2020 Finance Law – Provisions relating to customs duties

Brief: Checkout some of the changes in the provisions relating to customs duties as provided by the 2020 Finance Law for Cameroon.

Law No 2019/023 of December 24, 2019 instituted the Finance Law of the Republic of Cameroon for the 2020 Financial Year that began on January 1, 2020. The purpose of the 2020 Finance Law of Cameroon is to determine government’s expenditure and revenue for the year 2020. It also lays down the necessary conditions for a  financial and budgetary balance as well as the establishment of the State budget.

Today, I will be sharing with you some of the provisions relating to customs duties. I will select some pertinent changes that concerns the import and export of goods into Cameroon. This year, at the request of many of our readers, we will be sharing with you frequently information on border taxation (custom duties). 

You will also be reading in a few days to come some of the changes relating to taxes. Let’s see some of the provisions relating to customs duties as found in the 2020 Finance Law whose implementation started on January 1, 2019.

1. Goods exempted from export taxation

Some goods have been added to the list of products exempted from export tax (export duty). They include:

• Banana
• Industrial products made in Cameroon
• Domestic animals breeded in Cameroon
• Minerals or plants processed or produced in Cameroon as finished goods

Semi-finished goods

A 1% export duty shall be paid on all semi-finished products that are made in Cameroon. Semi-finished goods also known as intermediate or producer goods are goods that are partly finished. They usually serve as inputs used for the manufacture of other goods. This includes the final goods itself. There are companies that make semi-finished to sell to other firms that use them.

Assorted minerals & farm produces

Goods such as diamonds, rice, gold, crude palm oil, sorghum, millet, kolanut, gum arabic, eru/okok (Gnetum Africanum) have a 10% export tax. The agricultural goods are mostly those that are highly consumed in Cameroon. This may be because the government wants to reduce the export of such goods to fight scarcity and high prices in the local market.

Undressed timber (logs) will have a 35% export duty on the FOB value of the volume. Some finished and semi-finished timber will be subjected to an export tax of 10%. It should be known that for the past years, the government has been discouraging the export of undressed timber. This is probably one of the methods in which they want to encourage local transformation into finished and semi-finished timber.

2. Excise duty on certain imports

Some imported products have been subjected to the ad valorem excise duty. The most surprising is that of hydroquinone and cosmetics that content the agent which are used for skin bleaching. Below are some of the products affected by the excise duty:

50% on cosmetics containing hydroquinone 

As said above, most surprising of such products is hydroquinone which has been subjected to a 50% excise duty. Hydroquinone is a product used in making skin whitening cosmetics. This means, any product containing hydroquinone will be subjected to the above excise duty. You can read more about the New tax imposed on skin whitening products in Cameroon.

30% on tobacco & tobacco accessories

Cigarettes, cigars, pipes, tobacco and other tobacco related products and parts will have a 30% excise duty imposed. The increase in the price of cigarettes and other tobacco products is one of the ways government is using to reduce smoking. In this case, the increase in the excise duty will increase the price of cigarettes, tobacco and related accessories in Cameroon. It should be known that the recommended World Health Organization benchmark for cigarettes is 70% of the sales price.

25% on gaming machines

This includes board games, video game consoles, billiards, motor and movement games, special tables for casino and bowling.

12.5% rate on hair, wigs, motor bikes and passenger vehicles

Motorcycles with more than 250cm³ cylinder and its parts have been subjected to a 12.5% excise duty (those below this fall under the 5% rate). Also in this bracket are passenger vehicles with more than 250cm³ cylinder capacity and between 0-15 years old, hair, wigs, beards, wools, eyelashes, eyebrows and all products used in the manufacture of wigs or similar hair products.

5% rate for cocoa-free sweets and chocolates

Sweets that don’t have a cocoa content have been levied a 5% rate excise duty. The 2020 Finance Law provisions relating to customs also subjects chocolates and other products with high cocoa content to the same rate. As mentioned above, motorcycles below are also 250cm³ considered under this bracket.

The excise duty on chocolates and cocoa content products maybe to develop the production and processing potential in the country. It should be noted that most cocoa importing countries apply a 0% excise duty on cocoa bean and higher for processed cocoa products like cocoa powder, cocoa paste or products containing cocoa butter.

3. Exemptions from ad valorem excise duties

Some products have been exempted from or applied a zero rate excise duty. These include inputs that are used as raw materials for the production of other finished goods. However, such inputs must adhere to the below conditions:

• They should be products that are not produced locally even though they are used for local industrial production;
• The importer must have obtained an exemption certificate issued by the Tax Administration

This move may be to government’s way of encouraging local manufacture of goods. This will reduce the financial burden on businesses that need to import their inputs in their production process. It should be noted the government has tax incentives for companies that use local agricultural produce for the manufacture of their products. An example is the zero excise duty on exports within the CEMAC region on products manufactured with more than 80% local inputs. Checkout these 6 tax tips every agricultural business in Cameroon should know about.

4. Importer or exporter location

The location of the taxpayer (importer and/or exporter) shall be required by the Custom Administration. The information needed includes:

• Geographical location (localization pla)
• Postal address
• Telephone number
• Email address

The above are necessary for the Custom Administration localization system. Failure to provide the above information will mean the taxpayer has refused to comply with the provisions of the CEMAC Customs Code and shall have a legal effect

5. Demurrage charges included in transport expenses

As from January 1, 2019, demurrage charges shall be included as part of the transport cost. Demurrage charge is payment for exceeding the number of days contracted for loading and unloading of goods. In this case, demurrage charges will have to be included in the customs value if they were incurred before the arrival of the goods in any of the customs territory in Cameroon. If they originate from a customs territory in Cameroon, they will be excluded from the customs value.

Let me end here for today while we wait for part two which contain more Provisions relating to customs duties. In the next post on customs provisions as per the 2020 Finance Law, I will write about the import benefits for those investing in economically affected areas. It should be noted that the Prime Minister of Cameroon, Chief Dion Ngute, in a prime ministerial decree declared the Far North, North West and South West Regions as economic disaster zones.

This is due to Boko Haram activities in the Far North and the Anglophone Crisis that has been on-going for close to 4 years in the English-speaking North West and South West Regions of Cameroon. According to the provision, those investing in these regions will benefit from tax incentives. The 2020 Finance Law of Cameroon relating to customs duties have put in place import benefits for those investing in rehabilitation areas. Don’t hesitate to subscribe for more updates on your favorite business platform, OpenHub Digital. We help you start, run and grow your business in Cameroon. You can leave a comment below or get in touch with us if you need any of our services.

It is worthy to know that this information provided on OpenHub Digital is general and doesn’t constitute tax, legal or financial advice. Whilst the authors and editors have put in effort to ensure accuracy, they’re in no way responsible for any inaccuracies or omissions that you may come across. In this regard, tax, financial and legal advice needs to sought before you engage in any transaction based on the information provided on OpenHub Digital.

Image Credit: Journal du Cameroun