Central African Republic
Corporate Income Tax (CIT)
Who is Liable?
Taxation principle is territoriality, and business activities location
- As a result, Taxable benefits are the ones made by activities carried out in Central African (CAR)
- Related companies are those registered in CAR, regardless of the nationality of the shareholders or where the company is managed and controlled.
- Foreign companies engaged in activities in CAR are subject to CAR corporate tax on CAR source profits only.
CIT tax highlights
Withholding tax (WHT)
- WHT option at 15% rate exist.
- It relates to foreign companies (non-resident) who provides services in CAR to locally incorporated companies.
- The WHT is final tax.
The common Regime
Rate
- 30% for all business
- 20% for Agriculture related business
Minimum Tax :
- 1.85% for all business, but not less than XAF 1.850.000, unless they are exonerated.
- 3% for Agriculture related business, but not less than XAF 300.000 unless they are exonerated
Taxation requirements
Taxation regimes exist depending on the turnover for CIT minimum tax settlement: Turnover Scale Regime CIT Settlement Installments Settlement Equal or more than 30 Millions XAF and less than 100 millions Simplified Actual Corporate is paid in 2 installments by 15th of March, 15th September, Each installment must be equal to 1/2 of the previous year's tax 1st installment is determined on Y-2 and regularized on June 15th latest More than 100 millions XAF Actual Normal Corporate is paid in 3 installments by 15 February, 15 June, 15 october, Each installment must be equal to 1/3 of the previous year's tax 1st installment is determined on Y-2 and regularized in Y+1
- Final Tax being Maximum between installments and CIT rate payable latest 30th of April when filing the tax return
- Taxable income is based on financial statements prepared according to OHADA (organization for the harmonization of business law in French-speaking Africa) standard.
- Fiscal year starts from January 1st to December 31st
- CIT retention at source of advance tax exist for some category of activities; Rate is 3%
- Branch CIT rate is 30%
- While dividend tax of branches is 15%
- Double Tax Treaty (with France and CEMAC) reduces or exonerates Branch dividend tax
- Capital Gain is under CIT taxation, but can be deferred or eliminated in the event of a merger
- Companies registered during the six-month of the second half of the year can extend their fiscal year up to December N+1
- Losses are carried forward for 3 years
- Losses attributable to depreciation may be carried forward indefinitely.
- Losses may not be carried back.
- The statute of limitations period for CIT is four years following the year in which the tax was due.
Business expenses deductibility
Business expenses are generally deductible unless specifically excluded by law or by the provisions of an international convention.
Here are some major restrictions and/or limitations:
- Head office fee and any other remuneration paid out of CAMAC deduction is limited at 20% of charges before HO deduction
- Rent expense for movable equipment paid to a shareholder having more than 10% of the capital is not deductible.
- Interests paid to shareholders more than the central bank annual rate plus two points are not deductible
- Commissions and brokerage fees for services on behalf of companies located in Cameroon that exceed 5% of purchased imports and sales of exports
- Expenses paid is cash of more than 200.000 XAF are not deductibles
- Non-arm’s length expenses for services and certain purchases paid to natural persons or nonresident legal entities established in territories or states considered to be tax havens are not deductible.
- Fixed assets may be depreciated using the straight-line method at rates specified by the tax law (minimum, 5% to 100% Maximum)
Last Update: Novembre 27th, 2023
