The government highly encourages investment in the private sector in Cameroon and to this effect has put in place incentives with a view to promoting private investment and boosting national production. For this purpose, the applicable law is Law No 2013/004 of 18 April 2013, to lay down private investment incentives in the republic of Cameroon. This law is applicable to Cameroonian or foreign, natural or legal persons whether or not established in Cameroon, conducting business therein or holding shares in Cameroonian companies.
This law applies to investment in all sectors with the exception of those governed by special instruments like the upstream oil, mining and Gas sectors, and those under the general partnership contracts regime. It is good to note that for the purpose of incentives, there are two phases in the life span of the business venture that makes it entitled to benefits. There is the establishment phase which may not exceed 5 years, and the operation phase which may not exceed 10 years. After the expiry of this period, the investor shall automatically be subject to ordinary law. Also of key note is that any investor seeking incentives is required to get an Approval from the Minister in charge of private investment.
As per this law, investors are entitled to two kinds of incentives depending on the criteria, and the type of investment carried out. Common incentives apply to any investor who meets one of the following criteria;
They employ during the operational phase and according to the size of the enterprise and sector, at least a Cameroonian by tranche ranging between 5.000.000 (five million) CFA francs and 25.000.000 (twenty five million) CFA francs of planned investments, as applicable;
Annual exports of 10% of turnover, net of taxes; use local natural resources of 10% to 25% of the value of inputs; contribution to value added of 10% to 30% of turnover, net of taxes.
Specific incentives may be provided as an addition to the above, to enterprises which carry out investments that contribute to the attainment of the following priority objectives;
Development of agriculture, fisheries, livestock and plant, animal or fishery product packaging activities;
Development of tourism and leisure facilities, social economy and handicraft;
Development of housing, including social housing;
Promotion of agro-industry, manufacturing industries, industry, construction materials, iron and steel industry, construction, maritime and navigation activities;
Development of energy and water supply; encouragement of regional development and decentralization;
The fight against pollution and environmental protection;
Promotion and transfer of innovative technologies and research and development;
Promotion of exports;
Promotion of employment and vocational training.
The following Tax and Customs Incentives shall be open to the investor at the Establishment Phase;
Exemption from stamp duty on establishment or capital increase;
Exemption from stamp duty on the lease of immovable property used exclusively for professional purposes that form an integral part of the investment program;
Exemption from transfer taxes on the acquisition of immovable property, land and buildings essential for the implementation of the investment program;
Exemption from stamp duty on contracts for the supply of equipment and construction of buildings and installations essential for the implementation of their investment program;
Full deduction of technical assistance fees in proportion to the amount of the investment made, calculated on the basis of the total amount of the investment;
Exemption from VAT on the provision of services related to the execution of the project and obtained from abroad;
Exemption from stamp duty on concession contracts;
Exemption from business license Tax;
Exemption from taxes and duties on all equipment and materials related to the investment program;
Exemption from VAT on the importation of equipment and materials;
Immediate removal of equipment and material related investment program during clearance operations
During the Operation phase, according to the investor’s scale of investment and expected economic returns, they may enjoy exemption from or reduction of the following taxes;
Minimum fee;
Corporate tax;
Tax on profit;
Stamp duty on loans, borrowings, overdrafts, guarantees: increase, reduction, corporate capital repayment and liquidation, or any transfer of activities, real profit ownership or usufruct, leases or shares;
Tax on income from moveable assets during the distribution of income in the form of dividends or other forms to be specified in the agreement;
Special income tax(SIT) on sums paid to foreign companies for services rendered or used in Cameroon during the project design and execution phases, provided that they are billed at cost price;
Taxes, registration and stamp duties on the transportation of processed products;
Customs duties as well as all other fees and service taxes on the importation of all types of equipment, building materials, tools, spare parts, intermediate products, supplies and consumables which do not have locally manufactured equivalents, save for duties, taxes and other non-tax fees deemed to be a service fee;
Duties on the exportation of construction and processing plant equipment;
Any tax on the transfer, purchase or sale of foreign currency and any indirect consumer tax, including the special tax on petroleum products;
Any tax, duty or charge of any kind that is calculated on the basis of the turnover realized by the processing company.
Deferral of deficits after five years, with effect from that of their occurrence;
Exemption from duties, taxes, fees and fees on the importation of capital goods intended and used for the investment program.
There is also what is known as Tax credits which could be benefited by investors who meet the following criteria;
Employ at least 5(five) graduates every year;
Combats pollution; develops public interest activities in rural areas.
Notwithstanding the benefits provided for in the operation phase, the investor shall be required to pay the fees, taxes, duties, and other fees for service rendered. The rules for the assessment and collection of company tax shall be those provided for in the tax code and other accounting legislation. The state may on assessment of the importance of the project, extend the benefit of some tax and custom exonerations to shareholders, promoters and local co-contractors through contractual agreements
Apart from the tax and customs incentives, financial and administrative incentives are also available. The investor shall be subject to the exchange rate regime of Cameroon and with that, the investor may enjoy the following;
The right to open in Cameroon and abroad local and foreign currency accounts and to carry out transactions on such accounts;
The right to freely cash and keep abroad funds acquired or borrowed abroad, and to freely use such;
The right to freely cash and keep abroad income from transactions, dividends and proceeds of any kind from capital invested, as well as proceeds from the liquidation or sale of their assets;
The right to directly pay abroad non-resident suppliers of goods and services essential for conduct of business;
Free transfer of dividends and proceeds from the sale of shares in case of disinvestment.
Foreign staff employed by the investor and resident in Cameroon, shall enjoy free conversion and free transfer to their country of origin all or part of amounts due them, and they shall be subject to prior payment of various taxes and social security contributions to which they are liable in compliance with the regulations in force.
Facilities shall be put in place to necessitate the establishment of a specific visa and a reception counter at all airports throughout the national territory for investors, subject to their presentation of a formal invitation from the body in charge of investment promotion of small and medium sized enterprises (SMEs). The following shall also apply;
The issuance of the above mentioned specific visa in all of Cameroon’s diplomatic or consular representations;
The issuance of residence and work permits to expatriate staff involved in any investment project and holding a contract of employment for a period exceeding two years;
The issuance of environmental compliance certificates with respect to the investment projects concerned;
The issuance of land titles and long term leases.
Enterprises engaging in export operations shall benefit from: exemption from export duties on locally manufactured products, and the inward- processing regime provided for by the customs code.
From the above provisions, it indicates a huge tax cut for businesses and encourages investment within the national territory. As long as the proper steps are followed to obtain Approval from the Minister in charge of private investment, all of the above will be applicable.
Our law firm is ready to assist any investor willing to invest in Cameroon throughout the above process.
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