(Business in Cameroon) – Cameroon’s central government faces steep revenue losses as its new local taxation law takes effect. The law, in force since 2024, is set to direct significant funds away from national coffers and into local governments.
The Ministry of Finance predicts that the law will cost the state CFA100 billion in 2026, then CFA150 billion each year in 2027 and 2028. “The entry into force of the local taxation law in 2026 would result in a significant decrease in state budget revenues: CFA100 billion (0.3% of GDP) in 2026, and CFA150 billion (0.4% of GDP) in 2027 and 2028,” the ministry states in its latest budget document. Officials warn these shortfalls could throw off non-oil domestic revenue forecasts.
President Paul Biya signed the law on March 23, 2024, after Parliament passed it. The headline measure is the General Synthetic Tax (IGS), a flat-rate tax for businesses turning over less than CFA50 million a year. The government says this reform, replacing earlier lump-sum and simplified taxes, will bring in an extra CFA50 billion a year for local councils and regions.
In another boost for local budgets, the law will let CTDs collect “additional municipal cents” from excise duties, special income tax, and public procurement fees. This expansion should deliver around CFA43 billion in new revenue each year. Authorities also expect CFA20 billion annually from the increase in the special excise tax rate for waste collection and treatment, doubled from 0.5% to 1%.
In total, Finance Minister Louis Paul Motazé defended the law before Parliament by stating, “The newly identified funding sources would shore up municipal resources by CFA126.4 billion.” Minister Motazé added that this sum will supplement the CFA261 billion CTDs already collect, which made up 7.3% of the state’s revenues in 2023.
The government set a clear target: it aims for CTDs to receive at least 16% of the state’s own revenues, up from the current 7.3%. Minister Motazé says these moves are needed to accelerate the financing of decentralization in Cameroon.
Brice R. Mbodiam
