Taxable Income from Stocks and Shares for Personal Income Tax in Cameroon

In our previous post, we covered how to calculate taxable income for personal income tax. Today, we’ll delve into the specifics of taxable income from stocks and shares as defined by the Cameroonian tax code.

Types of Taxable Income from Stocks and Shares

According to Sections 35 and 36 of the tax code, the following incomes are considered taxable under stocks and shares:

1. Proceeds from Shares, Stocks, and Similar Income:
   • Any dividends or profits from shares and stocks.
   • Profits not reinvested in the company are considered distributed income and therefore taxable.
2. Income from Bonds:
   • Interest earned on bonds is taxable.
3. Income from Assets, Deposits, Surety Bonds, and Current Accounts:
   • Earnings from these financial instruments fall under taxable income.
4. Income from Digital Assets:
   • Profits from digital assets, such as cryptocurrencies, are also included.

Assessing Distributed Income

Distributed income refers to profits or proceeds not reinvested in the company. Here’s how they are taxed:

• Undistributed Profits: Any profits not placed in reserve or added to the company’s share capital are considered taxable distributed income.
• Funds Provided to Shareholders: Sums allocated to shareholders, either directly or through intermediaries, for purposes like advance payments, loans, or installments, are taxable.
• Sundry Earnings and Benefits: Includes undisclosed earnings and profits, as well as various benefits granted to partners in joint-stock and limited liability companies.

Example

Imagine a company earns CFAF 20,000,000 in profit but only reinvests CFAF 5,000,000. The remaining CFAF 15,000,000, if not allocated to reserves or capital, is considered distributed income and is taxable.

Special Considerations

There are specific rules for certain distributed incomes:

• Reimbursements and Loans: If sums are allocated to shareholders as loans or advances and later reimbursed to the company, they will be deducted from the taxable income for the period in which they are reimbursed.
• Profits from Non-Resident Companies: Profits from companies located outside Cameroon but whose head office is not in Cameroon are considered distributed every fiscal year and taxable to non-resident individuals.

Key Points

• Always ensure that profits and proceeds from stocks and shares are properly accounted for to determine your taxable income.
• Be aware of how distributions, loans, and sundry benefits affect your taxable income.
• Consult with a tax professional for accurate assessment and compliance.

Disclaimer

This content is for informational purposes only and should not be taken as tax advice. For personalized assistance, consult a tax professional.

Next Steps

In our next post, we’ll explore incomes from stocks and shares that are exempt from personal income tax in Cameroon. Stay informed and keep your tax matters in order!

For expert assistance in managing your business and tax obligations, contact OpenHub Consulting. We provide comprehensive services including company registration, tax declarations, sales and marketing, bookkeeping, and accounting for small businesses in Cameroon.

Have questions? Leave a comment or revisit our previous post here.

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