Law N°2020/018 of 17 December 2020 on the finance law of the Republic of Cameroon for the financial year 2021.

On 17 December 2020, the President of the Republic promulgated Law N°2020/018 of 17 December 2020 on the Finance Law of the Republic of Cameroon for the financial year 2021 (the "Law"). This Law enshrines many innovations or measures which aim at reviving the Cameroonian economy and meeting the economic and social challenges resulting from the health crisis of the COVID-19.

Ø  Innovations relating to economic recovery.

In accordance with Articles 234, 242, 243, 343 (4), 543 (d), 608, 612, of the Law, the measures to support economic recovery are of a general and sectoral nature.

From a general perspective, the following measures have been adopted :

-       Renewal of the special transaction for companies affected by the COVID crisis-19 by raising the rate of abatement on undisputed tax arrears from 30% to 50% ;

-       The extension from six (6) to twelve (12) months of the schedule for the settlement of the remaining tax arrears;

-       The reduction of the corporate tax rate for small and medium enterprises with a turnover of less than or equal to FCFA 3 billion by 02 points or at a rate of 28%;

-       The consecration of the free registration of repurchase and securitization agreements for domestic public debt.

In a sectoral perspective, many measures have been taken, particularly in the hotel, forestry and transport sectors.

In the field of transport:

-       The abolition of axle tax on motor vehicles ;

-       Raising the rate of stamp duty on motor vehicles from more than 20 HP to 150 000 FCFA;

In forestry matters :

-       The reduction of the rate of the felling tax from 4% to 3% for companies with sustainable forest management certification;

-       The opening of the possibility of monthly payment of the Annual Forest Royalty by the 15th of each month at the latest.

In the hotel sector:

-       Exemption from the payment of down payments and minimum collection and monthly reporting obligations for hotel companies.

Ø  Innovations relating to the broadening of the tax base.

In accordance with the provisions of Articles 7 B, 74, 74 bis, 82, 543, L1 and L105 of the Act, the innovations relating to the broadening of the tax base are as follows :

-       The obligation for all non-professional individual taxpayers to file an annual summary income tax return;

-       The submission of agreements allowing an entity to carry out an activity carried out by a previous holder at a high registration fee rate of 15%;

-       The strengthening of the system of automatic taxation of capital gains on the sale of securities abroad through the obligation of spontaneous declaration of direct and indirect sales made abroad. ;

Ø  Innovations to improve the business climat.

In accordance with the provisions of articles 124 ter, L 41 bis, 108, 109, 7C, 130 bis, 124 bis of the Law, the innovations enshrined for the improvement of the business climate are the following :

-       The consecration of an incentive scheme in the incubation phase, at the end of the incubation phase and in the exploitation phase for innovative start-ups operating in the field of Information and Communication Technologies and which are grouped within the management structures set up in approved management centers. 

-       Exemption from tax inspection for companies that can prove a growth rate of at least 15% from one financial year to the next;

-       Reinforcement of the tax advantages of the stock market sector through the application of a reduced rate of 1.5% of the down payment and the minimum collection of corporate tax and a reduced corporate tax rate of 25% for companies that proceed to the listing of their ordinary shares on the CEMAC Stock Exchange;

-       The ex officio admission as a deduction within the limits of 0.5% of the total production volume of companies in the brewing sector;  

-       The clarification of the VAT territoriality regime on material and immaterial supplies of services;

-       The institution of the procedure for automatic relief of incorrectly issued taxes.

Ø  Innovations relating to the securing of tax revenues.  

The provisions of articles L7, L8, 235 bis, 235 ter and 242 of the Law provide for the following innovations :

-       The encouragement of the payment of taxes, duties, fees or tax instalments by bank transfer or by electronic means or in cash exclusively at the counters of banks or approved financial agents ;

-        The immediate suspension of the collection of petroleum products from SCDP and SONARA from defaulting marketers and retailers ;

-       Forced recovery from marketers who are actually liable; ;

-       The introduction of solidarity in the payment of the timber felling tax.

ØInnovations in the strengthening of local taxation

In accordance with the provisions of articles 571 and 546 of the Law, the innovations in the area of local tax reinforcement are the following:

- The application of the stamp duty on advertisements to free distributions in the framework of commercial promotion campaigns;

- The exemption from the graduated stamp duty of financial assistance agreements for the Decentralised Territorial Communities.

Ø Innovations relating to the promotion of import-substitution.

The provisions of articles 122 and 142 of the law show the following measures:

- The exemption of production companies in the agriculture, livestock and fisheries sectors from VAT on the purchase of pesticides, fertilisers, and agricultural inputs, equipment and materials;

- The application of the reduced excise duty rate of 5% to imported corn groats of a certain tariff heading, imported mayonnaise of a certain tariff heading and imported cosmetic products containing hydroquinone.