Company Tax in Cameroon – Who is Liable to Pay?
Brief: The liability of the Company Tax in Cameroon falls on both moral and natural persons depending on the legal structure of the business.
Also known as a corporation tax liability, a company tax liability refers to the legal obligation of businesses (companies) to pay a tax to the government on their annual profits. This is clearly stated in the General Tax Code of Cameroon where it says a company tax will be levied on all profits or income generated by companies or corporate bodies within the national territory.
The corporate tax rate in Cameroon is 30% with an 10% additional council tax rate which makes it 33% in all. The latest date for companies in Cameroon to declare their annual income tax is March 15 of every year. The financial year in Cameroon follows the calendar year – January to December. Corporate bodies are also obliged to declare monthly turnover and pay advanced taxes. This is done on or before the 15th of every month.
Read more on a preview of Cameroon tax system
Who pays the company tax in Cameroon?
Company tax in Cameroon is paid on all business or trading activity that take place within the borders of the country. This includes the sales of assets, rental property or land, income from sales and others. Companies are obliged to keep their tax records for at least ten years. Such records include invoices, receipts, calculations and other tax-related information. Such records are also allowed to be stored electronically as long as they are secure and legible.
In Cameroon, there is a form of sole-proprietorship that has the same status like a company when it comes to income tax payments. Such a sole-proprietorship is issued a business license and is treated exactly like a company with the exception that the liability of the owner is unlimited.
Another clear difference is that the business is not incorporated and the business license is issued in the name of the owner with an alias business name. The business name can be used publicly with the initials ETS (Etablissement) written before it.
The Scope of Application of the Company Tax in Cameroon
All company structures in Cameroon exists as a separate legal entity which files its own statistics and tax returns (STR) at the end of the financial year. The STR shows the business’ income, deductions and the income tax it is liable to pay at the end of the year.
In Cameroon, there are some business types that are liable to company tax and others that are subject to a special tax scheme. Below are businesses in Cameroon that are liable to the company tax:
Businesses liable to company tax in Cameroon
1. Private and public establishments
This includes limited liability companies, joint stock companies, co-operative societies and public establishments or bodies with financial autonomy. Irrespective of their objectives, limited liability companies (private and public), co-operatives and their unions and joint-stock companies are liable to pay corporation tax. State bodies or public establishments that have financial autonomy and carry out gainful activities are also liable company tax.
2. Civil Companies
A civil company is actually a non-commercial company whose primary objective is to carry out civil activities and not commercial. Civil companies may also carry out commercial activities. However, performing such activities make them liable to company tax.
In Cameroon, civil companies do carry out commercial, agricultural, non-industrial and industrial activities. Examples of civil companies in Cameroon include the Industrial Zones Development & Management Authority known by it’s French acronym, MAGZI, the Cameroon Real Estate Company, SIC, National Investment Company, SNI. This however means the civil nature of the company does not affect the nature of the commercial activities that it carries out.
Civil companies in Cameroon are liable to company tax in the case where their members include one or more companies owning shares in a business that opted for corporation tax. This also includes civil companies that have taken the option of company tax under conditions fixed for partnerships.
Some activities carried out by civil companies include:
- sale of property, shares, holdings in real estate, intermediary transactions or when they buy on their behalf with the intention to resell
- when they earn a return after parceling and selling lands they acquired
- when they rent out or sublet part or an entirely furnished building owned or managed by them
3. Partnerships that have opted for company tax
They include partnership firms, joint-ventures, limited liability partnerships and financial syndicates. However, it should be noted that this option is irrevocable and may not be applied to companies that are not incorporated as well as partnerships that originated from previous partnership transformations.
For such an option to be valid, the partners are obliged to sign and notify the tax inspector of the area within three months of the start of the financial year. Failure to do that, the company tax will be levied on the share of the profits of
- partners in a limited partnership and
- partners who are not indefinitely liable or whose names are in the books of the administration in joint-ventures, financial syndicates or partnership firms
4. Public establishments, regional and local authorities
Scientific, educational, aid bodies, associations, regional and local authorities, all other public establishments are not subject to company tax except in the following cases:
- rental income from built-on and non-built-on property (estates)
- revenue from floating capital that is not liable to tax revenue from transferable securities they posses
- any other gainful activity
In case they earn income as above, they are obliged to carry out a separate accounting according to the rules and procedures governing commercial law.
5. Micro-finance institutions
All micro-finance institutions irrespective of their nature and legal form are liable to company tax.
Activities in Cameroon that are Exempted from Company Tax
Not every activity or institution in Cameroon is liable to company tax. There are certain institutions that have been exempted from corporation tax in Cameroon. Some of them include:
1. Co-operative societies that are engaged in the production, processing, conservation and the sales of livestock and agriculture produce are not liable to company tax.
2. Agricultural and pastoral unions
3. Agricultural mutual credit funds
4 Mutual-aid societies and associations
5. Regional and local authorities
6. Bodies and societies responsible for rural development
7. Non-profit making private education establishments
8. National Social Insurance Fund only on the benefits that deals with salaries
9. Open-end investment companies (SICAV), mutual credit and investment funds for profits gotten as part of their legal activity
10. Public hospital establishments
11. Economic interest groups for share profits distributed to their members who are natural persons.