Corporate Income Tax (CIT)

Corporate Income Tax (CIT)

Who and what is liable?

Taxation principle is territoriality, place of registration, and residence

• Cameroonian companies carrying on a trade or business outside Cameroon are not taxed in Cameroon on their foreign-source profits.
• Cameroonian companies are those registered in Cameroon, regardless of the nationalities of their shareholders or where they are managed and controlled.
• Foreign companies with activities in Cameroon are subject to Cameroonian corporate tax on Cameroonian-source profits.
• An entity is deemed resident if its registered office, centre of activity, or management is located in Cameroon; if it has resident employees in Cameroon that provide services to customers; or if it has a Permanent Establishment in Cameroon.

 CIT tax highlights

Retention at source

The Withholding tax (WHT) applies on income paid to corporations and physical persons domiciled outside Cameroon, by corporations or establishments located in Cameroon according to the following rates:

– General rate: 15%

– Average rate: 10%

– Reduced rate: 3%

The rates below apply according to the type or nature of activity as detailed to Articles 225 to 228 of the GTC.

It also concerns foreign companies subcontracting or not in the oil sector. Access to this taxation regime is subject to the prior authorization of the Director General of Taxation, issued upon written request of the service providers or the client.

Common regime

        Rate

• Rate: 30% plus 10% council surtax; total is 33% for yearly revenue execeeding 3 billions XAF
• Rate: 25% plus 10% council surtax; total is 27.5% for yearly revenue not execeeding 3 billions XAF
• Minimum Tax: 2.2%, or 5.5% of turnover depending of tax regime or business type

Tax regimes

In general, non-salaried activities with some exemptions are classified into 3 regimes depending on assumed yearly revenue. Lower revenue level includes less restriction regime than high revenue level, and options are opened to move to intermediate regime to highest.

This classification is also valid for the CIT.

Taxes regime are:

Taxation requirements

• Minimum tax is paid in advance, as a CIT deposit, on a monthly basis latest 15^th of the following month, for previous month activities, after deduction of the advance payment on purchases.
• Final Tax being Maximum between 12 monthly advance and CIT rate payable latest 15^th of March when filing the tax return
• Taxable income is based on financial statements prepared according to accounting principles and norms of OHADA (organization for the harmonization of business law in French-speaking Africa) standard statements.
• Fiscal year starts from January 1^st to December 31^st
• Corporate minimum tax retention at source of advance tax is applicable for some category of activities.
• Branch CIT rate is 33% or 27.5%, while dividend tax of branches is fully considered as distributed at 16.5%, or 33% rate depending of territory of resisence of beneficiairies.
• Double Tax Treaty (with France, Canada, United Arab Emirates, Morocco, South Africa, Tunisia, and CEMAC) reduces or exonerates Branch dividend tax, and some others taxes
• 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 4 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 deduction is limited at specific rate from 2.5% to 7.5% depending on activity type
• Rent expense for movable equipment paid to a shareholder having more than 10% of the capital
• Interest paid to shareholders in excess of the central bank annual rate plus two points
• 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 in cash of XAF 500.000 or more. The XAF 500.000is considered per invoice issued
• Expenses paid to local suppliers without reference to a Tax Identification Number.
• 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.
• Small equipment and other items that have a value not exceeding XAF 400,000 without tax are directly accounted for as charges and considered deductible expenses
• Fixed assets may be depreciated using the straight-line method at rates specified by the tax law (minimum, 1% to 33.33% Maximum)

Last update: 27 of November 2023