the 2021-2023 triennium. The government intends to broaden the tax base by continuing to rationalize exemptions,  optimize the taxation of the informal sector by promoting traceable means of payment and readjusting the VAT threshold for a better return on this tax. The government will also elaborate on a system to monitor the tax compliance of large enterprises and modernize some stamp duty collection systems.

By doing so, Cameroon expects to collect CFAF1,955.7 billion (+11.8%) of non-oil tax revenues in 2021, CFAF2,113.6 billion (+8.07%) in 2022 and CFAF2,339.2 billion (+10.6%) in 2023.

Let’s note that employers’ organizations have not reacted to these plans yet. However, a few weeks ago, Emmanuel de Tailly, managing director of Société Anonyme des Brasseries du Cameroun (SABC) and vice-president of employers’ grouping GICAM was calling for courageous tax decisions. "This crisis should offer the opportunity for courageous decisions to be taken concerning taxation (...) I think the time has passed for turnover tax. This tax must be replaced by an incentive and stable tax that favors the creation of value and long-term wealth," he said during an interview with Business in Cameroon.

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