How to Calculate Taxable Income for Personal Income Tax in Cameroon

In our previous post, we discussed types of income exempt from personal income tax. Now, let’s dive into how taxable income is calculated for personal income tax in Cameroon, focusing on the inclusion of salaries, benefits in kind, and allowable deductions.

Determining the Gross Income

The basis of assessment for personal income tax is the gross amount of all earnings. According to Sections 32 and 33, this includes:

  • Salaries and Wages: Your total salary or wages.
  • Allowances: Any additional allowances received.
  • Emoluments: Payments for services rendered.
  • Pensions and Life Annuities: Regular payments received as pensions or life annuities.
  • Benefits in Kind: Non-cash benefits provided by the employer, valued according to specific rates.

Examples of Benefits in Kind

Here’s how to value various benefits in kind according to the tax code:

  • Housing: 15% of the gross taxable wage.
  • Electricity: 4% of the gross taxable wage.
  • Water: 2% of the gross taxable wage.
  • Servants: 5% for each servant.
  • Vehicle: 10% for each vehicle.
  • Food: 10% of the gross taxable wage.
  • Telephone: 5% of the gross taxable wage.
  • Fuel: 10% of the gross taxable wage.
  • Security Guard: 5% of the gross taxable wage.
  • Internet: 5% of the gross taxable wage.

If you receive any benefits not listed above, they are valued at their actual cost.

Calculating Net Taxable Income

To find your net taxable income, deduct certain allowable expenses from your gross income:

  1. Gross Amount Paid: Sum of your gross salary, allowances, and benefits in kind.
  2. Business Expenses Deduction: A fixed rate of 30% of your gross income, with a cap of CFAF 4,800,000 per year.
  3. Compulsory Contributions: Any contributions paid to the State or the National Social Insurance Fund (NSIF) for compulsory retirement.

Example Calculation

Let’s say you earn CFAF 10,000,000 annually with additional benefits in kind such as housing and a vehicle.

  • Gross Salary: CFAF 10,000,000
  • Housing Benefit (15%): CFAF 1,500,000
  • Vehicle Benefit (10%): CFAF 1,000,000

Total Gross Income: CFAF 12,500,000

Next, apply the deductions:

  • Business Expenses (30%): CFAF 3,750,000 (capped at CFAF 4,800,000, so use CFAF 3,750,000)
  • Compulsory Contributions: Let’s assume CFAF 500,000

Total Deductions: CFAF 4,250,000

Net Taxable Income: CFAF 12,500,000 – CFAF 4,250,000 = CFAF 8,250,000

This net taxable income is the amount subject to personal income tax.

Key Points

  • Ensure all benefits in kind are valued correctly and included in your gross income.
  • Apply the standard deductions for business expenses and compulsory contributions.
  • Always keep your documentation up-to-date to substantiate these calculations.

Disclaimer

This content is for informational purposes only and should not be taken as tax advice. For personalized assistance, consult a tax professional.

Next Steps

In our next post, we’ll cover how to handle income from stocks and shares for personal income tax in Cameroon. Stay tuned!

For professional assistance in company registration, tax declaration, and more, visit OpenHub Consulting. We help start, run, and grow businesses in Cameroon with services like sales and marketing, bookkeeping, and accounting for small businesses.

Have questions? Leave a comment or revisit our previous post here.


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