CHAPTER IV : INVESTMENT INCENTIVES AVAILABLE
IN CAMEROON
In order to stimulate economic
development, the Cameroonian government supports
a series of incentive programs. These programs
are laid down by two 1990 presidential ordinances
which have created an Investment Code as well
as a Free Zone Regime. Both Cameroonian and
foreign controlled companies can benefit from
these incentives.
These companies must however fulfill
a number of requirements set out in the Investment
Code :
Creation of permanent jobs for Cameroonian
workers : at least one job must be created
for every 10 millions CFA Francs of investment
scheduled by the company
The annual exportation activity must amount
either to 25 % at least of the company's turnover
(taxes non included), or to a turnover in
convertible currency outside the Franc area
equivalent to at least 10 % of the company's
turnover (taxes non included)
Use of the host country's natural resources,
except for energy resources and/or goods and
services produced in Cameroon, for at least
25 % of the inputs' value (The goods and services
considered as produced in Cameroon are those
incorporating at least 25 % of the national
added value)
I. THE INVESTMENT CODE
An ordinance dated November 8th,
1990 instituted an Investment Code in view
of encouraging and promoting productive investments
in Cameroon. This ordinance guarantees free
transfer for foreign investors of any proceeds
from their invested capital, including the
funds remaining after liquidation.
Companies whose finished or semi
finished products are processed in Cameroon
are exempted from export duties, insurance
and transportation charges when exporting
these products. These companies are also granted
export incentives in the form of a deduction
from their taxable income.
The Investment Code also encourages
economic activities participating to the valorization
of the country's or UDEAC national ressources.
This promotion is achieved by an exemption
from all duties and purchase taxes on raw
materials of local or UDEAC origin, on water
and electricity for industrial use, on intermediate
goods used either totally or partly for manufacturing
finished or processed products, and on the
raw materials and products meant for the packaging
of finished or processed products.
The Code provides for special
regimes which may be granted by regulation
on the basis of an application for approval.
The regimes are as follows:
for the setting up of new corporations : the
basic regime or one of the specific regimes
namely :
- the small and medium scale enterprises regime
(SME)
- the strategic enterprises regime
for the setting up of solely export oriented
companies ; the free trade zone regime
for already existing companies : the reinvestment
regime
A) THE BASIC
REGIME
During the establishment phase which lasts
three years, the company which is granted
the benefit of the basic regime is entitled
to:
a reduced rate for import duties, customs
duties, turnover tax and all other import
duties payable on equipment directly linked
to the processes of production manufacture
and distribution
an exemption from duties and taxes on the
purchase of this equipment when it is manufactured
locally
an exemption from any registration fees concerning
capital increases
an exemption from registration fees for all
leases granted in view of a professional use
B) THE SMALL
AND MEDIUM SCALE ENTERPRISES REGIME
The company granted the benefits of this regime
is entitled to all the benefits of the basic
regime plus a reduction from the taxable income
of 25% of the wages and salaries paid to Cameroonian
staff during the financial year (The benefits
granted during the operational phase last
for seven years).
C) THE STRATEGIC
REGIME
The company whose activity is declared as
strategic under the industrialized Master
Plan and which is granted the benefits of
the strategic enterprises regime enjoys the
following benefits :
benefits of the basic regime for a period
of five years during the establishment phase
benefits granted by the basic regime for twelve
years during the operational phase, and the
deduction from taxable income of 25 % of the
wages paid to Cameroonian staff during the
operational phase
D) THE REINVESTMENT REGIME
The benefits of the reinvestment
regime are the following :
a 15 % reduced rate for import duties, customs
duties, turnover tax and all import duties
payable on equipment directly linked to the
production, manufacture or distribution processes
an exemption from duties and taxes on the
purchase of these products when they are manufactured
locally
an exemption from any registration fees concerning
capital increases and all leases granted in
view of professional use
II. THE FREE ZONE REGIME
The Free Zone Regime laid down
by an ordinance of January 29, 1990 aims to
promote new investments, facilitate export
development and create new jobs.
The company seeking establishment
within an Industrial Free Zone must submit
a complete application to the National Office
for Industrial Free Zone (NOIFZ) assuring
that :
it will produce goods and services (listed
in the application) for exportation;
it will not have any detrimental effect on
the environment and will abide by the laws
and regulations applicable to classified establishments
in Cameroon ;
it will not possess firearms and other items
of warfare or other dangerous or hazardous
materials without prior authorization from
the relevant Cameroonian authorities.
The certificate of compliance
is delivered or refused within thirty days.
The government authorization is needed only
for special Industrial Free Zones.
Industrial Free Zone companies are free to
undertake any kind of industrial and commercial
activity as well as render any service.
The free zone regime applies to
a part of the territory on the government's
initiative or at the suggestion of the National
Office for Industrial Free Zones.
The free zone regime provides
commercial benefits, tax and customs concessions
as well as many other facilities. An Industrial
Free Zone can be reduced to the settlement
area of a company and be designated as a Special
Industrial Free Zone.
A) COMMERCIAL BENEFITS
The provisions of the Cameroon
general trade schedule do not apply to Industrial
Free Zones. Therefore, there is no price or
margin control, no need for authorization
or licenses. But when in particular instances
a part of the production is sold to the national
customs territory, the Industrial Free Zone
company must pay all relevant customs duties
and taxes.
B) TAX CONCESSIONS
During the first ten years
of their operation, companies enjoy total
exemption from duties and taxes and from any
registration and stamp duties whatsoever.
From the eleventh year, the company is subject
to taxation on industrial and commercial profit
at a flat rate of 15%. However, taxable profits
are calculated following the deduction of
25% of the wages and salaries paid to Cameroonian
workers and 25% of the financial year investment
expenditure.
The company established within
the Industrial Free Zone is also granted the
following benefits :
total losses incurred over the tax holiday
period are deducted from profits made over
those years without limitation of the carrying
over period
it is not required as laid down by the law
to reinvest the special reserves arising from
the evaluation of the fixed assets
sales of real property are exempted from any
transfer tax
all purchases or sales of foreign currency
are exempted from currency export tax
C) CUSTOMS BENEFITS
The Industrial Free Zone company is exempted
from all customs duties and taxes all except
for cars. The same goes for sales of raw materials,
intermediate semi finished and finished goods
by parties residing within the National Customs
Territory.
D) SPECIAL PROVISIONS
RELATING TO LABOUR REGULATIONS
The company must comply with labor legislation.
A work permit as well as a resident permit
are required for foreign employees. During
the legal work or residency period, the foreign
employee does not have to pay income tax provided
that there is evidence that he is subject
to it in his home country, for the income
earned in the Industrial Free Zone.
E) OTHER ZONE
RELATED INCENTIVES AND BENEFITS
the exemption from government monopolies such
as CAMSHIP / CNCC and CAMAIR shipping and
the right to utilize any carrier for their
exports and imports without restriction requirements,
quotas and preferences
a promotional rate for electric power
the right to install their own power generation
equipment
preferential port charges for services provided
by the National port authority
the right to purchase and install their own
telecommunications system such as satellite
earth stations and microwave systems in view
of their international telecommunications
requirements
