Taxation of Digital Services in Cameroon: The New 3% Rule (2026)

The 2026 Finance Law transforms the taxation of digital services in Cameroon. Discover the new 3% turnover tax, the basic floor, and the strategic choices for your business.

For years, the digital economy operated in a gray zone. Foreign companies provided services in Cameroon—streaming, cloud storage, software—without a clear framework for how they should be taxed. The assumption was simple: “If I don’t have a profit center here, I don’t pay tax here.”

The 2026 Finance Law destroys this assumption. With the introduction of Section 17c, the state has not only defined how to tax digital giants; it has set a floor that can’t be escaped.

If you are a digital service provider or a local business relying on one, you need to understand the mechanics of the taxation of digital services in Cameroon. It is no longer about if you pay, but how you calculate it.

The 3% Turnover Tax

The government understands that determining the “net profit” of a company like Google or Netflix specifically for Cameroon is a nightmare. They don’t have local electricity bills or rent to deduct.

To solve this, Section 17c(1) establishes a simplified default regime.

• The Base: The tax is calculated on the total gross income earned within the Cameroonian territory.
• The Rate: The rate is fixed at 3%.
• The Nature: This tax is a “minimum assessment” and is considered final.

Why This Feels “Safe”

For many businesses, this is actually good news. It provides certainty. You don’t need to hire a local chartered accountant to audit complex expenses. You simply take your Cameroonian revenue (e.g., XAF100 million) and pay 3% (XAF3 million). It acts like a final discharge, freeing you from further corporate income tax liability.

Choosing the 30% Standard Rate

However, Section 17c (3) offers an alternative. Companies can “opt out” of the 3% lump sum and choose to be taxed on their actual net profit at the standard corporate rate of 30%.

At first glance, this seems logical only if you are losing money. If your business has huge expenses and very low profit, you might prefer a tax on profit over a tax on revenue. But the law sets three strict conditions in Paragraph 4 that make this option difficult:

1. Written Notification: You must notify the Tax Administration before the financial year begins.
2. Irrevocability: Once you choose this path, you are locked in for 5 fiscal years. You cannot switch back and forth.
3. Transfer Pricing Documentation: You must submit complete documentation proving that your costs (especially those paid to your HQ abroad) are fair and follow the “arm’s length principle.”

The “Arm’s Length” Hurdle

This third condition is the trap. The tax administration knows that multinational groups often shift profits by charging their local branches high “management fees” or “royalty fees.” By choosing the standard option, you are inviting a full audit of your global cost structure.

The Hidden Trap: The “Floor” (Paragraph 5)

So, why not choose the standard option if you have a profit margin of only 5%?

• Calculation: 30% tax on 5% margin = 1.5% of turnover.
• Result: You save money compared to the 3% turnover tax, right?

Wrong.

Section 17c(5) contains the most critical line in the entire text: “In all cases, the amount of corporate income tax payable may not be less than the amount resulting from the application of the 3% rule.”

This means 3% of turnover is the absolute minimum floor.

• Scenario A: You make a huge profit (50% margin). You pay 30% tax on profit (which is 15% of turnover). You pay more than the default.
• Scenario B: You make a tiny profit or a loss. The calculated tax is 0. But the floor kicks in. You still pay 3% of turnover.

Why Choose the Option?

If the option can only increase your tax (in high-profit years) and never decrease it below 3% (in low-profit years), why does it exist?

The answer lies in International Tax Credits. Many countries (like the US or France) allow companies to deduct foreign taxes from their home tax bill only if that foreign tax is an “Income Tax.” A flat 3% tax on revenue is often classified as a “Turnover Tax” (like VAT), which is not creditable.

By opting for the “Standard Rate on Net Profit” (even with a minimum floor), multinational companies can argue that they are subject to a true Corporate Income Tax. This allows them to claim the tax paid in Cameroon as a credit against their tax bill in New York or Paris, avoiding double taxation.

Read Also: New Rules for Tax Deductible Expenses in Cameroon

Strategic Advice for 2026

The new rules for the taxation of digital services in Cameroon force a clear decision:

1. For Purely Digital Firms (SaaS, Streaming): Stick to the 3% Default. It is simple, final, and avoids the headache of a transfer pricing audit. The 3% cost will likely be passed on to the final consumer.
2. For Multinationals needing Tax Credits: Consult with your global tax directors. The “Standard Option” might be necessary to save money at the group level, even if it’s more expensive locally.
3. For Local Distributors: Be aware that your foreign partners are facing this 3% cost. Expect them to renegotiate their commission structures or pricing early in the year.

The digital free ride is over. The era of the 3% floor has begun.

At OpenHub, we specialize in translating these complex rules into safe business strategies. Through OpenHub Consulting, we can perform a “Fiscal Health Check” on your books before the year ends. Alternatively, if you want to empower your internal team, the OpenHub Academy offers targeted training on these new fiscal realities.