Cameroon Individual Tax Guide

Worldwide Personal Tax and Immigration Guide 2021–22

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EY 1602/1606 Boulevard de la Liberté — Akwa P.O. Box 4456 Douala Cameroon Executive contacts Joseph Pagop Noupoué +237 698-00-57-03 Paris: + 33 (1) 46-93-77-18 Email: joseph.pagop.noupoue@cm.ey.com Thérèse Engoulou Bikom +237 699-15-20-15 Email: therese.bikom@cm.ey.com

A. Income tax Who is liable. Individuals who have their tax domicile located in Cameroon are subject to personal income tax on their worldwide income. Persons who have their tax domicile located outside Cameroon are subject to personal income tax only on their in­ come derived from Cameroon. Cameroonian and foreign nationals who earn income or profits taxable in Cameroon under the terms of an international convention to avoid double taxation are also subject to personal income tax, regardless of whether their tax domicile is located in Cameroon.

An individual is considered to have his or her tax domicile located in Cameroon if he or she meets one of the following conditions: • He or she has a home or a principal place of residence in Cameroon.

• He or she is engaged in a salaried or non-salaried activity in Cameroon, except when this activity is an accessory activity.

• He or she maintains a “center of interests or business” in Cameroon.

• He or she is a civil servant or state employee working in a foreign country and is exempt from tax in the foreign country.

Income subject to tax. For personal income tax purposes, taxable income consists of total net income from all categories earned by the taxpayer within the tax year, plus the profit from any gainful transactions engaged in by the taxpayer, less an abatement of XAF500,000.

Employment income. For purposes of the personal income tax, employment income includes all cash and noncash remuneration and allowances. Benefits in kind are valued according to the following fixed percentages of gross remuneration received.

Benefit in kind

Housing Automobile Domestic servant Electricity Water Food

Rate

15% 10% for each 5% for each 4% 2% 10%

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Allowances covering professional expenses and family-related allowances and benefits are specifically exempt. The tax base for employment income consists of gross remuneration and benefits after the 30% deduction for professional expenses (see Deductions).

In addition to the personal income tax, national housing contribution fund (CFC) and national employment fund (FNE) taxes are levied on employment income. The tax base for purposes of these taxes is the same as the tax base for personal income tax, except that the 30% deduction may not be claimed.

Self-employment and business income. Self-employed individuals are subject to personal income tax on profits derived from activities in Cameroon. Profits are categorized into the type of activity from which they are derived—commercial, professional and agricultural—and taxable income realized from each ­activity is calculated separately. Total net income from all categories is then subject to personal income tax under the rules applicable to employed individuals.

Taxable income derived from commercial activities and handicrafts depends on the tax regime of the taxpayer.

Self-employed individuals engaged in commercial activities or handicrafts, except for forestry companies, professional ministerial officers and liberal professions, who have annual turnover, exclusive of tax, of below XAF10 million, are subject to the flat rate taxation or discharge tax assessment system (régime de l’impôt libératoire). Individuals under the discharge tax assessment system cannot opt for another tax system but may be reclassified after the recalculation of their turnover.

Self-employed individuals engaged in commercial activities or handicrafts with annual turnover, exclusive of tax, of at least XAF10 but less than XAF50 million are subject to the simplified tax system (régime simplifié) except for passenger transporters, gambling companies and entertainment companies. Nonetheless, taxpayers realizing an annual turnover of at least XAF30 million can opt for the simplified tax system by filing a request with the competent head of the tax center, before 1 February of the tax year. This option is irrevocable for a three-year period. Their taxable income equals the difference between revenue and expenses required for operations.

Self-employed individuals engaged in commercial activities or handicrafts who have annual turnover, exclusive of tax, of XAF50 million or more are subject to the actual earnings tax system, and their tax is calculated in the same manner as company tax.

Self-employed intermediaries and agents are subject to the tax applicable to the categories of commercial activities or handicrafts to which their activities relate. The tax is withheld at source by the payers of the commissions.

Except for individuals engaged in the liberal professions who are also subject to the actual earnings tax system, taxable income derived from professional activities is the difference between income received and expenses paid during the tax year and is computed on a cash basis.

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Profits from agricultural activities of farmers, tenant farmers and sharecroppers are included in taxable income. In general, taxable income is determined in the same manner as income derived from commercial activities.

Investment income. Investment income is subject to withholding tax at a rate of 16.5%, which includes a 10% surtax, known as the additional council tax. Special rules apply to capital gains (see Capital gains).

The following types of interest income are exempt from p­ ersonal income tax: • Interest accruing on negotiable securities with respect to loans issued by the state, regional and local authorities • Interest accruing on savings accounts containing deposits of not more than XAF50 million • Interest on savings accounts for housing purposes • Interest on home loan accounts • Interest on cash notes Income derived from the rental of real property is subject to a 15% withholding tax if the rent is paid by government bodies and public establishments, corporate bodies or self-employed individuals assessed under the actual earnings or simplified systems.

Rent paid to enterprises assessed under the actual earnings system and depending solely on a Specialised Management Unit (Large Size Taxpayer Unit [DGE] or Medium Size Taxpayer Unit [CIME]) is not subject to this withholding tax. These units are subject to the Directorate General of Taxation (DGI).

Under the 2022 Finance Act, rents paid by taxpayers who do not fall within the scope of the abovementioned withholding tax are subject to tax on real estate income at a final rate of 11% (including 10% council surtax). This tax is paid on the declaration of the owner or beneficiary of the rents, by the 15th of the month following the end of each quarter.

Directors’ fees. Directors’ fees are treated as dividend income, not as employment income. They are subject to withholding tax at a rate of 16.5% (including 10% council surtax). The tax must be withheld by the payer company and remitted to the Treasury office where the establishment’s headquarters is located within 15 days after the act resulting in the liability.

Capital gains. Capital gains derived from the sale of real property by individuals are subject to personal income tax at a flat rate of 5%, which is withheld by the notary in charge of executing the deed of conveyance and paid at the same time as the registration duties on behalf of the seller. However, the purchaser may also pay the tax on behalf of the seller. If the last real property transfer is made by direct registration, the value used as the basis for the determination of the capital gains is the value declared in the deed of the parties. The Circular for the application of the 2017 Finance Law defines direct registration as the procedure of recognition of title over national land. In addition, the expenses that are deductible for the determination of the tax base are calculated on the basis of whether the taxpayer maintains an accounting.

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Gains derived from the sale of shares are subject to personal income tax as income from securities and taxed at the standard rate of 16.5% (including 10% additional council tax).

The tax on capital gains derived from the transfer of certain fixed assets may be deferred if the gains are reinvested.

Tax treatment of exceptional income. Exceptional income is income that is not likely to be collected annually by an employee and that exceeds the average net income received by the taxpayer in the last three years (for example, additional gratuities and the portion of severance pay exceeding that provided by the labor code and collective agreements). The 2018 Finance Act introduced an obligation for employers to disclose the elements of exceptional income for the calculation of personal income tax.

The computation of personal income tax on exceptional income involves the following steps: • Calculation of personal income tax on ordinary income by application of the progressive scale (a).

• Calculation of personal income tax on ordinary income plus one-quarter of exceptional income (b).

• Determination of the additional contribution on the exceptional income by subtracting the personal income tax on the exceptional income from the personal income tax on the ordinary income increased (b-a). The result is then multiplied by four (c).

• The addition of the supplement to the personal income tax on the ordinary income obtained (c + a).

This can be done solely at the employee’s express request. The employer is required to file with its tax center all the elements used as a basis for calculating the personal income tax on exceptional income. These elements must be attached to the tax return filed by the employer for the month of payment of the exceptional income.

Deductions

Employment deductions. The following expenses are deductible in determining employment income: • An amount equal to 30% of the gross remuneration and benefits received • Pension plan contributions • Insurance premiums paid for the spouse and children Business deductions. Deductible expenses for commercial, professional and agricultural activities are similar. They include the following items: • Costs of materials and inventories • All expenses incurred to conduct the activity (including personnel expenses, certain taxes, rental and leasing expenses, and finance charges) • Depreciation expenses • Provisions for losses and expenses Payments to persons located in tax havens. All expenses and remuneration that are recorded by natural persons or legal entities resident or established in Cameroon and linked to transactions with natural persons or legal entities resident or established in

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territories or states qualified as tax havens under Cameroon law are not deductible in determining personal income tax in Cameroon. However, amounts paid for the purchase of goods that are required for production in the country of production and that have been cleared at customs, as well as remuneration for services rendered in relation to such production, are deductible.

Rates. The following are the personal income tax rates.

Taxable income Exceeding Not exceeding XAF XAF

0 2,000,000 3,000,000 5,000,000

2,000,000 3,000,000 5,000,000 —

Rate %

10 15 25 35

A 10% surtax, known as additional council tax, is levied on the amount of personal income tax.

Contributions to the CFC are payable on employment income at a rate of 1% for employees and 1.5% for the employers.

Contributions to the FNE are withheld from employment income at a rate of 1%.

Audiovisual tax is imposed, with a maximum tax of XAF13,000.

Local Development Tax is imposed, with a maximum of XAF2,500.

Nonresident individuals normally are taxed on Cameroon-source income only; tax is generally withheld from payments. The applicable rates depend on the nature of the payments, as shown in the following table.

Type of payments

Rate

Employment income and income Ordinary rates of from commercial activities carried personal income tax out in Cameroon Dividends, interest and directors’ fees 16.5% (includes

10% additional council tax) Special income, such as royalties and Special income tax fees for technical services (TSR) at a rate of 15% and professional activities (subject to the provisions of

international tax treaties)

B. Inheritance and gift taxes For deceased Cameroon residents, estate tax is levied on worldwide personal property, real estate situated in Cameroon and in­tangible property located outside Cameroon. For nonresidents, only personal property and real estate located in Cameroon are subject to estate tax.

The rates of estate tax vary from 0% to 10%, depending on the value of the net assets. The tax may be reduced, depending on the relationship between the recipient and the deceased.

Claims from the administration with respect to inheritance tax lapse after 30 years.

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All deeds that transfer real estate or business assets located in Cameroon, and all gift deeds executed in Cameroon, are subject to gift tax. The rates range from 5% to 20%, depending on the relationship between the recipient and the donor.

C. Social security Social security contributions are calculated at the following rates on the basis of remuneration paid, including benefits in kind.

Contributions of employees are withheld monthly by the employer.

Description

Family allowances, paid by the employer on salary up to XAF9 million a year Retirement pension on salary up to XAF9 million a year; paid by Employer Employees Industrial accidents, varies depending on the employees’ activities (level of risk); paid by the employer

Rate (%)

7.0 4.2 4.2 1.75 to 5.0

Cameroon has entered into a social security totalization agreement with France to eliminate double taxation.

D. Tax filing and payment procedures The tax year is the calendar year.

Any professional taxpayer subject to the personal income tax is required to submit an annual tax return of the results of its operations. Individuals are required to file an annual tax return by 15 March of the year following the tax year.

Nonprofessional taxpayers who receive income from salaries, wages, pensions, life annuities, and/or income from securities and property income, as well as, in general, from passive income, are required to submit an annual tax return of personal income tax by 30 June of the year following the tax year at the tax office of their place of residence. This annual tax return of personal income tax can be filed directly online using a form provided by the tax authorities. It indicates by category of income the amount of income received during the past fiscal year; withholding taxes already incurred or advance payments made and the balances to be paid, if applicable.

Personal income tax on employment income must be withheld monthly by employers in accordance with a scale established by the tax administration and paid to the Treasury by the 15th day of the following month. Personal income tax on income from securities is withheld at source.

An individual must pay personal income tax for commercial, handicraft, professional, and agricultural activities to the tax office in accordance with the tax system applicable to the individual (see Section A).

Persons subject to the discharge tax assessment system are exempt from personal income tax and income tax and continue to pay their tax either quarterly or in full by 15 April of the year following the tax year.

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Individuals subject to the simplified tax system must remit a down payment or installment each month. The payments must equal 5.5% of the turnover realized during each month.

Individuals subject to the actual earnings system must make a monthly down payment equaling 2.2% of the turnover realized during each month. These standard installments include the 10% additional council tax and must be paid no later than the 15th day of the following month. The balance of the tax must be paid in a single payment by 15 March of the year following the tax year.

Effective from 1 January 2018, all individual enterprises falling under the specialized management units are obligated to declare personal income tax. Before 1 January 2018, this obligation was limited to individual establishments belonging to DGEs. It now applies to all individual establishments, regardless of the specialized management unit to which they belong (CIME and Specialized Tax Center for Liberal Professions [Centre Spécialisé des Impôts des Professions Libérales, or CSIPLI]).

An individual holding is not defined by law. However, it can be interpreted as being applicable to individual enterprises operated by natural persons that are not constituted as legal entities (for example, traders, artisans or farmers). The tax regime for these individual enterprises is based on the aggregate turnover of all establishments of such enterprises.

Individual enterprises that have several establishments and do not belong to any specialized management unit are also subject to this obligation.

Effective from 1 January 2019, employers falling under a specialized management unit and operating several establishments are required to declare and remit the taxes withheld from the salaries paid to their employees exclusively at the tax collector of the place of their registered office’s tax center.

Tax registration. The provisions of Article L1 bis of the Book of Tax Procedures, as amended by the 2020 Finance Act, contains new obligations regarding the registration of taxpayers. This procedure is carried out online on the website of the tax administration.

Effective from 1 January 2020, any natural or legal person liable to pay a tax or right (including employees) may carry out the following operations only if they present a valid unique identification number: • Opening of an account with credit and micro-finance institutions. Prepaid reloadable debit cards shall be assimilated to an account • Subscription of any type of insurance contract • Signature of contracts for connection or subscription to water and/or electricity networks • Land registration • Approval with respect to a regulated profession Under the 2022 Finance Act, for newly registered taxpayers, registration in the active taxpayer file takes place as of the date of filing the first tax return.

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E. Double tax relief and tax treaties In general, no credit for foreign taxes is available in the absence of a treaty. Cameroon has entered into double tax treaties with Canada, France, South Africa, Tunisia and the United Arab Emirates. It has also entered into the Central African Economic and Customs Union (CEMAC/UDEAC) treaty, along with the Central African Republic, Chad, Congo, Equatorial Guinea and Gabon.

A foreign tax credit equal to the tax paid in the other treaty country is generally available. For example, the CEMAC/UDEAC treaty provides the following relief: • Commercial profits are taxable in the treaty country where a foreign firm performs its activities through a permanent establishment.

• Dividends, interest and royalties are taxable in the beneficiary’s country of residence.

• Employment income is taxed in the treaty country where the activity is performed.

Under the treaties entered into with Canada, France, South Africa, Tunisia and the United Arab Emirates, withholding taxes may be levied on interest and royalties in addition to income taxes in the beneficiary’s country. The rates of withholding are generally reduced, and the withholding tax may be offset against the tax payable in the beneficiary’s country of residence.

F. Temporary entry visas All foreign nationals wishing to enter Cameroon must have passports or other valid travel documents to obtain entry visas. When applying for a temporary entry visa, an individual must present a valid passport, a certificate of accommodation and payment of XAF60,000. Cameroon does not have a specific quota system for the issuance of visas. Several types of temporary entry visas are described in the following paragraphs.

Tourist visas are granted to foreign nationals who intend to travel in Cameroon. They are issued by diplomatic embassies or Camer­ oon consulates abroad. Tourist visas are valid for 30 days, are not renewable and permit an unlimited number of entries into the country.

Business visas are granted to foreign nationals coming to Cam­ er­oon to take up technical, industrial or commercial positions.

They are valid for one year, are non-renewable and permit multiple en­tries into the country.

Student visas are issued to foreign nationals coming to Cameroon to pursue studies. They are valid for six months. Students must obtain residence permits valid for the length of stay (see Section H).

Temporary visas are granted to foreign nationals coming to Cam­ eroon for all other purposes (for example, for family visits). They are valid for three months, are non-renewable and permit an un­limited number of entries into the country.

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Transit visas are issued to foreign nationals passing through the country en route to other destinations. They are valid for five days and permit an unlimited number of entries into the country.

Entry visas may not be transferred from one category to another.

However, their validity may be extended in the case of a force majeure and on the express authorization of the DelegateGeneral for National Security.

G. Work permits and self-employment Work permits are valid for two years and are renewable for an unlimited number of times; the renewed permit is valid for two years. Expatriates may obtain work permits in Cameroon.

Following the submission of the necessary documentation, work permits are processed in approximately four to six weeks.

A foreign national may be self-employed if he or she obtains a residence permit. No minimum amount of capital is necessary to be self-employed.

H. Residence permits and residence cards In general, foreign nationals must obtain residence permits to obtain residence status. These permits are valid for two years and are renewable for the same period. To obtain the residence permit, the foreigner should have a long-term visa of six months. It is possible to obtain a temporary visa or a business visa by having a residence permit authorized in Cameroon.

Foreign nationals wishing to work in Cameroon must obtain residence cards, which, unlike residence permits, always include work permits. Residence cards are valid for 10 years and are renewable for unlimited periods.

To obtain a residence card, foreign nationals must present a valid passport and an international certificate of vaccination at the port of entry.

In certain cases, one or more copies of the following items and information must also be presented at the port of entry to receive a residence card: • The work contract • Authorization of entry and stay delivered by the DelegateGeneral for National Security • Date of commencement of the stay • Residence permit issued by the Delegate-General for National Security • A ministerial agreement • Proof of intention to repatriate

I. Family and personal considerations Family members. Under Cameroon law, the working spouses of

expatriates are obligated to have entry visas. Generally, it is ad­­ vised that spouses wishing to work file jointly with the expatriates for work permits.

Independent children of foreign nationals should obtain personal residence permits; dependent children residing with their parents

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in Cameroon must obtain authorized entry visas and residence permits.

Marital property regime. Cameroon’s elective community pro­p­ erty regime applies only to Cameroonian nationals. NonCameroonian nationals who are married in Cameroon or who establish a marital domicile in Cameroon are not subject to Cam­ eroon’s marital property regime.

Forced heirship. Forced heirship rules in Cameroon apply only to

Cameroonian nationals.

Driver’s permits. Foreign nationals may drive legally in Cameroon if they exchange their home country driver’s licenses for Camer­ oon licenses. No prior examinations are required to exchange the home country driver’s license.

In the absence of a home country driver’s license, a foreign national may obtain a Cameroon driver’s license by filing an application with the Ministry of Transport, taking a written examination and taking a practical driving test.