In order to increase youth employment, countries have to increase investments in education and skills training as well as encourage entrepreneurship. Governments also need to offer fiscal incentives and promote macroeconomic policies that support youth employment.
In order to improve and promote youth employment in Cameroon, the government came up with a tax incentive for businesses employing youths.
An update of this law was made in the 2021 Finance Law for Cameroon. The measure which took effect from January 1, 2016, concerned only businesses under the actual earnings tax system.
It should be noted that the measures contained in the 2021 Finance Law is aimed at reviving the economy and supporting businesses whose activities were affected by the Covid-19 pandemic.
According to the update, businesses subscribed to an Approved Management Centre have been added, and together with those under the actual earnings tax regime, will benefit from this tax dispensation.
Millions of young Cameroonians are unable to participate in economic activity, hence suffer from unemployment and economic marginalization. The high number of unemployed youths means young people won’t get the necessary skills needed to push forward the economy.
This measure will reduce the employers’ cost of hiring young workers meanwhile the employees wage remains unaffected. In effect, it is a cost-sharing mechanism between the employer and the government.
According to the law, the said business should not be benefiting from any other tax dispensation system or other special tax incentive system. The exemption will be valid for a 3-year period and 5 years if the recruitment is done in an economically backward area.
In order to benefit from this, businesses are obliged to submit to the tax authority the list of persons recruited and valid support documents.
This tax incentive will help create employment opportunities to the youth while the employer benefits from reduced cost per employee.
Read Also: Tax Incentives for Digital Economy Promotion
As for the employees, it gives them an opportunity to gain valuable experience which helps to ease their transition from the academic environment to the workplace.
Worth Reading: New Corporate Tax Rates for 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.