There is a tradition in almost every jurisdiction that the finance law comes up with new tax provisions. Cameroon does not make an exception. Section 13 of the 2021 finance law unveils the new tax rules applicable in the country as at 1st January 2021. The obligation for Non-professional taxpayers to file an online annual tax return of the previous year no later than 30th of June of the following year is an innovation among other. According to Section 74(a) of the General Tax Code (GTC), the notion of non-professional taxpayers refers to workers receiving compensation from their employers as well as individuals subject to tax on income from a life annuity, an investment or the holding of assets. For the specific case of employees, they shall comply with the new requirement in addition to the monthly returns made by employers on their behalf. Failure to do so may lead to tax and penal sanctions set by the GTC, although the filing of the annual tax return in question is not achievable for the moment. In fact, the Circular N°11/MINFI/DGI/LRI/L of 05th March 2021 outlining the Implementation modalities of the 2021 finance law specifies that ‘the modalities of implementation of the annual declaration will be the subject of a specific text’, which is still awaited unfortunately. In this respect, we thought we would shed some light on the reform by providing more insights on the legal frame of the new obligation followed by its technical assessment.
The Current Legal Frame Of The Obligation
The legal constraints surrounding this new obligation deals with the income concerned the process of filing the return, the payment of the tax number due and obviously the related sanctions. Regarding the targeted income, the circular for the 2021 finance law specifies that the new provisions of Section 74(a) of the GTC apply to the income earned during the year 2021 with the 30th June 2022 as the deadline to file the return. Concerning the contents of the return, they shall include the amount of income earned during the year, the annual tax due, any advance payment made and the balance tax. If such a balance is negative, the taxpayer is entitled to claim the reimbursement of the excess amount. Whenever it is positive, he shall pay his tax electronically, by bank transfer or in cash at a bank according to section M 7 of the Manual of Tax Procedures (MTP). Failure to do so may lead to fiscal and penal sanctions. Tax fine and penalties are provided for by Sections M 98, M 97, M 95 and M 106 of the MTP. In this respect, any non-submission of returns accrues a late interest of 1.5% per month up to a maximum of 50%, calculated on the basis of the taxes due and additional penalties of 30%, 100% and 150%, in case of good faith, bad faith and fraud respectively. The same way, the non-payment of taxes attracts a late payment interest of 1.5 % per month of delay without exceeding 30 % of the tax due. As far as penal sanctions are concerned, they include imprisonment or fines (depending on the offence) and temporary prohibition to exercise directly or by intermediary for a period not exceeding five (5) years.
From the analyses above, it appears that employees and other taxpayers should comply with the new tax provisions and file the new tax return in order to avoid the penal and fiscal sanctions mentioned above. However, the current tax legislation is unlikely to allow the enforcement of Section 74(a) of the GTC.
Technical Assessment Of The Reform
It is the duty of the tax legislator to enlarge the tax base and attract additional fiscal revenue but this should be accompanied by means enabling taxpayers to comply with the new tax requirements. The common criticism of the reform is the fact that the current tax legislation does not permit taxpayers concerned to submit their online tax returns because of two main inconsistencies. The first drawback has to do with the absence of the specific text to clarify the procedure of filing the returns, as indicated by the circular for the 2021 finance law. This simply means that neither the Tax Authorities nor the taxpayer know how to go about the new online tax return. There is another objection to the reform. In fact, the online platform does not provide for the necessary form to achieve the filing of the recent return resulting from Section 74(a) of the GTC. This turns out to be a serious issue in the sense where the new tax obligation came to effect in 2021 with 30th of June 2022 as the first deadline, whereas it is totally impossible for taxpayers to comply with the new tax provisions. Mindful of the fiscal and penal sanctions mentioned before, the reform sounds as a sword of Damocles hanging over the taxpayer’s head. This is the reason why we believe it is high time for the tax legislator and tax authorities to fill the gape by providing more insights on that matter. This will contribute to the progressive construction of a state governed by a rule of law. Conclusively, the new obligation of filing an annual return targets every non-professional including employees. There are plenty of sanctions although clarifications and supplements are still awaited from the State. Hopefully that they will come up without a retrospective effect. Otherwise, taxpayers would have to organize their defense very efficiently to tackle the potential heavy tax adjustments.