Political and Legal Framework 16 2007

Cameroon, an island of peace
Cameroon’s political history is a long and quiet river. In Africa as a whole and particularly in the Central African sub-region, Cameroon has successfully imposed her model of appeased democracy, based on her attachment to peace, respect for institutions and the rights of all citizens, which guarantee national unity.

Political stability and peace to guarantee your investment.

Close to 200 political parties freely operate in Cameroon and abide strictly by national laws. The civil society, which is composed of associations, actively participates in the life of the nation. Despite the multitude of political parties, political debate is underpinned solely by the general interest of the nation. The political stability and peace that reign in the country are an exception in a sub-region where leadership disputes and civil wars stifle any dream of development.
One government priority is curbing corruption and poverty.

An attractive legal and fiscal framework

The liberalization of Cameroon’s economy has been effective for many years now. The State guarantees security and ensures transparency in transactions. Great efforts are being made to rid government departments and services of corrupt tendencies and rigging.
The anti-corruption committee is gradually covering the entire nation. Many anti-corruption units have been set up in government departments and services.
Extensive advantages are provided for in the Investment Code to encourage foreign and local investors to establish and develop their business in Cameroon. Various support organs are at their disposal.
Investors are offered several tax and customs benefits, as follows:

Full exemption from taxes and levies for a period of 10 years (followed by a global 15% tax on profits from the 11th year, but lifelong exemption from all other taxes and levies);
Exemption from all custom duties and taxes on imports or exports, as well as from all other direct and indirect taxes (registration fees and stamp duty, etc.);
Exemption from production and sales taxes on all inputs purchased on the domestic market;
Exemption from restrictions in respect of import and export permits, authorizations and quotas;
Freedom to operate foreign currency accounts in the local banking system;
Freedom to purchase and sell foreign currency, as well as to earn commissions on foreign currency transfer transactions;
Freedom to transfer profits earned and to invest abroad;
Exemption from the Imports Verification Programme (SGS, VERITAS);
No subjection to the salary scale laid down in the Labour Code. Salaries may be fixed on the basis of productivity.

Corporate tax system

As a result of the 1994 tax and customs reform in CEMAC zone, the General Tax Code witnessed several adjustments, aimed at making it consistent with international standards. The 2005 finance law achieved that goal with regard to the Central African Economic and Monetary Community (CEMAC).

Value Added Tax (VAT) to promote development

Cameroon’s VAT is a precious instrument at the service of development. It offers various benefits to both the State and investors. Consider, for instance, tax exemptions on exports, VAT credit compensation and secure VAT credit reimbursement through a special account opened at the Bank of Central African States (BEAC).

Low customs duty

Cameroon’s customs duty system comprises a set of economic measures aimed at facilitating, under certain conditions, exports, imports, transit of goods and production (low duty rate of 10% ).

Investment Code

As part of its policy to consolidate the business environment and in order to stimulate and revitalize the private sector, the State of Cameroon amended the 1984 Investment Code by ordinance in November 1990 (supplemented by a decree in May 1991) and in January 1994. An Investment Charter was adopted in 2002 in view of adapting the national economy to market conditions.

The tax benefits in the Investment Code depend on the regime. The general guarantees and benefits of the Code are applicable to all regimes.
The Code provides for 4 (four) investment regimes.

Basic schedule

During the start-up phase (3 years), the major benefits are as follows

Exemption from most of the normal registration fees, except for company registration fees, a restriction compensated in practice by subsequent increases in the capital company’s without levies;
50% reduction in company tax from the first year of taxation
Exemption from registration fees and transfer tax, from the minimum lump-sum tax and the special company tax.

It should be pointed out that the company is required to pay a caution fee equal to the amount of tax and duty exemptions enjoyed by virtue of the regime, as a guarantee to abide by its obligations during this phase.

During the operational phase (5 years), the major benefits are as follows:

50% reduction in company tax, industrial and commercial tax and proportional tax on earnings from transferable securities;
Charging to trading results over the next 5 financial years, of any deficit resulting from depreciation normally taken into account during the first three financial years;
0.5% reduction, without carry-over, on the taxable income from the FOB value of manufactured goods;
Reduction from the company’s taxable income, without carry-over, of 50% of effective transport costs, where the company is located away from major urban centres;
Exemption from tax on insurance contracts and the special company tax.

SME schedule

The benefits during the start-up phase (3 years) are the same as in the basic schedule.

During the operational phase, which is 7 years, the benefits under this schedule are identical to those of the basic schedule, in addition, to granting the right to deduct from the company’s taxable income 25% of the wage bill of Cameroonian employees during the financial year under consideration.

Strategic enterprises schedule

The benefits are the same as those of the SME schedule. The additional benefit of the strategic enterprises schedule has to do with the duration of the operational phase, which is 12 (twelve) years.

Reinvestment schedule

The benefits to the company for a three-year period are as follows:

Benefits under the General Tax Code within the framework of the reinvestment schedule (income tax reduction equal to 50% of the amounts ploughed back);
Exemption from deed registration fees in respect of company capital increases;
Exemption from registration fees in respect of property lease contracts for houses reserved exclusively for professional use and which are an integral part of the investment programme of the company;
Exemption from taxes and duties on the purchases of locally manufactured goods.

For export-only companies, there is the free zone schedule, which is governed by special instruments.