Real Estate Income Tax in Cameroon – Key Updates in the 2025 Finance Law

The 2025 Finance Law brings important updates to real estate income taxation in Cameroon, clarifying the 15% withholding tax process.

However, questions arise regarding the interplay between this withholding tax and deductions mentioned in Section 48 of the General Tax Code. Let’s break it down.

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1. What’s New in 2025?

The 15% withholding tax on gross real estate income has been retained, with extra clarifications:

• Scope: The tax must be deducted at the source by public administrations, legal entities, sole proprietorships, or non-profit organizations (NPOs) listed in a regulation. Extra clarification: “…included on a list established by regulation”.
• Exemptions: Rent paid to enterprises assessed on actual earnings under specialized management units is exempt.
• Clarifications: The 2025 law reiterates that the 15% withholding tax is calculated on gross real estate income in compliance with Section 48 of the General Tax Code.

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2. Section 48: Understanding the Calculation of Taxable Income

To fully understand the withholding tax, let’s look at Section 48, which explains how taxable income from property is determined:

• Gross Income vs. Net Taxable Income:
  • Gross income: The total income earned from the property (e.g., rent).
  • Net taxable income: Gross income minus deductible charges, which are fixed at 30% of gross income unless real expenses are justified.
• Key Deductions:
  • 30% lump-sum deduction for landlords who can’t justify real expenses.
  • Deduction of justified real expenses, like repairs or maintenance.

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3. Addressing the Obvious Conflict

The 2025 Finance Law states that the 15% withholding tax applies to gross real estate income but references Section 48, which details deductions for calculating net taxable income. Here’s how to interpret this:

• The 15% withholding tax is a preliminary levy applied to gross income before any deductions.
• Section 48 applies when determining the landlord’s final tax liability, allowing for deductions like the 30% lump sum.

Example:

• Gross monthly rent: 1,000,000 CFA francs
• 15% withholding tax: 150,000 CFA francs (deducted by the tenant)
• Net taxable income (per Section 48): 700,000 CFA francs (after a 30% deduction)

In this scenario:

• The tenant remits 150,000 CFA francs to the tax authority.
• The landlord declares the 700,000 CFA francs as net taxable income when filing annual returns.
• The withholding tax acts as an advance payment toward the landlord’s final tax obligation.

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4. Practical Challenges

Many tenants are unaware of their responsibility to deduct the tax. Instead, they:

• Pay the landlord the full rent.
• Later pay the 15% withholding tax separately, which is non-compliant.

This misstep can create compliance issues for both parties and lead to penalties.

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5. What Should Landlords and Tenants Do?

Tenants:

• Deduct the 15% withholding tax before paying the landlord.
• Remit the withheld amount to the tax office within 15 days.
• Give the landlord with a certificate of withholding tax payment for their records.

Landlords:

• Make sure tenants are aware of their withholding obligations.
• Ask for a withholding tax certificate to avoid double taxation or disputes.

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6. Benefits of Compliance

• For Tenants: Avoid penalties for failing to deduct and remit taxes.
• For Landlords: Prevent double taxation and guarantee proper reporting.

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Stay Updated

Download the General Tax Code of Cameroon for reference here and stay informed about the 2025 updates.

Need help managing your taxes? Explore our Small Business Tax Management Services here or contact us for personalized support.

Got questions or need help with real estate income taxes? Leave a comment below or contact us for tailored advice. Let’s simplify tax compliance together!