Brief: Tax on private educational institutions in Cameroon
In Cameroon, education is considered a social service, hence has a special treatment by the tax authorities. The government doesn’t levy company tax on private educational institutions in Cameroon.
Educational institutions in Cameroon include both the government and private facilities that facilitate learning as well as the acquisition of knowledge, skills, beliefs, values and character. However, this post will be talking about tax on private educational institutions in Cameroon.
According to Section 2 of the Law No. 2004/022 of July 22 2004 to lay down the rules governing and functioning of private education in Cameroon,
“(1) Private education shall be a social service provided by private partners in the public interest, through curricular or training activities conducted within schools or training establishments, as the case may be, with support from the State and regional and local authorities.
(2) Private education shall be provided through nursery, primary. general secondary, technical secondary, vocational and teacher training institutions.”
It is the government’s role to see that its citizens are educated in one way or the other to enhance growth in the economy. In order to do this, the government has exempted educational services from paying company tax and other levies or contributions.
In Cameroon, the following services comprise what the educational institutions provide:
According to the general tax code of Cameroon, taxes are levied on all profits or income generated by individuals, companies or other corporate bodies. This tax is known as income tax which comprises of the personal income tax (PIT) and company tax.
The tax law in Cameroon has also put in place basis of collecting this tax as well as those who are liable. However, educational institutions are not subject to company tax. There are situations where these institutions are obliged to pay company tax.
Some of the activities where educational institutions pay company tax include:
Revenue from any other gainful activities order than education are subject to separate accounting according to the rules and procedures put in place by OHADA (commercial law).
According to Section 4 of the Cameroon General Tax Code, non-profit private education establishments are exempted from company tax. This means the profits earned by these institutions in Cameroon are not subject to company tax except in situations where they don’t carry out other income earning activities.
However, this does not mean that they will be exempted from paying personal income tax earned by sharing any profits made. Also, they are liable to deduct income tax from salaries or wages, profits from the sales of any handicraft, industrial or commercial activities as well as income from real estate activity.
Educational institutions are also exempted from the tax paid by employers to the National Employment. This is put in place by Law No 90-50 of December 19, 1990 that amended and supplemented Law No. 77-27 of December 6 1977 and Law #77/10 of July 13, 1977 instituting a housing fund tax.
All natural or corporate bodies, both foreign and nationals, carrying out commercial, economic or industrial and other professional activity within a council area are liable to the business license. This is business license contribution is based on the turnover declared by the taxpayer.
However, certain institutions shall not be liable to the business license as provided by the law. These include:
In Cameroon, value-added tax is levied on corporate bodies, natural persons, regional and local authorities that are allowed to carry out such taxable transactions. The activities include agriculture, mining, agro-industry, handicraft, forestry as well as some activities of liberal and related professions.
However, educational institutions have been exempted from VAT on tuition and boarding fees collected. This is done under the framework of normal activities by schools and university institutions that have been duly authorized by the Minister of National Education or that of Higher Education.
The tax law also provides for a special incentive to lay or faith-based private educational and vocational training institutions. This is effective if the institution is duly approved by the competent authority. The following are some of the tax incentives divided into individual and corporate taxpayers:
Educational and vocational training institutions also have the following obligations as prescribed by the tax law:
There are also situations where the state provides support to these private institutions of training and education. It should be noted that any shortcomings or serious breach of the law may lead to the suspension or forfeiture of the rights of the officials of the private schools or training institutions by the competent authorities.
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Photo Credit: Paul Bonafide Eferianor