It’s obligation to file tax returns in Cameroon

To round up this series, it’s very important for taxpayers to know that they’re obliged to file in their statistical & tax returns every year at the end of the fiscal year.

Many new business owners get confuse with exemption from the business license tax and exemption form income tax.

In Cameroon, a new business maybe exempted from paying the business license tax for at least one year. This does not stop the business from filing their tax returns and paying income tax at the end of the fiscal year.

As of now, businesses are not exempted from paying income taxes. Rather, some incentives have been given to businesses due to the Covid-19 pandemic and the conflict zones in the country.

See True or False? Cameroon Offers a 2-Year Tax Exemption for New Businesses

If this is the first on this series you’re reading or you’ve missed any, then you checkout the previous posts.

Part 1: Register your business in Cameroon

Part 2: You need a business license to run a business in Cameroon

Part 3: You need a business license to run a business in Cameroon

Part 4: How to treat modifications affecting your business in Cameroon

Tax returns

In Cameroon, every company or natural persons (sole proprietor business with a turnover of more than XAF10 million), irrespective of any conditions, whether they earn income or not, are obliged to file in their tax returns yearly.

This is done on or before March 15 for the previous fiscal year. Cameroon’s fiscal year is the same as the calendar year (January 1 to December 31).

Tax systems in Cameroon

Taxpayers in Cameroon are assessed according to three systems:

• Flat rate tax system – this is for sole proprietor businesses with an annual turnover of less than XAF10,000,000, except for those engaged in logging, liberal professions and professional officers.
• Simplified tax system – this includes sole proprietor business owners and corporate bodies with an annual turnover of equal to or less than XAF10,000,000.
• Actual earnings tax system – is made up of sole proprietorship and corporate bodies with an annual turnover of XAF50 million and above.

Monthly tax deductions

Taxpayers in Cameroon are obliged to spontaneously file monthly tax returns and pay a down payment. The income tax down payment is paid at their tax centers after filling special forms provided by the tax authority as seen below:

1. Simplified tax system – Those under this tax system file in their monthly tax return and pay a 5% deduction of their turnover on or before the 15^th of the month for the previous month. Added to this is a 10% for additional council tax which makes it 5.5%.
2. Actual earnings tax system – for this system, they pay a 2% of the months turnover not later than the 15^th of the month for the previous month. This amount is increased by 10% to include the additional council tax.

There are exceptions in certain cases especially for businesses that engage in regulated profit margin activities.

The percentages deducted are considered as down payments and shall be deducted from the annual tax payable. The balance shall be paid on of before March 15 every year.

If down payments paid is in excess, it shall be deducted from future installments. In case the business shuts down, such payments shall be refunded.

Corporate tax rate

In Cameroon, a corporate tax is levied on all profits or income made by natural and legal persons (corporate bodies) – those in the simplified and actual earnings tax system.

The taxable profits to be taken into consideration determined by businesses carried or transactions that take place within Cameroon.

Cameroon has two tax rates presently:

– 28% for businesses with an annual turnover of between XAF10 million and below XAF250 million.

– 30% for businesses with an annual turnover of above XAF250 million

Added to this rate is 10% additional council tax which gives 30.8% and 33% respectively.

See Government Incentives to Promote Digital Economy or Fiscal Incentive to Promote Youth Employment

Thanks for following this series from the beginning to now. Don’t hesitate to get in touch with us or meet a tax advisor of your choice for any questions on the above.

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