Get to know the different types of sole proprietor business in Cameroon and their legal structures?

This may be a big surprise to you, right!? In effect, there are not different but different in their legal structures and types of tax they pay. They have the same characteristics that define a sole proprietorship.

The sole proprietor business structure in Cameroon is unique in the sense that it can be registered in the three main tax regimes in Cameroon. Cameroon has three tax regimes – the flat rate, simplified and actual earnings tax systems. Get a preview of the Cameroon tax administration.

Sole trader under the flat rate tax system

Registering as a sole trader under the flat rate tax system is a very simple process. You are required to fill out a form at the regional or local council office where your business located.

You need the following documents to register this type of sole trader business in Cameroon:

• a photocopy of your national identity card for nationals, a passport or resident permit for foreigners
• 2 passport size photographs
• a localization sketch for you business premise

With your file opened, regional or council authorities will verify your location by visiting the site. During their visit, they will access your business’ turnover to know the tax bracket to be imposed.

Discharge tax

Taxpayers under the flat rate system pay the discharge tax. The discharge tax is a flat rate tax paid quarterly tax – payment is done before the beginning of each quarter. You don’t need a business license to operate like those in the simplified and actual rate tax system. Sole traders under this sector are sub-divided into four categories:

• Category A – service providers and producers with an annual turnover less than 2,500,000frs
• Category B – service providers and producers with an annual turnover between 2,500,000 and 5,000,000frs
• Category C – service providers and producers with an annual turnover between 5,000,000 and 7,500,000frs
• Category D – service providers and producers with an annual turnover 7,500,000 and 10,000,000frs

The discharge tax rate is determined by the regional or local authorities who benefit from the proceeds. The discharge tax rate is falls within a bracket determined by the categories listed above.

• Category A – from 0 to 20,000frs
• Category B – from 20,001 to 40,000frs
• Category C – 40,001 to 50,000frs
• Category D – 50,001 to 100,000frs

There are some exceptions when it comes to certain businesses. The discharge tax for transporters have a different threshold. I will treat this as an independent topic.

The discharge tax is a local or regional tax and is paid per council, per activity and per establishment. In the case where you have different activities being carried in the same establishment, discharge tax is paid per activity.

Sole trader under the simplified tax system

The main difference between this type of sole proprietor business in Cameroon and that above is that they are issued a business license. Also, your business must have an annual turnover of more than 10,000,000frs and less than 50,000,000frs.

In this type of business, the owner who is classified as natural person is registered in the Trade and Personal Property Credit Register, TPPCR.

You are required to provide the following documents to register:

• a photocopy of your national identity card for nationals,
• a photocopy of passport or resident permit for aliens
• a certificate of non-conviction for nationals or an equivalent for foreigners
• a localization sketch for your business premise
• tenancy agreement or land tax in the case you are the owner of the premise
• photocopies of marriage certificate where necessary

Company Tax

Businesses under this section are assessed under the company tax. The company tax rate in Cameroon is 30% with an additional council tax rate or 10% of the principal which makes it 33%.

They declare their taxes on a monthly basis – that is on or before the 15^th of the month for the previous month. Such a business is also obliged to provide annual financial reports and file in their statistics and tax returns at the end of the fiscal year.

Statistics and tax returns (STR) are filed before March 15 for the previous fiscal year. The 2019 Finance Law of Cameroon provides for STR to be filed online. It should be noted that such businesses are not supposed to collect or liable to value-added tax.

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Sole trader under the actual rate tax system

Except for the turnover and the fact that this system is liable to value-added tax, a sole proprietor under this section is not different from that in the simplified tax system. The difference is seen below:

• the business must have an annual turnover of at least 50,000,000frs and above.
• Businesses under this section are liable for VAT

The documents required to create this type of sole proprietorship business in Cameroon is same as that for the simplified system.

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