Tax Innovations of Cameroon’s 2022 Finance Law
Cameroon’s law-making body holds three (03) ordinary parliamentary sessions every year in the months of March, June, and November. Article 16 (2) b of Cameroon’s Constitution states that, “The National Assembly shall, during one of its ordinary sessions, adopt the State budget.” Traditionally, the last ordinary parliamentary session which holds in November is essentially devoted to the examination and adoption of the State budget for the following financial year. This is adopted in the form of what is known as the public finance law (“loi de finances” in French).
The purpose of the public finance law is principally to lay down the revenue and expenditure of the State, to define the conditions of budgetary and financial equilibrium, to adopt the State budget and to report on its execution. There are three (03) instruments which are considered as public finance law, namely, the initial public finance law, subsequent public finance laws amending previous public finance laws and the settlement law (the law which takes cognizance of the last executed public finance law). Examples of settlement laws can be found here and here.
Further, the public finance law contains a special chapter (chapter 2) relating to the amendment of the provisions of Cameroon’s General Tax Code, including for this year 2022 the amendment of Sections 4, 7, 89, 93 (c), 93 (h) bis, 93 decies, 104 (d), 107, 111, 120, 128 (b), 142, 149, 225, 225 (c), 228 (a) to 228 (e), 543, 544, 546 (a) (8), 559 M 1, M 2 (b), M 8 (c), M 13, M 14 (a), M 94 (a), M 94 (d), M 96, M 104, M 116, M 119, M 120, M 121 (6), M 126, M 128 and M 143. You can find the public finance law for the 2022 financial year here and the amended General Tax Code here.
Cameroon’s Directorate General of Taxation, the authority in charge of supervising and administering the tax policy of the nation has published a guide on the tax innovations introduced by the 2022 Finance Law. To access the guide click here Tax Innovations of 2022 Public Finance Law Cameroon. You can equally download the guide here. At the end of the 2022 fiscal year, the State of Cameroon projects to collect tax and customs revenues of 3 088.7 billion, an increase of 12.6%. The tax reforms are in tandem with the new economic and financial program concluded between Cameroon the IMF and President Payl Biya’s instructions contained in a Presidential Circular of 30 August 2021 on the preparation of the state budget for the fiscal year 2022 and prescribing particularly an economic growth of 4.4%; an inflation rate at or below 2%; an overall budget deficit of 2% of GDP or less, and the tax burden not to rise above 12.5%. The presidential circular is accessible here.
In a nutshell, the tax innovations can be summarized as follows:
- the introduction of a 0.2% tax on domestic money transfers with the exception of bank transfers and transfers for the payment of taxes;
- simplification of tax procedures at several levels, especially with regards to the digitalization of the tax system and refund of VAT credits;
- the simplification of the taxation of real property income through the introduction of a flat-rate tax of 10% on rents received under professional (commercial) leases;
- the definition of the tax status of non-profit organisations;
- the introduction of encouraging measures to encourage voluntary payment of taxes by defaulting taxpayers;
- the streamlining of the tax audit procedure;
- the reduction of the tax burden of taxpayers relating to payments made to contractors for public orders residing abroad and several other tawes touching on international operations;
- the introduction of depreciation rules to encourage technological innovation and creativity;
- seven year long fiscal incentives granted to Banana producers to boost local banana production;
- extension of tax exemptions to companies resident in zones considered as economically fragile (conflicts);
- introduction of additional measures to secure tax revenue and broaden the tax base;
- exclusion of lawyers from assisting and representing members of the public in tax proceedings, both administrative and judicial, and from providing tax law advisory services to members of the public.