Yaoundé - 09 December 2023 -
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Cameroon: govt raises log export tax by 345% in 6 years to promote local processing

Cameroon: govt raises log export tax by 345% in 6 years to promote local processing
  • Comments   -   Wednesday, 20 September 2023 17:14

(Business in Cameroon) - The tax imposed by the Cameroonian government on log exports increased from 17.5% in 2017 to 60% in 2023. This means that over 6 years, the rate has been raised by 343%.

Authorities said the move is intended to discourage the export of unprocessed wood and stimulate the local sector. It also matches the Cemac countries' goal of ending log shipments. Initially planned to take effect on January 1, 2022, this decision was postponed to January 1, 2023, and is now indefinitely delayed.

As part of its local processing-friendly approach, Cameroon has introduced a new rule in its 2022 finance act exempting all customs duties and taxes on imported appliances, equipment, materials, and tools intended for the development of local wood "advanced processing" activity. At the same time, an ad valorem excise duty has been introduced on all imports of wooden products and furniture. This is also to discourage the importation of finished wood products and instead encourage the purchase of locally manufactured furniture and other office furnishings, according to Cameroonian officials. The Head of State, Paul Biya, therefore instructed the government to "prioritize locally made furniture in public procurement."

Furthermore, although these measures are welcomed by industrial sawmill and woodworking business owners in Cameroon, they have stirred frustration among active forest operators in the country. In a letter sent to the Prime Minister on December 23, 2022, the Cameroon Timber Sector Group (GFBC), which represents 70% of the country's wood exports, called the measures a " fiscal stranglehold," and threatened to go on strike.

Technical Unemployment

“Your Excellency, Mr. Prime Minister, if nothing is done to preserve our industry, we are heading straight for a deluge that will jeopardize the colossal investments of our companies. Unfortunately, starting from January 2, 2023, we will be forced to go on strike, which will initially manifest as the suspension of customs declarations and will continue with placing employees on technical leave in companies. We are currently financially strangled," reads the GFBC's letter.

In response to this outcry from forest operators, the government turned a deaf ear, and the strike threat issued by the GFBC did not materialize either. This is because timber exports, both in logs (with a 60% exit tax) and processed (with a 15% exit tax), continued from January 2023. According to the report on the national accounts for the first quarter of 2023, published by the National Institute of Statistics (INS), the "forestry and logging" sector contributed CFA227 billion to Cameroon's GDP, accounting for 0.5% of the total. However, the INS reveals that this sector's performance was the worst since the fourth quarter of 2021. While timber exports were not suspended in Cameroon despite the threat from the forestry industry, some companies had to trim staff due to what they considered a "fiscal stranglehold."

"With the recent tax increases in the 2023 budget law, actions taken by the customs administration to review upward the taxable values used as the basis for taxation, and the government's silence since our notice of the suspension of customs operations, the top management, in solidarity with the Cameroon Timber Sector Group (GFBC), has decided, until further notice, to place all staff on technical unemployment, effective January 13, 2023," reads a memo signed on January 11, 2023, by Marc Sarraute, Administrative and Financial Director of Italian-owned Fabrique camerounaise de parquets (Fipcam). This company, which claimed 662 employees in 2015, has been operating in Cameroon since 2001 in the forestry and sawmill sector.

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