In order to promote and support investment, tax laws in force in Cameroon have developed a number of incentive schemes.
The reinvestment system
This scheme is essentially aimed at encouraging companies that reinvest their profits in the renewal of their production tool. Concerned are only companies operating in the industrial, agricultural, forestry, tourism, mining or NICT sectors.
To be eligible, the reinvestments must be made in one of the following forms:
- construction or extension of buildings constructed with permanent materials;
- acquisition of material sealed to the fund for a permanent, heavy mechanical equipment, heavy duty transport equipment;
- acquisition of specialised exploitation equipment not capable of operating another job for enterprises in the sector of information and communication technologies;
- acquisition, renewal and installation of production, processing, packaging and conservation equipment in food processing activities;
- expenses on soil preparation, crop planting, excluding maintenance costs, for the agricultural sector;
- any social reinvestment.
The tax benefits are:
- reduction of taxes on the basis of 50% reinvestment admitted, and that may not exceed half of the earnings declared during the fiscal year concerned. In case of insufficiency for a fiscal year, carrying forward is allowed on the following fiscal years within the limit of three closed financial years;
- for companies of the information and communication technologies, the reduction is granted on the basis of 25% of the admitted reinvestment, without exceeding one quarter of earnings declared during the fiscal year in question;
- as concerns taxpayers subject to the minimum tax on turnover, the reduction is granted within the limit of 50% of the minimum tax.
The tax system of the stock exchange sector
The system aims to encourage companies to go on the financial market in order to favour:
- the modernisation and transparency of the enterprises;
- the mobilisation of savings for long term financing of the economy.
The tax benefits are:
- For companies in the stock market (art 108), differentiated reduction of the CT rate from 35% to:
- 20% for three years, for companies that carry out capital increases of at least 20%;
- 25% for three years, for companies carrying out the transfer of securities up to 20% of the capital;
- 28% for three years, for companies carrying out increase and transfer of shares lower to the threshold of 20% of the share capital.
- Reduction of 30% of the CT rate for companies involved in the bond market and for those who are deemed to make a public call for savings (article109 and 109 A);
- Exemption from registration fees on conventions and instruments on the transfer of listed securities (section 112);
- Exemption from the Tax on Investment Income on net capital gains realised on the stock market;
- possible cumulating of the stock exchange system with other systems such as reinvestment, developmental projects, the public / private partnership.
The special tax system for developmental projects
This special regime applies to companies involved in well-defined areas (industrial, agricultural, tourist and social housing).
To be eligible, companies must:
- be employment generating;
- constitute a pole of economic and social development;
- give rise to investments to the tune of CFA five (05) billion francs at least for large enterprises, and 500 million for SMEs.
The tax benefits are:
- exemption from the business licence for the first two years of operation;
- registration at the fixed fee of CFA 50 000 of real estate deeds and transfers directly related to the putting in place of the project;
- exemption from VAT on local purchases of construction materials and on imports for the putting in place of the project;
- the application of accelerated depreciation at the rate of 1.25 of the standard rate for specific capital acquired during the installation phase;
- extension of the duration of the deficit carried forward by four (04) to five (05) years.
The regimes of the investment code and free zones
These regimes reserve a preferential tax treatment to authorised companies that realise productive investments in Cameroon.
The advantages here are:
- exemption from registration and transfer fees;
- 50% reduction of corporate tax (CT), the PIT and the Tax on Investment Income (TII);
- The carrying forward on the results of 05 subsequent years, of the deficit resulting from the depreciation deduction normally posted during the three (03) first financial years;
- reduction of an amount that cannot be carried forward equal to 0.5% of the FOB value of manufactured products.
The tax system of the public/private sector partnership contracts
This system offers tax facilities to companies within the framework of the realisation of major infrastructure projects in partnership with a corporate body under public law.
The tax benefits granted under the public-private partnership contracts are:
- coverage by the budget of the public contracting partner of the Value Added Tax (VAT) on imports and local purchases of equipment related to the project;
- free registration of agreements and instruments signed by the contracting partner of the public entity.
- discount of five (5) points in principal on the rate of corporate tax for the first five (05) years of operation;
- free registration of agreements and instruments signed by the contracting partner of the public entity during the first five (05) years of operation;
- extension of the duration of the deficit carried forward from four (04) to five (05) years;
- application of accelerated depreciation consisting of an increase of 25% of the normal depreciation rate to practice.
The regimes of sector based codes:
These different regimes are part of promoting the activities of the extractive sector. This consists specifically of the benefits referred to in the various codes of that sector of the extractive economy, which are:
- The regime of the mining code, which grants benefits to any mining research or exploitation enterprise or company, operating in accordance with the provisions of the Mining Code;
- The regime of the petroleum code, which gives tax incentives to oil companies for their research, exploration and production;
- The regime of the gas code, which grants operators of the sector significant tax benefits during their installation phase and in their operation phase.
The advantages offered by these regimes are essentially:
- exemption from business licence during the first two years;
- gradual reduction in the rate of corporation tax for companies involved;
- Reduction of income tax;
- Consecration of accelerated depreciation for fixed assets;
- VAT exemption for materials purchased in the local market;
- exemption from registration fees for instruments and agreements;
- VAT exemption on oil research and production;
- exemption of dividends paid to shareholders of oil companies.