Cameroon investment codes (Fr)
Export legal and fiscal notebooks - Kenneth Weissberg (1996)
INTRODUCTION
At
Cameroon, the investment incentive is governed by Ordinance No. 90/007
of 8 November 1990 on the Investment Code and its implementing decree
nO 91/215 of May 2, 1991.
In 1994, this device
of encouragement has been substantially modified by ordinances n094 / 001,
002 and 003 of January 24, 1994 modifying certain provisions of the Code of
Investments within the framework of the tax and customs reform UDEAC.
Mon
the objectives of this tax and customs reform being to reduce
tax and tax exemptions in order to optimize the national tax yield,
the tax regimes granted under the Investment Code have been remitted
in question. Each regime had to be renegotiated with the Ministry of Development
Industrial and Commercial.
The law
of Finances for 1995/1996 confirmed this tax optimization policy by
reducing from 5 % to 0.5 % the reduction rate of the FOB value of exports
and by imposing certain basic products delivered to the Free Zones
Industrial.
However, this reform did
not abolished the Investment Code which still remains in force and
is still of some interest for any investor wishing to commit
economically in Cameroon.
It is however obvious
that now, with the liberalization of the Cameroonian economy and the reform
tax and customs, the Investment Code is of
mainly fiscal; economic, customs and commercial advantages
provided for by the Code falling almost under common law.
After presenting the scope of the Investment Code (I) and the approval procedure (II), the advantages common to all the schemes of the Investment Code (III) will be exposed.
The different regimes proposed by this Code will then be analyzed separately, with their respective specificities (IV). Finally, the status of Industrial Free Zones will be the subject of a separate study, taking into account its specific nature (V).
I - SCOPE OF APPLICATION OF THE INVESTMENT CODE
The following may apply for approval to one of the plans of the Investment Code:
Any Cameroonian or foreign natural or legal person, who creates or develops an economic activity oriented towards:
- development of national natural resources,
- the creation of new jobs,
- production of competitive goods and services for internal consumption and export,
- increased exports of manufactured goods,
- transfer and adoption of appropriate technologies,
- the protection of the environment,
- improving the quality of life in rural and urban areas, and whose activity falls into one of these sectors:
- agricultural production, processing of agricultural products, animal husbandry, fishing, logging combined with wood processing, storage and preservation of food products,
- the transformation of hydrocarbons, the extraction and transformation of mineral resources, the manufacture of building and public works products, the transformation of materials leading to the production of a good,
- construction of buildings and public works, ship repair, technological research and data management, hospital training and medical analysis laboratories, catering establishments integrated into a tourist complex or located in a site recognized as being of tourist interest, accommodation establishments likely to be subject to classification, approved tourism agencies, tailoring, maintenance of industrial equipment focused on the manufacture of spare parts, testing, analysis and control of raw materials, finished or semi-finished products used or produced by industry.
II - APPROVAL PROCEDURE
1. The Management Unit
of the Investment Code
To benefit from one of the plans offered by the Code of
Investments, the company must submit an application for approval to
the Investment Code Management Unit (CGCI), with the exception of the
regime of Industrial Free Zones which falls under the competence of the Office
National Industrial Free Zones (ONZFI), see below.
Investment Code Management Unit
Former ONCPB building. 3rd floor
PO Box 15438
DOUALA - CAMEROON
Tel (237) 42.59.46 / 43.31.11
Fax: (237) 43.30.07
The approval request files must include a list of documents, the details of which appear in article 39 of decree n091 / 215 of 2 May 1991.
2. Approval of the Code of
investments
The approval of a business
to one of the investment code regimes is granted by deed
regulatory.
The agreement specifies:
at. Regarding the business
- the name and statutes of the beneficiary company,
- the place of establishment of the company showing that it is not in a prohibited zone for the exercise of the action concerned,
- the physical and financial investment program that the company offers,
- the company's employment and professional training policy,
- the objectives pursued in the investment program which must comply with the eligibility criteria corresponding to the regime granted.
b. Regarding administration:
- the eligibility criteria for which approval is granted,
- the regime and the advantages granted, distinguishing those relating to the installation phase from those relating to the operating phase; the transition from one phase to another being subject to control.
Any company approved for one of the schemes of
Investment Code must become operational (start of construction and
equipment) at the latest within two years from the date of
date of signature of the deed of approval. In default and in the absence of reason
valid, the act of approval becomes null and void.
III- ADVANTAGES COMMON TO ALL
REGIMES
The Investment Code has set up several advantages common to the different plans offered
A. Administrative advantage: the single window
The company
approved under one of the Investment Code regimes automatically benefits
centralized management of its authorization files necessary for its
activity, at the level of the Investment Code Management Unit.
All files are processed by the one-stop shop (obtaining the exemptions provided for by the texts, authorization to exercise certain activities, visas for national and foreign staff, residence permit, access to administrative documents in matters of importation, etc.)
B. Economic benefits
Any investment approved under one of the regimes of the Investment Code benefits from the guarantee of non-commercial risks of article 15 of the Treaty establishing the Multilateral Investment Guarantee Agency ratified by Cameroon.
In addition, finished or semi-finished products processed in Cameroon and exported by the approved company are exempt from exit duties and insurance and transport taxes.
Lastly, the enterprise which exports part or all of its industrial production can deduct from its income an amount that cannot be carried over equal to 0.5 % from the FOB value of exports of its finished or semi-finished processed products (before on July 1, 1995, the abatement rate was 5 %).
C. Customs benefits
The approved company
benefits from a common external customs rate including customs rates
moderate on equipment and raw materials intended for
companies.
It is important to specify that
the economic liberalization policy pursued by Cameroon these
recent years has relaxed the customs regulations in force, which
somewhat relativizes the advantages granted to companies in this area
approved.
IV - REGIMES PROPOSED BY THE INVESTMENT CODE OF THE
CAMEROON AND THEIR RESPECTIVE SPECIFICITIES
The Cameroon Investment Code includes several incentive schemes to invest:
- For the creation of new companies, the Investment Code organized the basic regime and the regime for strategic enterprises
- For the creation of exclusively export-oriented businesses, the Investment Code provides for the industrial free zone regime
- For existing and operating companies, the Investment Code has set up the reinvestment regime.
The tax advantages granted under these various regimes take into account the progress of the investment project and distinguish the installation phase from the operation phase.
During the installation phase:
the company is required to provide a personal and joint bond or guarantee to guarantee the difference between the amount of duties and taxes payable under common law and that reduced by duties and taxes resulting from the approval. The installation phase may be extended by reasoned request presented to the Investment Code Management Unit, on reasoned request or force majeure.
It is now appropriate
to present the different investment regimes with their specificities
respective.
1. Basic scheme
with conditions
eligibility
To be able to benefit from the basic investment code regime, the project presented must:
- create jobs for Cameroonians (I per tranche of 10,000,000 F. CFA investment),
OR
- have an export activity of at least 25 % of turnover excluding taxes, OR
- use national natural resources other than energy and / or goods produced in Cameroon up to at least 25 % of the value of its inputs.
b) Advantages
In addition to the administrative, economic and customs advantages common to all the schemes of the Investment Code (see III), companies approved under the “basic” scheme benefit from the following tax advantages:
During the installation phase (three years)
- exemption from registration fees for acts of capital increase,
- exemption from registration fees for leases of buildings for exclusively professional use which are an integral part of the investment program selected (against 10 % under ordinary law),
- exemption from transfer taxes on the acquisition of buildings, land and buildings essential for the implementation of the program (against 15 % under ordinary law),
- exemption from registration fees for contracts for the supply of equipment and construction of buildings necessary for the implementation of the program, reduction of 50 % in corporate tax from the first tax year (the common law rate being 38.5 %),
- exemption from the special tax for registration of business insurance contracts.
During the operating phase (renewable period of five years)
- exemption from the minimum collection tax payable under corporate tax,
- reduction of: - 50 % of the corporate tax for legal persons (the common rate being 38.5 %), - 50 % of the tax on industrial and commercial profits for sole proprietorships
- reduction of 50 % of the proportional tax on income from movable capital (the common law rate for non-Cameroonian shareholders being 25 %),
- possible carry-over to the results of the following five financial years of the deficit resulting from the allocation of depreciation normally recognized during the first three financial years,
- deduction from the taxable income of the business of a non-reportable amount equal to 50 % of transport and utilities, when it settles in an area far from large urban centers.
2. Small and medium-sized enterprises scheme
a) Eligibility conditions
Companies must meet the following conditions to apply for approval to the “small and medium-sized enterprises” (SME) plans:
- create permanent jobs for Cameroonians (1 job for every 5,000,000 FCFA of investment),
OR
- have a level of investment less than or equal to 1.5 billion CFA francs,
AND,
- have a stake in the capital of the Cameroonian natural person company or of Cameroonian company up to at least 35 % of this capital.
Decree n091 / 215 of May 2, 1991 specifies that it is an effective participation in the capital and excludes the use of counter letter.
b) Advantages
Notwithstanding the administrative, economic and customs advantages already set out in Chapter III, economic operators approved under the "small and medium-sized enterprises" regime benefit from the following tax advantages:
- During the installation phase (three years)
During the installation phase, companies approved under the “small and medium-sized enterprises” regime enjoy the same tax advantages as those granted to enterprises under the “basic” regime.
- During the operating phase (non-renewable period of seven years)
In the operating phase, a company approved under the “SME” scheme benefits from the same tax advantages as under the “basic” scheme, with the additional possibility of deducting from its taxable income a non-reportable amount equal to 25 % of the wage bill paid to employees of Cameroonian nationality during the financial year in question.
3. Regime for strategic enterprises
Conditions of eligibility
To be approved for the “strategic business” plan, you must:
- be declared strategic in the Industrialization Master Plan, AND,
- have an export activity equal to at least 50 % of its annual turnover excluding taxes,
OR,
- use national natural resources, excluding energy resources and / or goods or services produced in Cameroon up to at least 50 % of the value of its inputs,
OR,
- create permanent jobs for Cameroonians (1 job for every 20,000,000 F. CFA investment).
If these conditions are met by the company, an agreement with the Cameroonian State may be signed, specifying the reciprocal commitments of the parties.
Benefits
In addition to the administrative, economic and customs advantages set out above in Chapter III and IV, economic operators approved under the "strategic enterprises" regime benefit from the following tax advantages
- During the installation phase (three years)
During the installation phase, the tax advantages granted under the “strategic enterprises” regime are identical to those granted under the “basic” regime.
- During the operating phase (non-renewable period of twelve years)
In the operating phase, the company approved under the "strategic enterprises" regime benefits from the same tax advantages as in the "basic" regime, with the additional possibility of deducting from its taxable income a non-reportable amount equal to 25 % of the payroll paid to employees of Cameroonian nationality during the financial year in question.
4. Reinvestment scheme
Conditions of eligibility
If an enterprise is governed by ordinary law or by a special scheme which has expired, it may apply for approval of the "reinvestment" scheme provided that its program:
- has been approved under the reinvestment scheme of the General Tax Code,
AND,
- anticipates an increase in productivity and an increase in production of at least 20 % compared to the situation at the time of filing of its application for approval,
OR,
- enables it to offer a higher category of services than that which it was capable of providing at the time of filing its request for approval.
Benefits
In addition to the administrative, economic and customs advantages set out above
(page 689), economic operators approved under the "
reinvestment ”benefit from certain tax advantages which,
unlike the diets previously studied, do not change over time.
For a period of three years from the date of granting of approval, the company approved under the "reinvestment" scheme benefits from:
- a reduction in corporate tax or proportional tax on the income of natural persons on the basis of 50 % of reinvestments accepted,
- exemption from registration fees for acts of capital increase,
- an exemption from the registration fees for leases of buildings for exclusively professional use forming an integral part of the investment program adopted by the company.
V - REGIME OF THE INDUSTRIAL FREE ZONE
Ordinance n0 90/001 of January 29, 1990 created the Zone regime
Industrial Free and Industrial Franc Point in Cameroon and Order No. 5
IIMINDIC / IGI of December 28, 1990 fixed the terms of application.
Applications for the granting of industrial free zone status or
Point Franc Industriel must be submitted to the National Office of Zones
Industrial freeholds (ONZFI). The Minister in charge of Industrial Development
issues the decree granting the status of Industrial Free Zone which decree
is notified to the candidate by ONZFI.
National Office for Industrial Free Zones
PO Box 925
DOUALA - CAMEROON
Tel: (237) 43.34.44
Fax: (237) 43.33.17
terms
The conditions required to be able to benefit from the status of Industrial Free Zone or Industrial Free Point are as follows:
- use at the latest at the end of the 5th year, at least 80 % of Cameroonian staff and ensure their continuous professional training,
- produce goods or services intended exclusively for export or to markets outside Cameroon. (Note: A company in the Industrial Free Zone may export, exceptionally, part of its production to the national customs territory, under conditions set by the Ministry of Industry.)
- not to produce harmful effects for the environment,
- not to be in possession, without prior authorization, of products whose entry and storage are prohibited in an industrial free zone,
- not to carry out activities outside the Industrial Free Zone for which approval is sought,
- offer all the facilities and grant all support to the agents of the Cameroonian security forces who ensure the police and the maintenance of order in the Industrial Free Zones,
- organize clean security services in industrial free zones. (Note: The 1995/1996 Finance Law excluded forest exploitation companies from the status of Zone Franche Industrielle. Wood processing industries are however still eligible for this scheme).
Benefits
* Commercial advantages
The General Exchange Program (PGE) in
force in Cameroon does not apply to Industrial Free Zones. To this
title, imports and exports are neither subject to a
license, authorization or quota limitation.
It is important to remember that the common law of
Cameroonian customs regulations have been relaxed in recent years
within the framework of the liberalization of the economy and the reform
customs fiscal; which somewhat relativizes the advantages granted in this
domain for companies in Industrial Free Zones.
The imports and exports of the Industrial Free Zones are
subject to the formality of prior declaration for statistical purposes
for ONZFI and inspection and control by customs services.
No price control or
profit margin does not apply to the products and services of
Industrial free zones.
Fiscal advantages
Companies approved as Zone Franche Industrielle or Point Franc Industrielle benefit from significant tax advantages:
- total exemption during the first ten years from direct and / or indirect taxes and charges in force or to be created as well as registration and stamp duties of any kind whatsoever,
- from the 11th year of operation, even exemption, with the exception of the tax on industrial and commercial profits (BIC) to which they are subject to the overall rate of 15 %.
The tax profit determined in application of the provisions of the General Tax Code is obtained after allocation:
- an amount equal to 25 % of the payroll paid to employees of Cameroonian nationality during the financial year,
- an amount equal to 25 % of the capital expenditure for the financial year. In the event of a change in the BIC tax base rules, the new provisions only apply to approved companies if they are more favorable to them.
- the deficits suffered during the exemption period are considered as expenses for the following years and deducted from the profits made during said years, without limitation of the delay period,
- no obligation to reinvest the special fixed asset revaluation reserve prescribed by the laws and regulations in force,
- exemption from transfer tax for any sale of real estate within the ZFI,
- exemption from any tax on the transfer of currency for any purchase or sale of currency by a ZFI company.
- Customs benefits
All exports from a
Industrial Free Zone are exempt from all customs duties and taxes and
all other direct and / or indirect taxes, duties and taxes, current and
future.
With regard to imports, these
were exempt, like exports, from all duties and taxes
until June 30, 1995.
Since July 1, 1995 (Finance law
1995/1996) deliveries to industrial free zones of coffee, cocoa,
medicinal plants, wood logs, rubber, sugar, palm oil and
bananas are assimilated to exports and, therefore, subject to
exit or export levy applicable to these products.
CONCLUSION
At the end of this
analytical presentation of the investment incentives in force at
Cameroon, it is necessary to note that these are part of a
essentially fiscal perspective since the liberalization policy of
the economy and the measures taken by the Cameroonian government within the
of the tax and customs reform UDEAC.
In order to give back to the Code
of Cameroonian Investments the means to enable it to ensure
fully its appealing vocation to national investors and
foreigners, it seems necessary to review its provisions.
According to the Management Unit
of the Investment Code, preparatory work has already been launched in
that Sens. Some even mention a regional investment code.