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Cameroon: Tax Provisions in 2009 Finance Act Include Changes Affecting Foreign Service Providers and Oil and Gas Industry
Tax provisions included in Cameroon’s 2009 Finance Act (loi n°2008/012 du 29 décembre 2008, portant loi de finances pour l’exercice 2009) were enacted as published in late December 2008.
Furthermore, explanatory guidelines to the tax law changes (circulaire n°001/MINFI/DGI/LC/L) were issued by the Cameroonian tax authorities on 2 January 2009.
The following discussion provides an overview of certain tax provisions contained in the 2009 Finance Act.
Expanded Scope of Services Subject to the Taxe Sur le Revenu
The Taxe sur le Revenu (TSR) is a tax that is assessed in the form of a (15%) withholding on the compensation paid for certain services provided by foreign companies. The 2009 Finance Act expanded the tax basis to which the
TSR applies, to encompass:
- Sums paid abroad by enterprises established in Cameroon as consideration for services of all kinds, except for amounts paid for freight, transit, and lighterage (loading and unloading) services performed within Cameroon
- Audiovisual services with digital content, supplied or used in Cameroon—for these purposes, the term “audiovisual services with digital content” means services aimed at transmitting television or sound radio-broadcasting signals by digital, analogical or Hertzian means, including the transmission and distribution of images or sounds via satellite, fiber optics or any other technological process
- Compensation paid to subcontractors of Cameroonian oil enterprises that do not have a permanent establishment in Cameroon
KPMG Observation
According to tax professionals with Fidal,* the scope of the TSR has been expanded to apply to services of all kinds, and now pertains to a very broad range of services. The
TSR currently applies to all intangible and intellectual services, provided that they are supplied or used in Cameroon and that the service provider does not have a permanent establishment there.
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Clarification of Application of TSRP to the Oil Industry
As a result of the 2009 Finance Act, the Taxe sur le Revenu Pétrolière (TSRP), which applies to the oil and gas industry, has been aligned with the provisions under the standard
TSR regime.
Under the new provisions, the TSRP now can be assessed on compensation paid to oil and gas enterprises that do not have a permanent establishment in Cameroon and that perform drilling, research, or assistance work on behalf of local oil enterprises.
Consequently, Cameroonian enterprises that perform drilling, research, or assistance work for oil companies are subject to the standard
TSR tax regime. In other words, these domestic entities are subject to the standard tax requirements—including statistical and tax registration and filing requirements.
Cap on Deductions of Commissions and Brokerage Fees Paid to Foreign Sales Offices
Before the 2009 Finance Act, the Cameroonian tax code (Code des impost) did not impose any limit on the amount of deductions relating to commissions and brokerage fees paid by Cameroonian companies to sales offices located abroad. With the 2009 Finance Act, the deductibility of sales commissions and brokerage fees paid to foreign sales offices is limited to 5% of the sales proceeds.
According to the Cameroonian tax authorities, for purposes of determining the 5% cap, the sales price includes insurance and freight costs.
Under this new provision, the limitation does not apply when the commission agent is established in Cameroon, in which case the principle of full deduction still applies, subject to the standard conditions.
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For more information, contact a tax professional with Fidal Direction Internationale* in Paris:
Yves Robert, Tax Partner : +33.1.55.68.15.76,
yrobert@fidalinternational.com
Mohamed Mahjoubi, Tax Manager: +33.1.55.68.16.53,
mmahjoubi@fidalinternational.com
*Fidal is a French law firm that is independent from KPMG and its member firms.
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