By Mr Divine Afuba, LLM (Distinction) London School of Economocs

Partner and Head of Banking and Finance Practice

1. Introduction

On 23 December 2024 the president of the republic promulgated Law N° 2024/020 on local taxation (the “2024 Law” for short). The 2024 Law repeals Law N° 2009/019 of 15 December 2009 relating to local taxation and shall be transposed into the General Tax Code and implemented progressively.

The 2024 Law is actually part of Cameroon’s decentralization framework, provided by the 1996 Constitution, and implemented by, among other enactments, Law N° 2019/024 of 24 December 2019 to institute the general code of regional and local authorities (the “2019 Law”). The 2019 Law seeks to empower regional and local authorities in line with the constitutional mandate for increased autonomy. By aligning local tax administration with national fiscal procedures, the law enhances efficiency, transparency, and financial independence at the subnational level, reinforcing the role of regional and municipal councils in local governance and service delivery.

The 2024 Law is very broad in scope and in this paper, we provide an overview of some of its provisions.

2. General provisions

The 2024 Law lays down the taxes, duties and royalties collected on behalf of regional and local authorities. This law enshrines the principle of legality in matters of local taxation in its section C3: a local authority may only levy a tax, duty or fee if such tax, duty or fee has been established by law, adopted by that local authority’s deliberative body and approved by the competent authority. Furthermore, a rapprochement is made between State taxes and local taxes. The 2024 Law, in Sections C1(4) and C6(1), states that fiscal procedures applicable to State duties and taxes shall apply mutatis mutandis to the issuance, recovery, control, penalties, and litigation of local tax bases. It further provides that local taxes shall be levied and collected under the same conditions as State taxes, except where otherwise specified by law.

In its section C2, the 2024 Law enumerates the different types of local taxes. These include:

• Council taxes;
• Additional council taxes on State taxes and duties;
• Regional taxes and royalties; and,
• Any other levy provided for by law.

A summary of these different taxes is set out below.

3. Council taxes

Section C7 provides that proceeds of council taxes collected by the State shall be derived from the following:

• Business licence tax;
• Licence fee;
• Comprehensive tax;
• Property tax;
• Property transfer tax;
• Motor vehicle stamp duty;
• Forest royalty;
• Stamp duty on advertising;
• Tourist tax; and,
• Special excise duty to finance waste collection on behalf of regional and local authorities.

The above list is an exhaustive list but only an overview of some of these taxes shall be provided below.

4.1. Business licence tax

The business licence tax is one that is paid by any natural or legal person of Cameroonian or foreign nationality engaged in an economic, commercial or industrial activity in a council. Only the actual or habitual practice of the activity and the financial gain therefrom is liable for the business licence tax (sections C8 and C9). The tax assessment is based on the taxpayer’s declared turnover for the last financial year ended.

Section C11 provides a list of persons not liable to pay this tax. These persons include hawkers, hospitals run by religious bodies or non-profit organisations, school facilities, persons liable to pay the comprehensive tax, rural development cooperative societies and agricultural mutual benefit and credit schemes, as well as some cooperatives and/or their unions and common initiative groups.

But the law makes exemptions to the payment of the business licence tax. For example, new enterprises are exempted from the tax for a period of 12 months. This period is extended by an additional 12 months for enterprises that are members of approved management centres (in French, “centres de gestion agréés”).

This tax is paid by applying a rate to the turnover of the taxpayer for the previous financial year, fixed as follows:

– 0.0159% of the turnover of large enterprises, for a minimum contribution of 5 000 000 F CFA and a maximum contribution of 2.5 billion F CFA;

– 0.283% of the turnover of medium-sized enterprises, for a minimum contribution of 141 500 F CFA and a maximum contribution of 4 500 000 F CFA;

– 0.494% on the turnover of small enterprises, for a minimum contribution of 50 000 F CFA and a maximum contribution of 140 000 F CFA.

4.2. Property tax

4.2.a. According to section C49 of the 2024 Law, this tax is levied annually on built-on and non-built-on estates found in a council, under the following conditions:

– for property on built-on estates that benefit from infrastructure and services such as road networks, asphalted roads, water, electricity and telephone services;

– for property on non-built-on estates when they are located in headquarters of administrative units; and

– for lands located in urban peripheries.

4.2.b. Persons liable for this tax are natural and legal persons who own built-on and non-built-on estates, including de facto owners. Further, where a building is rented under a long, building or rehabilitation lease, or subject to an authorization of temporary occupation of public land constituting a right in rem, the property tax shall be issued in the name of the lessee, or authorization holder.

4.2.c. Section C50 contains a list of properties that are exempted from property tax. These include land used exclusively for agricultural, livestock and/or fishing purposes; property belonging to public and private hospitals and schools; property belonging to denominational, cultural or charity organizations recognized as being in the public interest, where such property is used for non-profit purposes.

4.2.d. This tax is due on 1 January of every fiscal year and shall be settled no later than 30 June, or on the basis of a pre-filled return. The basis of tax assessment shall be the value of the lands and building declared by the owner, and the value per zone of property shall be laid down by a separate instrument. Where there is a failure to file returns, the administrative value of the property fixed in accordance with the provisions of section 546(a) of the General Tax Code shall serve as the basis of the assessment.

4.2.e. To ensure payment of this tax, the lawmaker in section C55 of the 2024 Law provides that deeds relating to mortgages, transfers of ownership or use of immovable property shall not be registered without proof of due payment of property tax.  This is in addition to the rule in the General Tax Code that judges and arbitrators are prohibited from ruling on unregistered documents. In addition, any entry in the land register shall be subject to the presentation of a receipt for payment of property tax or a certificate of exemption issued by the competent tax authority.

 

4.3. Property transfer tax

Section C57 of the 2024 Law enacts that a property transfer tax shall be introduced for the benefit of councils as provided in the General Tax Code, and applicable as follows:

1. At 10% interim rate: deeds and transfers of built-on urban property.
2. At 5% medium rate: deeds and transfers of non-built-on urban property and built-on rural property.
3. At 2% reduced rate: deeds and transfers of non-built-on urban property.
4. At 1% super reduced rate: deeds and transfers of property to associations recognized as being of public utility and duly authorized religious bodies, notwithstanding the provisions of section 344 of the General Tax Code.

4.4. Forest royalty

Section C71 of the 2024 Law provides that the annual forestry royalty shall be calculated based on the surface area of all types of logging licenses, including the sale of standing volume allocated to specific development projects. The royalty shall comprise a floor price and a financial offer. The floor price is fixed as follows:

– sale of standing volume: 2 500 F CFA/ha;

– concessions: 1 000 F CFA/ha.

The law states that forestry royalty shall be paid in three equal instalments: before the 15^th of March for the first instalment, before the 15^th of June for the second instalment, and before the 15^th of September for the third instalment.

4.5. Stamp duty on advertising

4.5.a. Section C72 provides that the following shall be subject to advertising tax: bills; tracks and leaflets; billboards; newspaper, radio, movie, television advertising and vehicles with loudspeakers; free distribution for commercial purposes; any other material or non-material medium.

4.5.b. With the exception of car advertising, stamp duty shall be levied at a rate of 3% of the invoice cost of advertising for each medium. For car advertising, the stamp duty is 30 000 F CFA per month per vehicle with a PA system, and 20 000 F CFA per month per vehicle without a PA system.

Stamp duty for tobacco and alcoholic beverage advertising, including free distribution, shall be levied at a rate of 15%.

4.5.c. The law provides for different avenues for the collection of the duty. For instance, the payment of stamp duties on advertising via posters, leaflets and flyers shall be deducted at source by companies in specialized management units and remitted to the relevant tax centre. Other advertisers shall declare and pay stamp duties on advertising to an advertising agency, which shall be required to repay the amount on duty collected within 15 days on the month in which the advertisement duty was paid.

Another example concerns newspapers published outside Cameroon but distributed in Cameroon. The insertion of an advertisement in such newspaper shall give rise to declaration and payment of stamp duty at the time of payment of the advertisement costs corresponding to such insertion (section C75 of the 2024 Law). The law is unclear as to how this provision shall be enforced, since the publishing newspaper is outside Cameroon.

4.7. Tourist duty

This duty is levied on overnight stays in any classified or unclassified tourist accommodation. The duty is payable per guest and is collected by the accommodation establishment. The duty rates are set out in section C78 of the 2024 Law:

– 5 star hotels: 5 000 F CFA per night;

– 4 star hotels: 4 000 F CFA per night;

– 3 star hotel : 3 000 F CFA per night;

– Furnished establishments and other lodging: 2 000 F CFA per night;

– 2 star hotels: 1 000 F CFA per night;

– 1 star hotel and other unclassified accommodation establishments: 500 F CFA per night.

4. Additional council taxes on State taxes and duties

Pursuant to the provisions of section C82 of the 2024 Law, these taxes are instituted on the following taxes and duties for the benefit of councils:

-personal income tax;

– company tax;

– value added tax (VAT);

– excise duties;

– special income tax;

– public procurement registration fees.

The 2024 Law in its section C83 provides that the rate of additional council taxes shall be 10% of the principal of the personal income tax, company tax and VAT; 5% of the principal of excise duty, the special income tax and public procurement registration fees.

 

5. Council taxes and royalties

These include local development tax, local stamp duty and fees.

5.1. Local development tax

This is tax is collected for the provision of basic facilities and services to the public, such as street lighting, sanitation, refuse collection, ambulance services, potable water supply and electrification. The tax is paid by public and private sector employees, as well as by those liable for the payment of discharge tax (in French, “patente”) – section C86 of the 2024 Law.

For public and private sector employees, this tax is charged at a fixed rate per salary. For instance, for a salaried worker who earns a monthly salary ranging between 62 000 F CFA and 75 000 F CFA, he pays an amount of 3 000 F CFA per year as local development tax. And for a salaried worker who earns a monthly salary ranging between 75 001 F CFA F CFA and 100 000 F CFA, he pays an amount of 6 000 F CFA per year as local development tax.

For those subject to discharge tax, if the taxpayer’s principal tax is 30 000 F CFA or less, the local development tax is set at 7 500 F CFA per year. If the taxpayer’s principal tax is more than 500 000 F CFA, the local development tax is set at 90 000 F CFA per year.

The tax is collected at the same time as the personal income tax, the comprehensive tax and the business licence tax.

5.2. Local stamp duty

This duty is fixed at 500 F CFA and applies to documents up to one A4-page in size, including:

– a copy or extract of civil status record;

– legalization or material certification of signature or document;

– suppletive judgment;

– power of attorney;

– invoices from service providers to regional and local authorities;

– any request submitted to the officials of regional and local authorities.

Any document larger than the above basic size of documents shall be liable for payment of a stamp duty of 1000 F CFA.

 

5.3. Fees

These include cattle slaughter tax; impoundment fees; market fees; building permit or layout fees; parking, parking lot and quay occupancy fees; and council excise duty on polluting activities. Only the building permit or layout fees shall be discussed.

5.3.a. Building permit or layout fees

According to Section C103 of the 2024 Law, building permit and layout fees shall be imposed on all buildings constructed within the council headquarters or in suburbs included in an approved town plan. The fee rate is set at 1% of the building’s value and applies to both new constructions and major renovation works.

Any execution of work without prior payment of fees shall render the builder liable for a penalty of 30% of the fees due. The penalty shall be paid to the council.

Section C106 states that the building permit tax shall be collected by the tax authorities and that the issuance of the building permit shall be subject to the payment of the tax.

6. Regional taxes and royalties

These taxes and royalties are laid down in Part VI of the 2024 Law. By way of general provisions, section C124 of the law enacts that the proceeds of the following taxes, duties and royalties shall be paid to the regions: a share of the transferable balance of oil and gas royalties; a share of mining royalties; a share of the special tax on petroleum products; a share of the resources of the Sustainable Development Fund for the Financing of Water and Sanitation Projects; airport stamp duty; a stamp duty on vehicle registration certificates; a share of radio frequency usage fees; a share of the resources derived from the annual gaming fee; and the local stamp duty paid to the region. Sections C125 to C132 then explain how the shares of these different royalties shall be collected and redistributed among the regions.

6. Tax procedures specific to local taxes

Part VIII, which is the final part of the 2024 Law, deals with tax procedures that are specific to local taxes.  Broadly speaking, it carries a lot of similarities with the procedures laid down in the General Tax Code. For instance, it provides that the provisions of the Manual of Tax Procedures of the General Tax Code shall apply, mutatis mutandis, to the taxes, duties and levies of regional and local authorities, and that any person liable to pay a local tax shall be duty-bound to file for pre-registration under the conditions laid down in Book I of the General Tax Code. In addition, failure to pay local taxes in due time and form under the law shall lead to the application of the penalties provided by the Manual of Tax Procedures of the General Tax Code.

It provides further that payment of local taxes shall be made by electronic means, telepayment, bank transfer or in cash at authorized financial institutions.

Where a taxpayer fails to pay local taxes in due time, a forced recovery procedure shall be instigated in accordance with the Manual of Tax Procedures of the General Tax Code. However, the sums owed by taxpayers as local taxes, duties, levies and royalties are time-barred after four years after the due date, provided no prior decision interrupts the limitation date. For council royalties, the limitation period is two years.

Conclusion

The 2024 Law was enacted as part of the decentralization drive of the government. But, for such an important decentralization, this law still puts State-appointed officials in charge of tax collection on behalf of local authorities. This defeats the purpose of the decentralization initiative. The law overburdens the taxpayer with multiple heads of taxes and the taxpayer may find it hard to keep track with all these taxes. The taxpayer is therefore exposed to the risk of steep tax penalties in case of default.

The above exposé on the 2024 Law is not meant to be legal advice, but it shared for information purposes. Dayspring Law Firm, a partnership of commercial, corporate and investment attorneys offer advice on the broad spectrum of business law, including general tax law and local tax law. Contact us should you need expert advice on these areas of the law.