Cameroon Economy

26 January 2010
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MACROECONOMICAL PANEL

Agriculture, including also the farming, fisheries and forests, play an important role in the economy of the country.

For 20% to the formation of GDP.

Until 1970, agriculture was the driving force of economic growth in the country, later this resource has been replaced by oil which has become the largest source of income.

The secondary sector constitutes 34% of the GDP, but the remaining 46% of GDP comes from services.

The productive sectors are those of the extraction and refining of oil, aluminum, bauxite, nickel, uranium, gold, natural gas, food processing, textiles, cotton, timber, millet, rice, wheat, coffee, cocoa, sugar cane, rubber, bananas, pineapple, fish and shrimp
.


BUSINESS OPPORTUNITIES FOR ITALIAN COMPANIES


Short-term prospects for the economy Cameroonian foreshadow a gradual expansion of non-oil sector. In particular, it provides a robust growth in construction and in terms of material and actual execution of transactions, due to infrastructure investment programs of the government.

Similarly you should see an expansion of the forestry sector, by improving transport infrastructure and an increase in production of aluminum in the manufacturing sector.

Services should also contribute to accelerate economic activities, particularly in the sectors of financial intermediation, transport and telecommunications, driven by growth in domestic demand.

Currently in Cameroon, there are no investments by  Italian companies.

There is a discreet presence entrepreneurial  within the forest sector and the transformation of wood, while some activities can be reported by Italian entrepreneurs in transport, construction, agro-food industry, in renewable energy and biotechnology, in chemical and pharmaceutical industry.

In general, products made in Italy are perceived as products of high quality and reliability.


INDUSTRY

This sector includes the extraction, preservation and the energy sectors.

The extraction of oil  and the extraction in general are the dominant elements and constitute 46% of oil exports making the oil the most increased resource.

Other important industries are those of steel, aluminum and the leather processing.

A thriving industry is tourism.


INVESTMENT LAW

Italian investments are protected by the bilateral agreement on mutual protection of investments, which came into force on 15 June 2004 and still applied.

Regarding direct investments, it is appropriate that the foreign operator creates a company incorporated in Cameroon to operate freely in the country.

If the foreign investors hold more than 50% of the capital to carry out, the activity must obtain prior authorization.

For companies that have their headquarters in Cameroon, the law requires the registration in the Register of Commerce in the country two months after the opening of a subsidiary, branch or other form of commercial affiliation.
Individuals who have their habitual residence in Cameroon are subject to income tax.


TAX SYSTEM IN CAMEROON

The General Tax Code (CGI) in force was adopted by Law No 2002-03 of 19 April 2002, as amended by the Finance Act of 2007, which reintroduced the system of reinvestment.

Companies and individuals holding business income, agricultural income or self-employment, re-investment in Cameroon is part of a rebate in income tax on 50% of investment value (which must be at least 25,000. 000 FCFA).

The rebate of tax may not exceed 50% of declared income.

The tax on personal income (Irpp)

Natural persons having their habitual residence in Cameroon are subjet to Irpp ,for example people who have a house of ownership, usufruct or lease, or those who have not made  their home their place of principal residence or center of interest or business.

Following the provisions of international conventions against double taxation,payers Cameroonian or foreign are subject to taxes, that have their habitual residence abroad and receive income from sources in Cameroon.

Diplomatic agents are exempt from the payment ,also  consuls and consular agents of foreign nationality as the country they represent a similar benefit granted to diplomats and consulates in Cameroon.

The tax base
CGI provides that, in calculating tax system, taxable income is subject to a proportional tax (deducted at source for each income category) and a progressive tax (levied on the entire net income tax).

The taxable income shall be done by the total income, consisting of the algebraic sum of net income class (each of which determines the taxable income according to its own rules), less the costs incurred in tax (exhaustively planned) that have not been already taken into account in determining the individual income (eg interest paid for loans for the purchase of a main, arrears of annuities paid on a compulsory or free, voluntary contributions to supplementary pension schemes by up to 10% income of employees, contributions to national social security fund, insurance premiums for life by up to 10% of taxable net income calculated after other charges deductible).

Rates, payments and statement
Taxable income so determined is subject to progressive tax (Barème progressif) after slaughter cd. "Family" of 500 thousand FCFA for dependents (since 2004 no longer applied the system of the familial quotient).

The proportional tax paid on the individual income category is deducted from that calculated by applying the following progressive rates:
Income brackets Rate
from 0 to 2,000,000 FCFA 10%
from 2,000,001 to 3,000,000 FCFA 15%
from 3,000,001 to 5.000.000 FCFA 25%
Over 5,000,001 FCFA 35%

The tax payment is done in two stages:

  1. payment of monthly installments, by 15 of  the following month, deducted at source made on each category of income;
  2. calculation of tax due at starting of the  next year by applying to the entire income tax rates for brackets. The balance (less any deposits paid) must be paid by 15 March.


The declaration must be filed on paper model at the local offices by 31 March for the previous year incomes and it must be accompanied by a statement of family expenses and the elements considered by the CGI as an index of wealth (including all main and secondary residences 'foreign, domestic, cars, boats, airplanes, swimming pools, leisure travel, consumption of water, electricity, telephone).

The categories of income
As anticipated, the tax system to advance monthly payment is usually made by deduction at source made on the following income categories:

  • Compensation of employees: consisting of wages, salaries, allowances and bonuses of any kind, fringe benefits, pensions and annuities. The tax base is given the amount net wage is obtained after deduction of social security contributions, a flat-rate reduction of 30% and the removal of 500,000 FCFA briefed to month. The tax base so determined shall apply Barème progressif. Are exempt from tax gross income of less to 52,000 CFA francs. Not taxable family allowances and welfare grants, the war pensions and disability benefits, the amounts received as compensation for accidents at work and received by the heirs for the death of the employee;
  • Income from land (revenus fonciers): provided that the income not received in an agricultural activity, enterprise or self-employment, derives from the leasing of buildings constructed of industrial plant and equipment and capital gains realized by individuals for the sale of properties built and unbuilt. The taxable amount is the difference between the amount of gross income realized and the total expenditure (repairs, maintenance, management fees) fixed in an amount equal to 40% of gross income. The capital gain is the difference between the price declared by the parties and the value of property at the time of the last transfer. The deduction, equal to 5%, is operated by the tenant's obligation to pay to the collector at the tax office and the right of deduction in the statement. The capital gain is determined by the notary outright;
  • Income (revenus de capitaux mobiliers): are considered as such dividends paid and accrued interest on bonds, loans, deposits and securities. The tax base, made from the gross total dividend distributed or accrued interest, shall apply a withholding tax of 16.5% (15% to shareholders or creditors domiciled in France);
  • Corporate income (bénéfices Handicrafts, industriels et commerciaux - BAIC): arising from the operation of a commercial, industrial and artisanal (including data mining). The taxable amount is the difference between revenues and costs. Taxpayers with a turnover exceeding 100 million CFA francs are subject to the "régime du réel" and the income is determined by the analytical method. Taxpayers with annual turnover of between 15 and 50 million CFA francs are subject to the "régime de base" while those with turnover of between 50 and 100 million FCFA to the "régime simplifié": in both cases, unless option irrevocable for the royal regime, the taxable income is determined by applying different rates of turnover determined by ministerial decree. Taxpayers who do not fall into one of these three schemes are subject to a substitute tax system of value added and contribution to operating licenses, according to a scale established by local communities that benefit from the revenue from that tax;
  • Income from self-employment (bénéfices des professions non commerciales - BNC): arising out of professions, positions and functions as well as from profit-oriented business whose profits are not tied to any one of the other categories of income (eg, income received for use or grant use of copyrights, inventions, patents, trademarks or manufacturing formulas). The taxable amount is the difference between the amount earned and expenses incurred in the exercise of the profession. For taxpayers who receive an annual gross fees exceeding 30 million CFA francs, the tax base is determined by the royal regime, and a method of analysis, while taxpayers with gross pay between 15 and 30 million CFA francs are required to be simplified (to compensate statement applies to 15%);
  • Income landowners (bénéfices de l'exploitation agricole): are those achieved by both the owners or tenants of land. The tax base is identified by applying the same rules as for the determination of business income (revenue minus costs).


Irpp are exempt from income derived from exploitation of land for food production for which the area is less than 5 hectares.

Taxpayers with a turnover of between 5 and 30 million CFA francs have been brought under the simplified according to the rules laid down for the firm's profits while those with a turnover exceeding 30 million FCFA determine the income with the analytical method (scheme real ).

For taxpayers with turnover of less than 5 million CFA francs flat rate income tax is established by a Commission department and the tax is paid by way liberating.

For the last three categories of income the monthly installments, payable by the 15th of next month, be equal to 1, 1% (1% plus 0.1% for its CAC) turnover in the previous month ( 1.65% payable quarterly for companies in basic scheme).

The Irpp due for the entire tax period can not be less than 1% of turnover (1.5% for firms in the basic scheme).

Corporation tax (IS)

For the principle of territoriality Is hitting the income of firms engaged in economic activities in Cameroon, or those that have income attributable to the company under an international convention against double taxation.
It is addressed to: corporations, cooperatives, public bodies and agencies of the State with financial autonomy, the civil society who are dedicated to an industrial or commercial activities or transactions with for-profit, permanent establishments foreign firms.

The tax base
The determination is done by the same rules as for the determination of business income with the analytical method.
The following costs can be deducted: depreciation (other than straight), losses, provisions for losses or specific charges (excluding those for foreign exchange losses), waste conversion and currency receivables, interest expense on bank overdrafts to of members, overhead costs (eg salaries of employees, contributions paid to pension funds and / or illness, insurance premiums on account of illness, rents, donations to a maximum of 0.5% of turnover, costs of location, branches, business tax as the tax on business licenses).

Rates, payments and statement
The rate of corporation tax is the single, currently at 38.5% (35% plus 3.5% for the CAC).

The tax due can not be below a minimum established in 1, 1% of turnover, and is paid monthly (by 15th of the month) through advances representing 1, 1% of d ' affairs of the previous month.

The balance is paid before 15 March of the following financial year and 38,5% of taxable income less any advance payments monthly and withholdings (eg capital gains).

The annual statement must be submitted by 31 March.

The value added tax
From 1 January 2005 the rate is 19.25% (17.5% plus 1.75% for the CAC).

It is addressed to public boards and local authorities.

The supplies are serving export zero-rated.

Among the exempt transactions are those relating to basic necessities (including rice, maize flour, salt, unrefined, frozen fish), essential pharmaceutical products, school books, domestic water supply (up to 10 cubic meters per month) and power (up to 110 kW per month).

As for the instrumental and obligations are to submit periodic returns (monthly for taxpayers brought under the real and the simplified, quarterly for those brought under the base) but were not realized taxable transactions, are not subject to the annual return.

The tax due is paid before 15th of the month or quarter following the completion of operations.

The repayment of VAT credit (up to 2006 was provided for a threshold of 100,000,000 FCFA to obtain) should be asked to present a specific application, accompanied by the required documents, the Director of the tax office having territorial jurisdiction.
The registration applies to all contracts (excluding employment contracts) and private acts.

It can be fixed, proportional, progressive or digressive.

In major reason for this:
- Lease: 10% of the total fees planned;
- Sales of cars: 5% of the sale;
- Public contracts for higher value to 5.000.000 FCFA: 2% of the contract;
- Transactions in real estate: 15% of the amount;
- Transactions on vacant land: 5% of the amount;
- Transactions in securities: 2% of the amount;
- Marriage contracts: 1%;
- Succession: tax pro rata from 2 to 10%;
- Wills: set fixed 12 thousand CFA francs;
- Capital increase: tax digressive from 2 to 0, 25%.

 


Other taxes

These include:

  • Tax on real estate: it relates to the real estate building and not building located in the territory of Cameroon, the tax is determined by applying the value declared by the owner in law or fact, the rate of 0.1% (determined by the Finance Act 2006) plus 10% for CAC;
  • The contribution of the operating licenses (patentes des contributions): An annual municipal tax is payable by any natural or legal person exercising a trade, business or profession not specifically exempt (eg. Hawkers and artisans). Is calculated according to turnover the previous year. There are 7 classes under which the rate varies from 0.4% (for a VA between 5 and 15 million FCFA) to 0.075% (VA <2 billion FCFA);
  • Excise duty: 25% (ad valorem or specific quantity) affects certain goods identified by the ministerial list. It consists mainly of cigarettes, cosmetics, luxury goods (jewelry, precious stones) and some drinks (mineral water, soft drinks, malt beer, wine). Apply the same rules laid down in respect of value added.


The taxation of foreign flows:

  • Special tax on income (TSR): affects the provision of services sales abroad by enterprises and institutions located in Cameroon, the state, from local authorities. In particular, they are: copyright, sale or lease of license of patents, trademarks, secret formulas and processes, lease or right of use of films (cinema or television) or transmission television fees for studies, consultations, technical assistance, financial or accounting, income received by companies drilling, research or assistance on behalf of oil companies; reward for information of an industrial, commercial or scientific equipment and the lease for industrial use commercial or scientific experience.
  • Proportional tax on income from movable capital (Tprcm): is payable on dividends paid abroad and the income that you declare to be held abroad, the tax rate is 16.5% (15% for shareholders resident in France) .

 

The tax is deducted at source from taxable income when it is secured.


CUSTOMS DUTIES

There are no non-tariff restrictions on trade in goods, although they can sometimes be some delays for administrative reasons, the clearance procedures.

For reasons of health and safety, importation of some products are subject to various kinds of permissions: meat, breeding, feed, pharmaceuticals, salt, soap medical, weapons and ammunition, pyrotechnic products, minerals and precious stones , radioactive, kerosene, fuel, transceivers, pesticides.

For some products or services  the approval of their prices is required.

Export of certain species of lumber is prohibited.

Some of these products are also subjected to import charges, to quality control and compliance, before it can be distributed within the country.
Importers and exporters must register with the Commerce and Personal Property Credit Register and register with the Ministry of Commerce.

All imports, including those from the CEMAC countries, must be declared prior to shipment.

Also those in excess of 2 million CFA francs must be placed with an authorized intermediary and are subject to pre-shipment inspection by the Societe Generale de Surveillance (SGS).

Particular exchange rate regimes apply to imports of petroleum and minerals.

Barriers

Cameroon is a founding member of WTO (World Trade Organization).

The country is also a member of the Central African Economic and Monetary Community (CEMAC), whose currency is pegged to the euro at a fixed parity.

In 1993, the CEMAC adopted a common external tariff, and negotiations are underway for the future establishment of a customs union.

All duties are ad valorem.

The simple average duty of 19.1%. However, customs duties are particularly high (around 50% for products imported from the European market: 30% of customs duties and 18.7% of value added tax).

Agricultural products are subject to higher rates (simple average duty of 22.6%) compared to non-agricultural products (simple average of 18.6%).

Cameroon provides duty free entry for products of other CEMAC countries, based on respect for rules of origin.

On all products, local and imported, we apply a value added tax of 17, 5% and excise duty of 25% for beverages, tobacco products, foie gras, caviar and substitutes, salmon, metals and precious stones, jewelry.

The value added tax adds a municipal tax (cents additional municipal CAC), representing 10% of the rate, which raises the same at 19.25%.
All exports are subject to a fee.

Cents additional municipal (CAC)

This is an additional tax, whose revenue flows into the Commons. The rates established for the income tax and value added are increased by 10%.


PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
Cameroon is part of the World Intellectual Property Organization (WIPO). There are not violations and counterfeiting of Italian products.

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