In its recent report on governance and corruption in Cameroon, the International Monetary Fund (IMF) calls for an overhaul of the tax code.
According to the report, the code contains numerous inefficient nuisance taxes, that not only impede effective revenue collection but also create potential avenues for corruption. "95% of the revenue collected by the Directorate General of Taxes in 2021 were generated by 26 out of the 54 taxes [...] in the General Tax Code," the IMF informs adding that the taxes were “low-yielding.”
The Bretton Woods Institution believes that the Cameroonian tax system is too complex partly due to the “countless tax exemptions and exceptional tax treatments provided for in the General Tax Code and special tax regimes."
Indeed, apart from the General Tax Code, Cameroon has a host of laws, decrees, and other texts governing aspects of fiscal policy. They include sectoral codes (oil, natural gas, and mining), the law on export zones, the law on incentives for private investment, the law on public-private partnership contracts, the law on free economic zones and conventional agreements, etc.
For the IMF, multiple texts breed inconsistencies and duplicate provisions. "These texts provide the legal basis for discretionary tax breaks for companies meeting specific criteria, but these breaks are not included in the general tax code,” the report reads.
According to the IMF, Cameroon's statutory income tax rates are high. "The general corporate tax rate is 33% (including the Additional Council Tax), while the minimum tax is 2.2% of turnover. Large formal companies in Cameroon are burdened not only by a high overall tax rate but also by unusually strict limits on tax deductions (for example, for technical services provided by the foreign parent company). It is therefore not surprising that 90 percent of large taxpayers pay only the minimum tax, perhaps by under-declaring their profits, as the Directorate General of Taxes suspects,” the IMF explains.