Types of Income Exempt from Personal Income Tax in Cameroon

In our previous post, we covered the basis of assessment for personal income tax. Now, let’s explore which types of income are exempt from personal income tax in Cameroon.

Exemptions from Personal Income Tax

According to Section 31 of the tax code, several types of income are exempt from personal income tax in Cameroon. Here’s a breakdown:

1. Special Allowances

Allowances intended to cover inherent duty and service expenses are exempt if they are used for their intended purpose and not overstated. For instance, if you receive an allowance for travel expenses related to your job, and you spend it on travel as required, this amount is not taxed.

2. Family Allowances

Family allowances or benefits are exempt. These could include payments made to support family needs, such as child benefits. For example, if you receive CFAF 200,000 as a family allowance from the government, this amount is exempt from tax.

3. State Allowances and Benefits

Allowances and benefits paid by the State, councils, or State institutions under laws governing assistance and insurance are exempt. This includes various forms of social security or welfare benefits provided by the government.

4. Compensation for Industrial Accidents

Temporary allowances, benefits, and life annuities paid to victims of industrial accidents and their rightful claimants are exempt. If you receive a life annuity due to a workplace injury, this payment is not subject to personal income tax.

5. Court-Ordered Life Annuities

Life annuities paid as damages by virtue of a court judgment for total permanent disablement requiring third-party assistance are exempt. For example, if a court orders compensation for a serious injury that leaves you dependent on others, these payments are tax-exempt.

6. Civil Servant Salary Supplements

Fixed salary supplements paid to civil servants are exempt from personal income tax. If you receive a fixed amount in addition to your regular salary as a civil servant, this supplement is not taxed.

7. Injury and Disability Pensions

Injury and disability pensions paid to ex-servicemen are exempt. Veterans receiving disability pensions due to service-related injuries do not have to pay tax on these amounts.

8. Scholarships

Scholarships are exempt from personal income tax. If you receive a scholarship to cover educational expenses, this amount is not taxed.

9. Pensions and Death Benefits

Funds received as pensions, death benefits, or cumulative compensation for death or injury are exempt. For instance, if you receive a pension or a lump-sum death benefit, these are not included in your taxable income.

10. Salary Adjustments for Diplomats

Salary increases resulting from the application of the salary adjustment index to civil servants and State employees working in diplomatic and consular missions abroad are exempt. For example, if you’re a Cameroonian diplomat and your salary is adjusted while posted abroad, this increase is not taxed.

11. Labour Medals Bonuses

Bonuses paid during the award of labor medals by the Minister in charge of Labour are exempt. If you receive a bonus for a labor medal, this is not subject to tax.

12. Severance Pay as Damages

The share of severance pay granted as damages, excluding sums for loss of salary, is exempt. If part of your severance pay is awarded as damages under labor laws, this amount is not taxed.

Example

To illustrate:

  • If you receive CFAF 150,000 as a family allowance, CFAF 300,000 as a scholarship, and CFAF 500,000 as a court-ordered life annuity, all these amounts are exempt from personal income tax.

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 will return to the topic of assessing taxable income by focusing on specific calculation methods. Stay tuned!

For expert assistance in company registration, tax declaration, and more, visit OpenHub Consulting. We help start, run, and grow businesses in Cameroon with services like sales and marketing, bookkeeping, and accounting for small businesses.

Have questions? Drop them in the comments or check out our previous post here.


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