Home West Africa Cameroon’s industrial sector Survey reveals taxation concerns and calls for reform

Cameroon’s industrial sector Survey reveals taxation concerns and calls for reform

51

(3 Minutes Read)

The recently released industrial sector business climate survey by the Ministry of Economy, Planning, and Regional Development (Minepat) shows that 81% of business leaders perceive the tax burden (proportion of tax expenses to turnover) as being high, while 18% consider it average, and 1% regard it as low.

More than half of the business leaders from the surveyed 1,000 companies believe they do not have good relations with customs, tax, and other services. In general, the study highlights that industrial sector leaders believe taxation is heavy in Cameroon.

Estimated at 11.8% of the GDP in 2022, the tax burden reached 12.6% in 2023, according to the General Directorate of Taxes (DGI). The rate is projected at 13.55% for 2024. However, the DGI reported that the tax burden in Cameroon is still lower than the African average of 17.2% and international standards. “It is generally accepted that the share of mandatory levies in the national wealth must reach at least 25% to be significant and lead to true development,” says the DGI.

According to financial experts, the issue of taxation in Cameroon is not the pressure, but tax fairness. Indeed, tax pressure in the country is primarily borne by a small number of taxpayers, especially large enterprises, while many potential taxpayers evade taxes. In its recent report on governance and corruption in Cameroon, the International Monetary Fund (IMF) noted that formal large enterprises in Cameroon are burdened not only by a high overall tax rate but also by unusually strict limits on tax deductions.

Read Also:

https://trendsnafrica.com/indian-companies-secure-contract-for-cameroon-chad-electrical-interconnection-project/

https://trendsnafrica.com/cameroons-massive-arable-land-development-project-picking-momentum/

https://trendsnafrica.com/cameroon-has-the-highest-ict-penetration-in-the-cemac-region/

The high effective tax burdens on the profits of formal enterprises promote informality and inaccurate reporting of profits and turnover. It suggests Cameroon should reduce the legal rates of corporate tax, minimum tax, and flat-rate and simplified tax systems provided for in the General Tax Code. Since 2020, the Inter-employer Grouping of Cameroon (Gicam) has denounced the “confiscatory” nature of the tax, with a general corporate tax rate of 33% (including the local council surtax), while the minimum tax is 2.2% of turnover.