FORMS OF COMPANIES AND TAX REGIMES IN CAMEROON; APPROVED GUIDELINES
The entrepreneurial ecosystem is booming, which has positively changed the Cameroonian economic landscape in recent years.
More and more people but especially more and younger people from the country and even from the diaspora are embarking on the adventure, thus creating resources and jobs.
Creating a business always comes down to answering certain questions; in particular what form of business would be best for what activity or starting resources?
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- FORMS OF COMPANIES IN CAMEROON
The OHADA Uniform Act relating to Commercial Companies and Economic Interest Groupings mainly provides for five forms of companies
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- public limited companies
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- Limited Liability Companies
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- Simplified joint stock company
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- General Partnerships
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- Simple Limited Partnerships.
In Cameroon, these companies are grouped into two groups depending on whether they are natural or legal persons.
1- Legal persons
The public Limited Company (PLC)
It can be one person or multi-person. The minimum capital is ten million CFA Francs divided into shares. The shareholders are jointly and severally bound for the losses of the company up to the amount of their contribution to the capital.
It can be administered by a board of directors or by a general administrator whose members are elected for a term not exceeding six years.
In the Sole shareholder limited company, the sole shareholder makes the decisions falling within the competence of the general meetings.
The Private Limited Liability Company (LTD)
Like the SA, the SARL can be one-person or multi-person. For the LLC, the minimum capital is fixed at one million FCFA by the Uniform Act.
However, Law No. 2016/014 of December 14, 2016, establishes a new minimum capital for the LTD at 100,000 FCFA.
It is headed by a manager appointed for a renewable term of 4 years and a general meeting of shareholders.
The Limited Partnership
There are two types of partners: general partners and limited partners.
The limited partners provide most of the funds and are responsible for the company’s debts up to the amount of their participation and the general partners, are indefinitely and jointly bound for the company’s debts and are responsible for managing the company. Collective decisions are taken unanimously unless otherwise provided in the statutes.
In the event of the death of a general partner, the company ceases to exist if he has no heir. Furthermore, if the deceased partner was the only general partner and his heirs were all minors, the surviving partners have a period of one (1) year from the death to appoint a new one, failing which the company will be automatically dissolved.
General partnership
The Partnership is mainly formed by traders. The partners are jointly and severally bound for the debts of the partnership. Collective decisions are taken unanimously by the partners.
The company comes to an end in the event of the death of one of the partners unless otherwise provided in the articles of association, judicial liquidation of bankruptcy, or prohibition to exercise a commercial activity.
The Simplified Joint Stock Company (SJSC)
This a new form of company introduced by the reform of the OHADA Uniform Act relating to commercial companies in 2010. It is characterized by the freedom granted to the partners concerning the organization in the statutes of the share capital as well as the rules organization of the company, namely the appointment or dismissal of managers, and the procedures for adopting collective decisions.
The SJSC may be made up of one or more partners, natural or legal persons.
Individuals
When a business is not a company, it is not a legal person but a natural person. The entrepreneur has the legal personality of the company. In other words, there is no dissociation between the assets of the company and that of the partner and both are committed in the event of loss or debt.
TAX REGIMES IN CAMEROON
The General Tax Code of Cameroon provides for three tax regimes in Cameroon, namely:
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- the discharge tax system,
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- the simplified regime
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- The regime of reality.
Submission to one scheme or another depends on the company’s annual turnover.
The discharge tax regime (article C45 to C47 CGI)
Taxpayers subject to the discharge tax are those exercising a commercial, industrial, artisanal, or agro-pastoral activity that does not fall under either the real profit regime or the simplified regime, and whose turnover does not exceed 10 million FCFA.
The payment of the discharge tax exempts from the payment of the license, the personal income tax, and the value-added tax except in the case of deduction at source.
The tax to be paid is decided by the local authority of the location of the activity according to a range fixed by the category of activity ranging from A to D:
– Category A: from 0 F CFA to 10,000 F CFA;
– Category B: from 10,001 CFA francs to 20,000 CFA francs;
– Category C: from 20,001 CFA francs to 25,000 CFA francs;
– Category D: from 25,001 CFA francs to 50,000 CFA francs.
The payment of the discharge tax is done quarterly, at the latest fifteen days after the end of the quarter.
The simplified regime
Taxpayers with a turnover of more than 10 million and less than 50 million come under the simplified tax regime.
Taxpayers under the simplified regime are subject to payment of corporation tax at the rate of 30% plus 10% for additional municipal tax, i.e. a total of 33.3% deducted from all net profits made by legal entities during the fiscal year
A monthly installment of 5.5% of turnover is paid by taxpayers under the simplified tax regime for corporation tax.
Personal income tax (IRPP) is payable by anyone with a tax domicile in Cameroon. It is based on all of the taxpayer’s net income during a fiscal year.
The personal income tax and corporation tax are the direct taxes imposed on simplified taxpayers.
Under indirect taxes, simplified taxpayers are subject to the payment of the license which is a tax levied for the benefit of the municipalities and paid by taxpayers who are natural or legal persons carrying out a commercial, industrial, or any other activity that is not exempt.
The business license is calculated based on turnover. Newly created companies are exempt from payment of the business license for the first year of operation.
In addition, companies under the simplified scheme that own land, built or not, in their name are subject to payment of property tax at the rate of 0.1% on the value of the land and buildings owned by the company.
Real tax regime
Taxpayers with a turnover of more than 50 million FCFA are subject to the real regime.
These are subject to the payment of corporation tax at the rate of 33.3% including a monthly installment of 2.2% on the turnover as well as the license.
In addition to corporate income tax, real taxpayers are also subject to payment of property tax at the rate of 0.1% based on the value of land and buildings owned by the company.
In general, the tax regime is determined when the company is created. A departure plan is assigned depending on the legal form and purpose of the company.
At the end of the financial year, the company, after examining its figures, can request reclassification from the simplified to the actual. This process is irreversible.
This reclassification can be done spontaneously by the tax authorities to switch a taxpayer from the real one who no longer meets the conditions of liability to the simplified regime.
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Article by CHUO ANGABUA JUNIOR
‘’The content of this article is intended to provide a general guide to the subject matter. We insist specialist advice be sought depending on your specific circumstance’’
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