In the previous post, we discussed tips on how to start a business in Cameroon. That was just a Part I – the Part II will be coming next week. Let’s talk about income tax today.
I have been writing a lot about income tax in my previous posts. Almost everyone pays income tax, even though with twisted face. It’s no magic word.
All those who carry out income generating activities are entitled to give back to the government a percentage of what they have made. You know that the government is an automatic shareholder in whatever thing you are doing. Income tax is paid on all types of income, including wages/salary from your job, profits made from your business, investment returns like dividends and bank interest. Those who sell valuable assets like shares or property are also liable to income tax. You can read more on property tax in Cameroon.
Income tax can be subdivided into personal and corporate income tax. Cameroon practices a progressive tax system. That is, the higher your income, the higher the tax rate you have to pay. The lowest tax rate in Cameroon is 10% which starts from tax-free threshold. The highest is 35% which is charged on those who earn more than 5,000,000FCFA.
In Cameroon, there is a threshold where you are not allowed to pay income tax. Those who earn less than 62,000FCFA monthly wages are exempted from personal income tax.
For those who work under employers, it is easy – the employer deducts it automatically from your salary or wage. What you receive on payday is the amount minus the taxes that have been paid to the tax authority by your employer on your behalf.
For incomes from business profits, property sales, bank interests, you have to declare it yourself. At the end of each year, taxpayers, except salary or wage earners are required to complete an income tax return. The tax return file records all your income and works out what you owe as tax. It should be noted that businesses having a business license are required to do monthly declarations and payments. This amount shall be deducted at the end of the year and the balance paid. If you overpaid, then you are entitled to a tax refund.
The deadline for declaring your income for the past year is March 15 each year. Monthly tax returns must be submitted to the tax office by taxpayers that are under the simplified tax system or those assessed under the actual earnings basis. This is done within the first 15 days of each month that follows the month which the relevant transaction was carried out.
Taxpayers whose sole income comes from salaries, pensions, wages, life annuities or capital gains from securities are exempted from this tax obligation.
Was this helpful in clarifying any doubts you had about income tax? The notion of income tax is not very easy to many people. That’s why some people choose tax agents to help them prepare their tax return. This will help take out the stress in you. It will also ensure that your tax return is correct and deposited on time. What you may not know is that tax agents can help you to highlight some of the deductions that you didn’t know about.
If you need help on getting your tax returns done, don’t hesitate getting in touch with us. If you found out this information was helpful, share with others in your network. Sharing is caring. Don’t forget to subscribe to our newsletter.