A Review of the Cameroon Tax System
The Cameroon tax system is very similar to the tax systems practiced in many countries in the world. That is, the income tax concept of Cameroon is same as that of other countries of the world. It is divided into two main sub-groups – individual and business.
Types of taxes in Cameroon
We can divide it into direct, indirect and para-fiscal fees or charges
Direct taxes include
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- Corporate Tax
- Personal income tax
- Property tax
- Value Added Tax (VAT)
- Stamp duties and registration fees
- Special income tax
- Special tax on petroleum products
Para-fiscal charges / fees
- Audiovisual tax
- National Employment Fund (NEF) contribution
- Social contributions
- Municipal taxes
It can also be subdivided into personal income tax and corporate tax. Before we continue, we need to see one tax that is considered in all the other taxes. I am talking of the Additional Council Tax
Additional Council Tax
An additional council tax is applied on personal income tax, corporate tax, excise duties and Value Added Tax for the benefit of councils. It is 10% of the principal tax to be paid.
Corporate Income Tax
Any business that is resident in Cameroon is taxed on income received for activities carried within the territorial boundaries. Non-resident businesses are also taxed on income sourced in Cameroon. For residents, what is taxed is the profits earned while non-residents are taxed on the transactions they carry out in Cameroon. The net taxable income is determined after all expenses or charges that are directly related to the activities have been deducted.
Corporate income tax rate in Cameroon
- Financial year equals normal calendar year
- Tax rate: The tax rate for Cameroon in 33% which is sub-divided as follows: Corporate tax rate = 30% in addition to an Additional Council tax rate = 10% of the corporate tax. Hence the tax rate is put at 33%.
- Advance corporate tax payment is done before the 15th of every month the balance is which is paid latest March 15 every year upon presentation of the monthly declarations
- The minimum tax calculated should not be less than 2% of the turnover of the current year in addition to the 10% levy for additional council tax. This gives you a 2.2% minimum tax rate for certain tax regimes.
Personal income tax (PIT)
- Financial year equals normal calendar year
- Tax rate ranges from 10% to 35% in addition to the additional council tax which is 10%
- This is tax levied on all those resident in Cameroon.
- It is based on personal acquired income. Expatriates who source their income from Cameroon also pay the PIT. Examples of personal income taxes include:
- The employer deducts the tax from the employee’s salary and deposits at the tax center before the 15 of every month
- Employees who earn less than 62,000frs a month are exempted from the above deductions. This means employers are not supposed to deduct this tax from employees who earn less than 62,000frs
Personal income tax calculation
The personal income tax is calculated following a scale which is applied on net wages, pensions or salaries. This calculation is subject to international conventions.
- 10% as from 0 – XAF2,000,000
- 15% as from XAF2,000,001 – XAF3,000,000
- 25% as from XAF3,000,001 to XAF5,000,000
- 35% as from XAF5,000,001 upwards
Value Added Tax
- VAT is levied on natural persons as well as corporate bodies. This include both regional and local authorities governed by public law and who occasionally carry out taxable transactions within the scope of VAT
- The General VAT rate is 17.5% while the Zero rate is 0%
- The additional council tax of 10% is included in the general rate which gives you 19.25%.
- The rate is applied on both on imported and locally produced goods
- The VAT zero rate is applied to export products
- The general VAT rate is applied to all transactions that are not subject to the zero rate
- The basis of assessment is shall be rounded to the nearest thousand francs
- Rate General = 25% Abated = 12.5% Extra-abated = 2%
- The rates are applied on both on imported and locally produced goods
- The additional council tax of 10% is included in each rate
The tax system applied in Cameroon is declarative. However, the tax administration may send pre-filled tax return forms for revenue owed to the tax payer. Taxpayers declare their taxes at the tax center where they are registered. They fill a pre-filled form obtained from the tax office. The tax administration has also made it possible for taxpayers to fill this form online .
The Cameroon tax system follows the calendar year for its taxable period. Each taxpayer is supposed to submit their statistics and tax returns for the year on or before March 15 the following year.
Advance income tax are also paid on a monthly bases. Taxpayers are obliged to do this on or before the 15th of every month. These advance tax payments are deducted from the annual tax gotten after the taxpayers have declared their statistics and tax returns.
This post was brought to you thanks to Ess.BE, a quality control management consultancy based in Douala – Cameroon
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This content has been prepared for information purposes only. It is not intended to provide, and should not be relied on for, tax, accounting or legal advice. You need to consult your own tax, accounting or legal advisors before engaging in any transaction.