(Business in Cameroon) – In 2023, the Cameroonian government provided CFA449.4 billion in tax relief to businesses and households, according to the Ministry of Finance. This amount, which represents 1.5% of the country’s GDP, is down from 1.8% in 2022—a drop of over CFA40 billion compared to the previous year.
The Ministry noted that not all tax relief measures could be fully assessed due to missing data. Out of 465 measures identified, 457 were evaluated, covering 98.3% of the total. This means the actual amount of tax relief may be higher than the CFA449.4 billion reported.
The Organization for Economic Cooperation and Development (OECD) defines tax relief as special measures that reduce government revenue to encourage certain economic activities or support specific groups. The measures lower taxpayers’ tax bills compared to regular tax rules.
Households Receive More Benefits Than Businesses
The Ministry’s report showed that households received 57.7% of the tax relief, while businesses received 42.3%. Tax relief for households amounted to 7.1% of total tax revenues collected in 2023. For businesses, it represented 5.2% of the revenues.
Most of these tax cuts were on value-added tax (VAT) and import duties. VAT exemptions alone totaled CFA177.7 billion in 2023, which equals 13.8% of VAT revenues. Import duty exemptions reached CFA152.2 billion, representing 39.4% of the import duty revenues collected that year.
The main goal of these measures was to help households access essential goods, which accounted for 22.8% of the tax relief. For example, to ensure rice remains affordable, the government loses about CFA52 billion annually by reducing import taxes on rice to 5%, instead of the regular 20%. From 2008 to 2016, rice imports were fully tax-exempt.
Tax relief also aimed to improve access to healthcare (6%), support consumption (5.6%), and make housing and education more affordable. Investment incentives accounted for 25.2% of the relief, while agriculture and livestock support received 8.6%.
A Growing Challenge for Public Finances
While tax relief has been helpful for businesses and households, it remains a heavy burden for Cameroon’s public finances. The government is now focusing on increasing non-oil revenues and is considering reducing or removing some tax exemptions.
As part of the push for import substitution, the government plans to review tax exemptions that hurt the trade balance. Products like rice, fish, and wheat, which are key targets under this policy, may see tax cuts reduced or gradually removed.
During a budget debate on July 5, 2022, Finance Minister Louis Paul Motazé said, “The government will review all tax relief measures to eliminate those that are ineffective or no longer align with current policies. For example, tax exemptions on products like rice, fish, and wheat, which impact the trade balance, must now be reduced or gradually phased out.”
