Once you start a business in Cameroon, one of the basic rule is to know about your tax regulations. Many small business owners rarely take the basic tax obligations of their businesses seriously. Below, I am going to share with you 6 basic tax tips for businesses in Cameroon. It will help you to start, run and grow your business without having problems with the tax authorities.
1. Your business structure
Many business owners or entrepreneurs are ignorant of the tax obligations of their business structure. There are three very common types of business structures in Cameroon:
- Sole-proprietorship with less than 10 million francs turnover per year.
- Sole-proprietorship and corporate bodies with more than 10 million francs turnover.
- Limited liability company (public or private)
You have to report your business activity at the tax center of your choice within ten days of starting. The tax administration will issue a business license that allows you to carry out business activities legally. This license also specifies your tax regime from which you will know the type of taxes that you have to pay.
2. You need a business license
This is one of the most important of these tax tips for businesses in Cameroon. All legally registered business with a turn-over of above 10 million francs CFA need a business license to operate. After registering the business, you need to report your activity within ten days of starting.
NB: Many business owners confuse the business license tax for income tax. A reader once told me he has just finished his one year exoneration from income tax. He wanted me to help him on how to start paying taxes. Read business license exoneration in Cameroon to know more about. Furthermore, you can checkout the business license penalty for carrying out illegal or prohibited activity.
3 . Your business’ tax regime
There are three main tax regimes in Cameroon for various business structures. It includes:
- The flat rate tax regime: for sole-proprietorship with a turnover of less than 10 million francs CFA.
- Simplified tax regime: for sole-proprietorship and corporate bodies with turnover of above 10 million and below 50 million.
- The actual earnings tax regime: for sole-proprietorship and legal persons with turnover of 50 million and above.
Checkout why you have to choose us to establish and register your business in Cameroon.
4. The single identification number (SIN)
All legally registered business in Cameroon have a unique identification number. It is used to identify the entity or individual as a taxpayer. The number is attributed to businesses during their registration procedure.
The taxpayer is oblige to mention this number on all business transaction document. Also, businesses are obliged to present the single identification number when they carryout any financial payment.
On another note, anyone who fraudulently uses a SIN is liable to a fine of up to 1,000,000FCFA per transaction. Also, the taxpayer will be penalized if they do not put the SIN on an invoice. The penalty will be the non-deduction of the said invoice when filing your statistics and tax returns.
5. Monthly tax declaration
Every month, businesses under the simplified and actual earnings tax regimes are obliged to declare an advance tax. This is done on or before the 15th day of every month for the previous month. Failure to do so, they will pay a penalty of 100% of the amount. However, the advanced tax amount will be deducted at the end of the year when filing your tax returns.
6. Freelancers – how do businesses treat them for tax purposes?
Freelancers are not employees, but they have to pay taxes on income earned for their services. Many business owners are unaware that they have to deduct taxes when paying freelancers. The General Tax Code of Cameroon provides that businesses should deduct 5.5% of the amount invoiced on behalf of the tax administration [Section 92 (a). This amount collected has to be paid in on or before the 15th of the month after it was collected.
Download the 2019 General Tax Code for Cameroon
However, if the business fails to deduct, the tax office will consider that they collected and didn’t pay. In this case, the business will be penalized.