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8.2.2. Withholding Taxes

Cameroon applies a withholding tax called Special Tax on Income (TSR) on most payments made to non-residents. The tax is due at the standard rate of 15%, although reduced rates of 10% and 5% apply in certain circumstances. Dividends and interest are not covered by the TSR but are subject to a specific withholding tax.

TSR applies to payments made in remuneration of royalties in a broad sense, licensing of software, know how, rents for equipment, as well as studies, consulting and technical, financial or accounting services.  

Effective 1 January 2022, an exemption from TSR is provided to holders of petroleum contracts and sub-contractors in the research and development phase with respect to remuneration for assistance, rental of equipment and material and all other services rendered in connection with oil operations by foreign services providers, provided that the foreign service providers do not have a permanent establishment in Cameroon and provide the service at cost price if the services are furnished at cost.

Dividend

Tax is withheld at the rate of 16.5% (15% plus 10% council surtax) from gross dividends distributed to non-residents.  

The withholding tax rate is 11% on dividends paid by resident companies that are listed on the Central African Stock Exchange.

Note that under domestic law excessive payments made to non-residents, the deduction of which is disallowed for corporate tax purposes (see Sec. 6.5.), are generally reclassified as constructive distributions and subject to withholding tax.

Interest

Tax is withheld at the rate of 16.5% (15% plus 10% council surtax) from gross interest paid to non-residents. Effective from 1 January 2014, an exemption applies to interest on loans granted by foreign lenders with a maturity of at least 7 years.

The withholding tax rate on interest paid on corporate bonds issued by resident companies that are listed on the Central African Stock Exchange is 10% in case of bonds with a maturity period of less than 5 years and 5.5% for bonds with a maturity period exceeding 5 years.

Royalty Copyright

Tax is withheld at the rate of 15% on royalties paid to non-residents. The rate is reduced to 10% with respect to royalty payments made to a non-resident carrying out temporary assignments in Cameroon. An exemption applies on royalties paid to residents of CEMAC countries (namely, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon), provided the income is subject to tax in the recipient state. Note, however, that the multilateral CEMAC Convention allows the Contracting Parties to limit the application of an exemption or reduced rate under the Convention to amounts deemed to be at arm’s length.

Royalty Patent

Tax is withheld at the rate of 15% on royalties paid to non-residents. The rate is reduced to 10% with respect to royalty payments made to a non-resident carrying out temporary assignments in Cameroon. An exemption applies on royalties paid to residents of CEMAC countries (namely, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon), provided the income is subject to tax in the recipient state. Note, however, that the multilateral CEMAC Convention allows the Contracting Parties to limit the application of an exemption or reduced rate under the Convention to amounts deemed to be at arm’s length.

Royalty Trademark

Tax is withheld at the rate of 15% on royalties paid to non-residents. The rate is reduced to 10% with respect to royalty payments made to a non-resident carrying out temporary assignments in Cameroon. An exemption applies on royalties paid to residents of CEMAC countries (namely, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon), provided the income is subject to tax in the recipient state. Note, however, that the multilateral CEMAC Convention allows the Contracting Parties to limit the application of an exemption or reduced rate under the Convention to amounts deemed to be at arm’s length.

Service Management

Tax is withheld at the rate of 15%.

Service Technical

Tax is withheld at the rate of 15%.

Capital Gains

Capital gains derived by non-residents from the sale of shares in resident companies are subject to tax at the rate of 16.5%, provided the gains exceed XAF 500,000.

Tax is withheld at the rate of 5% (reduced from 10% effective 1 January 2019) on capital gains arising from the disposal of real property.

Others

  • One-off payments for material services to non-resident enterprises to the extent they would forego the option to file a return and be assessed on a net basis: 10%;
  • Commissions paid to non-resident money transfer businesses for transfers from Cameroon:  3% (reduced from 10% effective 1 January 2022);
  • Payments made in the framework of public procurement:  3% (reduced from 5% effective 1 January 2022);
  • Fees for the provision of access to audio-visual supplies with digital content: 5%;
  • Fees for services provided to oil companies during the research and development phase:  3% (reduced from 5% effective 1 January 2022); and
  • Payment towards rental and charter of vessels, the rental of spaces on foreign vessels, and for commissions paid to port agents abroad: 3% (reduced from 5% effective 1 January 2022.

Below is a discussion of domestic withholding tax rules for most of the common cross border payments.

Capital Gains 16.5 %
Dividends 16.5 %
Interest 16.5 %
Royalty Copyright 15.0 %
Royalty Patent 15.0 %
Royalty Trademark 15.0 %
Sales 0.0 %
Service Management 15.0 %
Service Technical 15.0 %

* Rates are current as of 02 October 2022