In Cameroon, all assets and revenues of non-profit private educational institutions used directly or exclusively for educational purpose are exempted from company tax.

Education is considered a social service, hence has a preferential treatment in the tax legislation. The government doesn’t levy company tax on the main activities of private educational institutions in Cameroon.

However, they’re subject to a preferential income tax rate of 15% on any passive income (income from taxable commercial activities) that is not related to their main activity.

This rate is levied only on unrelated business or other income making activity. The rate is lower than the regular income tax rate of 30%.

Law governing private education in Cameroon

According to Section 2 of the Law No. 2004/022 of July 22, 2004, to lay down the rules governing and functioning of private education in Cameroon,

“(1) Private education shall be a social service provided by private partners in the public interest, through curricular or training activities conducted within schools or training establishments, as the case may be, with support from the State and regional and local authorities.

(2) Private education shall be provided through nursery, primary, general secondary, technical secondary, vocational and teacher training institutions.”

It is the government’s role to see that its citizens are educated in one way or the other to enhance growth in the economy. In order to do this, the government has exempted educational services from paying company tax and other levies or contributions.

Services provided by the educational institutions

In Cameroon, the following services comprise what the educational institutions provide:

•     Pre-nursery or kindergarten services
•     Nursery & primary school services
•     Secondary & high school services
•     Higher education and     professional education
•     Specialized education and vocational training services as well as
•     Other trainings, educational and support services

Tax on Educational Institutions

Income tax is levied on all profits or income generated by corporate bodies within the borders of Cameroon.

However, private educational institutions, just like other not-for-profit making organizations, are exempted from paying corporate tax, in so far as profits made are not derived from other trade or business carried out.

Tax System Practiced

The 2022 Finance Law of Cameroon has made provision for a new tax regime for non-profit institutions. The Non-profit Tax System is for all bodies, public or private, that doesn’t have as goal to seek profits and whose activities don’t compete with for-profit businesses.

Download the 2022 Finance Law of Cameroon

Exemptions for Educational Institutions

Private educational institutions fall under the Non-profit Tax System. All institutions that fall under this new tax regime are exempted from the following:

• Business license contribution
• Company tax
• Property tax

Exceptions

Private educational institutions, like other institutions in the non-profit tax system, are subject to the following:

• Value-added tax (VAT) on goods and services acquired in carrying out their activities
• Income tax on movable capital investments
• Withholding taxes and levies for which they are legally liable

They are also subject to value-added tax when they carry out taxable transactions in accordance with section 125 of the General Tax Code of Cameroon.

Download the General Tax Code of Cameroon

Tax on Commercial Activities

If the private educational institution carries out any commercial activity that brings in profit, they are imposed a preferential tax rate of 15% plus an Additional Council Tax of 10%, that makes a total of 16.5%.

A 1.1% (including an Additional Council Tax rate of 10%) minimum tax applied on turnover of these commercial activity is paid on or before the 15 of every month for the previous month.

They are therefore obliged to declare taxes every month, including that for all profit-making commercial activity.

Obligations of Private Educational Institutions

Educational and vocational training institutions also have the following obligations as prescribed by the tax law:

• They’re obliged to deduct at source and pay to the competent tax center the personal income tax of their employees. This should be based on the salary deduction scale as provided by the state as well as international conventions. See the minimum taxable wage in Cameroon
• Obligation to deduct and pay property income tax in the case where there are tenants renting the property
• Declare and pay a 1.1% minimum tax on turnover every month on or before the 15th of the month
• File in their Statistical & Tax Returns (STR) before March 15 every year for the previous financial year
• Carry out separate accounting for other profit-making commercial activities

Read Also: What happens if you fail to file the statistical & tax return on time?

Some activities where educational institutions pay company tax include:

•     Income from rents on built-on or non-built-on property
•     Income from the sales of school-based materials and
•     Revenue from any other gainful activity

Was this post helpful? Do you have any questions? Share with friends, leave a comment below.

Photo Credit: Paul Bonafide Eferianor