CHAPTER ONE

SCOPE OF APPLICATION OF THE COMPANY TAX

INTRODUCTION
The scope of application refers to the delimitation made by the CGTC on the taxable and exempt
persons, taxable and exempt transactions and territoriality. By the end of this chapter, you would have
acquired competences on the identification of:
 Taxable persons
 Exempt persons
 Assessment base
 Territoriality

I. TAXABLE PERSONS
A taxable person is a moral person whose income is liable to the company tax. As per article 3 of the
CGTC, the following are liable to the company tax in Cameroon.
 Joint stock companies/limited liability companies
 Cooperative societies
 All financial institutions
 Civil societies that carryout lucrative activities
 Public corporations
 Partnerships which have opted to be assessed under the company tax…etc

II. EXEMPT PERSONS

Section 4 of the foregoing law renders the following persons exempt from the company tax:
 Cooperative societies that produce crops and life-stock for human or animal consumption or as
agricultural input. This exemption only holds if they do not retail their products in retail shops that
do not belong to them, or sell products in their shops that are not produced by them or do any form
of business with non-members of the cooperative.
 Mutual aid societies and associations.
 Regional and local authorities and their public utility services
 Organization that work for rural development
 Private clubs and societies for the part of their activities which is non lucrative
 The national social insurance fund on the part of the profit that originates from salaries
 Private none profit making educational bodies
 Public hospitals…etc

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III. BASE OF ASSESSMENT
The company tax is levied on the net profit realized by the business for a given fiscal year. The rate of
the company tax as at 2022 is 30%. This rate is raised by 10% of additional council tax, bringing the
effective rate to 33%. Since January 2021, a reduced rate now applies to companies with an annual turnover
of not more than three billion CFAF: 28% [28% + additional council tax (10% of 28% = 2.8%) = 30.8%]
Beyond these two effective rates of 33% and 30.8%, there are special incentive rates of the company
tax applicable to specific sectors of the economy or activities. These special rates serve as fiscal incentive
measures to boost targeted sectors of activity:
 25% [25% principal rate + additional council tax (10% of 25% = 2.5%) = 27.5%] for
companies whose shares are quoted in the Central African Stock Exchange.
 20% [20% principal rate + additional council tax (10% of 20% = 2%) = 22%] for public
companies that promote local building materials.
 15% [15% principal rate + additional council tax (10% of 5% = 1.5%) = 16.5%] for business
start-ups operating in the ICT sector
In determining the company tax liability, the base of assessment should always be rounded down to
the lower thousand before application of the appropriate tax rate.

Company Tax Liability = Profits (rounded down to the lower thousand) x Rate of Company Tax

IV. TERRITORIALITY
The taxable profit concerns solely profits earned on business carried out in Cameroon. Profit is
earned on business carried out in Cameroon if:
 The organization is resident or domiciled in Cameroon. Any one of the following conditions
qualifies an enterprise to be considered as operating in Cameroon
 The headquarters is registered in Cameroon
 It has a permanent establishment in Cameroon
 It has a dependent representative in Cameroon.
 The enterprise carries out activities in Cameroon that constitute a complete business cycle.

V. TAXPAYER OBLIGATIONS
Beyond the general obligations of the taxpayer vis-a-vis the tax administration, the company tax
subject is required to:
 Declare their income to the tax administration on or before the 15 th of March of each year
 Keep accounting records in compliance with the provisions of the OHADA Uniform Act on
Accounting and Financial Information: those of the simplified regime should present records
according to the Minimum Cash Accounting System; those of the Actual earning regime should keep
records according to the Standard Accounting System.

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  Communicate all movements of their stock for the fiscal year as well as the software used in
managing stock
 Keep a register of sales and purchases.
 Make payments using counterfoil books issued by the taxation service
 A statement of sales per customer must be sent to the tax administration at the moment of
declaration
 Public limited companies must keep a record of the securities they issue.

VI FINES AND PENALTIES

1. FAILURE TO FILE A RETURN: The fine depends on the circumstances and gravity of the offence as
follows:
 Failure to file return within the legal deadlines (late declaration)gives rice to a non-
discountable fixed fine of 5 000 000CFAF, 1 000 000CFAF, or 250 000CFAF depending on if the
defaulter is under the Large Tax unit, Medium-sized Enterprise Taxation Centres or Divisional
Taxation Centres respectively.
 If failure to file persists after official notification from the tax administration, the taxpayer
will be submitted to an arbitrary assessment and the amount of the tax will be raised by 100%.
in case of any further offence, it is raised by 150%.
 Failure to file a nil declaration within deadlines gives rise to a fine of 1 000 000CFAF. If
failure persists beyond official notification, a further fine of 1 000 000CFAF is paid per month
of lateness.
 Any failure to file an application for registration of a newly created business within
stipulated deadlines gives rise to a fine of 250 000CFAF. Engaging in an economic activity
without prior registration gives rise to a fine of 100 000CFAF per month of clandestinity.
 Fraudulent use of a taxpayers’ unique identification number gives rise to a fine of 1 000
000CFAF per transaction. Anyone who deals business with such an individual is liable to a fine
of 5 000 000CFAF per transaction.
These fines are paid without prejudice for interest calculated in arrears under similar conditions as
with filing of inadequate returns bellow.
2. FILING OF INADEQUATE RETURN: This refers to any irregularities (ommissions, inaccuracies etc,
that affect the tax base ) identified and adjusted by the tax authority during control. When the
adjustments give rise to additional taxes to be paid in excess of what was originally declared, this
amount is subject to:
 A monthly interest of 1.5% per month of arrears up to a maximum of 50%
 An increase of the disputed amount by 30%, 100% or 150% in case of good faith, bad faith or
fraud, respectively.

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 3. COMMUNICATION OF FALSE INFORMATION: The prerogatives of the tax administration makes it
an obligation for the company to present any business documents which the administration deems
necessary for the exercise of its mission.
 Any objections to this provision gives rise to a fixed fine of 5 000 000CFAF and a monthly
penalty of 100 000CFAF per month of delay after the deadline stipulated for the information to
be made available. Same applies for the communication of false information. This may further
give rise to a prohibition to operate, import or bid for public contracts.
 The production of fake documents in order to benefit from tax reliefs, or any form of forgery
with tax-related documents gives rise to a fine that may go up to 100 000 000CFAF
4. FAILURE TO PAY-IN TAXES WITHHELD AT SOURCE WITHIN DEADLINE: This gives rise to a
fine determined in function of the withheld amount as follows:
RANGE
FINE (CFAF)
From (CFAF) To (CFAF)
0 5 000 000 500 000
5 000 001 25 000 000 2 000 000
25 000 001 50 000 000 5 000 00
50 000 000 And above 10 000 000
Beyond these fiscal fines, the penal code further punishes tax related offenses with a prison term
that can run from 1 to 5 years or a fine from 500 000CFAF to 5 000 000CFAF, or both.

CONCLUSION
Tax compliance is significantly enforced when the scope of application is accurately defined in the
tax legislation and comprehensively assimilated by the tax payer.

CONSOLIDATION EXERCISES

1. Consider the following registered businesses:

Ku-adzem, a sole trader
Nsaidzedze, a sole partner
Lionel Documentation Company Ltd.
GLOFACAM Agricultural cooperative society
National Real Estate Corporation created for the provision of low cost housing
Bayangi All-Star, an NGO aimed at promoting economic development in the Manyu division
Which of these businesses is within the scope of application of the company tax?

2. Which of the statements below are correct?

The company tax is a progressive tax
Income is the base of assessment of the company tax

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 The company tax is a direct tax
The company tax cannot be assessed for a period of less than one year
When the company tax advance is greater than the tax liability, the excess is treated as a tax credit
It is the job of the Cameroon tax administration to determine the taxable profit

3. What will happen to the following businesses? (Precise the amount to be paid by the business as a
result)
 A Public limited company with an annual turnover of 7 billion CFAF has not filed their tax
declarations for the month of September 2021
 MAJUMBUM started business on the 21/03/2021 and on the 01/08/2021, has not yet applied for
registration with the local tax authorities.
 SABINUS Ltd. Is a newly created businesses registered for tax purposes under the actual earning
system. The business deals exclusively in zero-rated transactions. As a result, for the past months,
the business has been accumulating VAT credit. For the month of July 2021, no transactions were
recorded. As a result, the accountant estimated that there was nothing to declare and so no
declaration was filed. On 28/08/2021 a notice was received from the tax authority requesting
declaration. The accountant however remained on his decision to not declare until the 15/09/2021
when a nil declaration was finally sent.
 KAYAMATA RECREATIONAL CENTRE that practices the withholding of taxes at source from
interactions with business partners in compliance with the CGTC. On the 24/09/2021, the tax
department discovers that PIT on employee salaries for the month of August 2021 amounting to 27
000 000CFAF have not been paid to the state treasury.
 On 15/01/2021, EYERE was suspected of forging tax documents in order to benefit from tax relief.
For this reason, the tax administration submitted the business to tax control. However, as at
01/05/2021, the business owner has refused to provide the requested information to tax authority.

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