Tax Compliance 101 for Beauty Businesses in Cameroon

The beauty industry in Cameroon is booming, but are you staying compliant with the 2024 General Tax Code? Whether you run a hair salon, cosmetics shop, or spa, you must stay on top of tax obligations. This is essential for avoiding penalties. It also helps in building sustainable beauty businesses. Here’s everything you need to know.

Why Tax Compliance Matters

Tax compliance is more than just following the rules—it’s about protecting your business. Here are some benefits:

• Avoid Penalties: Late or inaccurate filings can lead to fines that eat into your profits.
• Build Credibility: Compliant businesses are more likely to attract partners and investors.
• Access to Incentives: Tax-compliant businesses can benefit from government programs like tax amnesty or green energy incentives.

Key Tax Obligations for Beauty Businesses

1. Value Added Tax (VAT):
   • If your annual turnover exceeds 50 million CFA, you must register for VAT. This means charging VAT on your services and remitting it to the tax authorities.
   • Example: A cosmetics shop selling beauty products should include VAT in its pricing structure to avoid undercharging customers.
2. Corporate Income Tax (CIT):
   • Registered businesses must pay CIT on their profits. For beauty businesses, accurate bookkeeping is critical to calculate taxable income correctly.
   • Monthly advance CIT payments must be filed no later than the 15th of the following month. Ensure these are done to avoid late penalties.
3. Personal Income Tax (PIT):
   • If you employ staff, you are responsible for withholding and remitting PIT on their salaries. This must be declared monthly by the 15th of the following month.
4. Local Business Taxes:
   • Beauty businesses must also pay council taxes and other levies, depending on their location.
5. Tax Regimes for SMEs:
   • Flat Rate Tax Regime: For businesses with a turnover below 10 million CFA.
   • Simplified Tax Regime: For businesses with an annual turnover between 10 million and 50 million CFA.
   • Actual Earnings Tax Regime: For businesses exceeding 50 million CFA in annual turnover.
6. Important Note on Invoices:
   • Section 8a of the 2024 General Tax Code emphasizes the non-deductibility of expenses when:
     • They are supported by invoices that don’t have the mandatory information as outlined in Article 150(3) of the General Tax Code (this applies to domestic invoices only, not those from foreign suppliers).
     • They are justified by invoices issued outside the tax authority’s electronic invoicing monitoring system.
   • This suggests a strong push towards electronic invoicing and makes it very advantageous for businesses to use the system. However, it doesn’t explicitly prohibit other forms of invoicing. Other invoice types are allowed as long as they include the mandatory information and are reported within the system.

Tax Filing Deadlines to Remember

• Monthly Declarations:
  • VAT, PIT, and advance CIT must be declared by the 15th of each month.
• Annual Declarations:
  • Annual CIT returns must be filed by March 15 for large businesses and April 15 for medium-sized businesses.
• Council Taxes:
  • Local taxes are usually due at the start of each fiscal year. Check with your local council for specific deadlines.

How to Stay Compliant

• Organize Your Finances: Use a reliable POS system like Kola Business Manager to track sales. It can also generate invoices. Manage taxes easily with it.
• Hire Professionals: Let our Tax Management Services help you stay on top of deadlines and filing requirements.
• Understand Tax Deadlines: Mark your calendar for key filing dates to avoid penalties.

Next Steps

Not sure where to start? Contact OpenHub Consulting for personalized tax guidance and tools to keep your beauty business compliant and thriving.

Stay compliant. Stay ahead. Let’s grow your beauty business the right way.