(Business in Cameroon) – The new private investment law, presented by the government to Parliament, updates the framework in place since April 2013. The main measure of the reform is the shift from tax reductions to a tax credit system, described by Minister of Economy Alamine Ousmane Mey as the most significant fiscal adjustment in the text.
The government explains that the new law “replaces the tax reductions of the 2013 law with a system of tax credits.” Before lawmakers, Alamine Ousmane Mey emphasized that this innovation, “the most significant,” is based on the “restructuring of fiscal incentives through the introduction of the tax credit mechanism.” The goal is to redesign the architecture of fiscal advantages while maintaining an attractive environment for private investment.
In practice, “the tax credit is a fiscal benefit granted by the State to reduce the amount of tax owed, with a ceiling of 50% of the overall rate, and allows the remaining balance to be carried forward to the next fiscal year,” the minister explained in a report following his presentation to the National Assembly’s finance and budget committee. The mechanism limits the amount of tax relief but spreads it over time through the carry-forward option.
In the same document, the minister recalled that the most widely used system worldwide, and recommended by tax specialists, is the tax credit because it allows companies to retain resources to sustain their activities. He added that it is “even more advantageous as it allows companies to meet their commitments based on the credit’s results and over time.” The tax credit is thus presented as a more flexible instrument, aligned with project performance and profitability profiles.
These tax credits can cover up to 75% of the investment amount under the general regime and up to 80% in priority development zones. The benefit can be carried forward for five fiscal years, “providing direct and traceable support for capital-intensive projects,” the minister said. To maximize efficiency, the operational phase granting access to benefits is reduced from 10 years to 5 years, extended to 7 years for investments in economic zones or export-oriented projects.
Regarding the impact on company cash flow, the Minister of Economy noted that experts believe “the shift to the tax credit does not negatively affect corporate cash flow. Because the tax credit is a fiscal advantage granted by the State to reduce the amount of tax owed, with a ceiling of 50% of the overall rate, and allows the remaining balance to be carried forward to the next fiscal year.” In conclusion, he stated that “the tax credit helps reduce pressure when settling tax obligations,” by smoothing the tax burden over time without depriving the State of revenue in the medium term.
