Global Tax Alert | 22 October 2013

Cameroon issues draft 2014 finance law

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In early October 2013, the Government of Cameroon issued its draft 2014 finance law (draft law). The key provisions impacting multinational enterprises are outlined below.

The draft law includes the imposition of the Capital Gain Tax (CGT) on gain realized on the transfer of a mining title outside Cameroon and the introduction of joint responsibility between a local subsidiary and its foreign shareholder for the payment of CGT due on the transfer of shares.

In addition, the draft law imposes two new cumulative conditions on the limitation of the deductibility of interest paid to shareholders owning directly or indirectly at least 25% of the capital or voting rights of the company. To be deductible, such interest payments (i) cannot exceed one and a half of the amount of the real capital for all shareholders; and (ii) the interest paid to such affiliates cannot exceed 25% of income before income tax and before deduction of the interest and depreciation taken into account for determining the same result.

The cash reimbursement of loans and advances by a shareholder to the company is subject to a dividend income tax, if such financing was made in cash.

The draft law requires the repayment of Corporate Income Tax that was not imposed on any asset acquired under the reinvestment regime, if there is a transfer of such asset before the end of the fifth year following the date of its acquisition.

With respect to transfer pricing, the draft law sets forth stronger controls through the new obligation to provide a detailed statement of related party transactions (companies which control or which are controlled by them), in addition to other existing disclosure and documentation requirements.

Finally, in relation to Value-Added Tax (VAT), the draft law establishes the right of the taxpayer who has disagreed with the total or partial rejection of its VAT credit by the tax authorities after an audit, to request a full tax audit to clarify the determination.

Future Alerts will cover legislative developments.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Cameroon Sarl, Pan Africa Tax Desk, Douala
  • Joseph Pagop Noupoué
    +33 1 55 61 18 36
    joseph.pagop.noupoue@cm.ey.com

EYG no. CM3897