Lex Africa Guide 2012 Full - Afrer.org

16for the payment of taxes and the discharge of other taxobligations arising from the service contract.Tax Treatment of Groups of CompaniesCameroon tax laws contain no special provisions for groups ofcompanies. A company is always treated as an independententity, and it is not possible for companies, however related, tocombine their results for tax purposes. Special rules do howeverlimit the taxable portion (for company tax purposes) of adividend paid by a subsidiary to its parent company to 10% ifcertain conditions are met (see section on Dividends).Tax Treatment of Branches and SubsidiariesThe profits of a branch or a subsidiary of a non-resident companyare subject to company tax in the same manner as those of aresident company. Subject to the provisions of applicableinternational conventions, the profits of branches of nonresidentcompanies and those that do not have their head officein Cameroon are deemed to be distributed at the end of each taxyear to non-resident persons. Such profits are subject to adividend withholding tax at the rate of 16.5% (which is the samerate that applies to dividends paid abroad).Corporate Assessments and PaymentsThe tax year runs from 1 January to 31 December each year anda company’s financial year, for official purposes, mustcorrespond to the tax year. A return showing the company’sresults for the financial year must be filed by 15 March eachyear, along with any supporting documents requested by the taxauthorities. The tax authorities may adjust the results shown inthe return. The taxpayer has the right to respond to theadjustments and has recourse to the courts if an agreementcannot be reached with the tax authorities.DividendsDividends received by a resident company from a resident ornon-resident company are subject to company tax but therecipient company has the right to set off any Cameroon taxwithheld from the dividend against its company tax liability. Inthe case of the dividend received from a non-resident company,foreign tax paid on the dividend is not creditable againstCameroon company tax unless a double tax treaty provides forsuch credit. The treatment of dividends received by corporateshareholders depends on whether the shareholder has at least a25% shareholding in the company, the head office of theshareholder and the company are located in Cameroon oranother Central African Economic and Monetary Union(Communauté Economique et Monétaire d’Afrique Centrale)(CEMAC) state and the shares remain registered in the name ofthe shareholder for at least two consecutive years. In thissituation, only 10% of the net dividend received is subject to tax.If the dividend paid is disclosed in the financial statements of thecompany in the same year that the receipt of the dividend isdisclosed in the financial statements of the shareholder, thewithholding tax paid by the company is set off against thewithholding tax payable by the shareholder on any dividenddistributions subsequently made by that shareholder.Capital GainsCapital gains are treated as ordinary businessincome and are taxed at normal company taxrates. However, a capital gain realised on thedisposal of a fixed asset in the course oftrading is excluded from income for a periodof three years if the taxpayer reinvests the gain in new fixedassets for the business. A capital gain resulting from thegratuitous allocation of shares, founders’ shares or debentureson the merger of limited liability companies or limitedpartnerships with share capital is also excluded, provided thatthe company arising from the merger has its registered office inCameroon or another CEMAC state. Moreover, on theassignment, transfer or cessation of a company within five yearsfollowing its creation or purchase, net capital gains will beassessed at only half their value. If such an event takes placemore than five years after the company is formed or purchased,the net capital gains will be assessed at a third of their value.Withholding Tax on Imports and Selling priceA withholding tax of 1% of the total customs value of goodsimported or 1% of the selling price of purchases made is levied.The withholding tax on the selling price of purchases is levied atthe rate of 5% for non-registered taxpayers.Tax Treatment of IndividualsIndividuals resident in Cameroon are taxable on their worldwideincome. Non-residents are taxable only on income ofCameroon origin. A person is deemed to be resident inCameroon if the individual has a place of abode, a principal placeof residence or a centre of business activity in the country. Anyperson who spends more than six months (or 183 days) in any taxyear in Cameroon is expected to file a tax return. A person isconsidered to be a non-resident if the individual does not have aprincipal place of abode or centre of business in Cameroon andhas not been physically present in the country for more than 183days. In most cases, a non-resident’s tax liability is settledby withholding taxes levied on its income.Personal Assessments and PaymentsIndividual taxpayers must file tax returns each year by 15 March.However, taxpayers who derive income only from employmentand/or from securities and whose taxes are withheld at sourceare exempted from the obligation to file a tax return. Theprocedures for payment of personal income tax vary accordingto the type of income. Payment of personal income tax onincome from salaries, wages, pensions and annuities is made bywithholding at source. Income from securities and, in somecases, income from real estate is also withheld at source. Anyexcess tax withheld can be refunded after the annual return isfiled. Personal income tax on other income is assessed aftersubmission of the return and must be paid within fifteen daysfollowing the issue of the notice of assessment. The taxpayer isdirectly responsible for paying income tax on the following typesof income: industrial and commercial profits, professionalearnings, agricultural profits, and income from real estate.Value Added Tax (VAT)Cameroon introduced Value Added Tax (VAT) from 1 January1999. It is levied on all commercial transactions and activitiesexcept those that are specifically exempted. All exports oftaxable products and similar transactions are assessed at 0%. Allother transactions are assessed at the rate of 19.25%. Latepayment of VAT attracts interest at the rate of 1.5% per month upto a maximum of 50% of the principal VAT liability. Fines arelevied for various omissions in discharging VAT obligations.Business Licence Tax (known in French as Patente).Business enterprises must pay an annual business licence taxwhich is calculated according to a scale based on the annual