The financial or the stock exchange market is the place where securities are traded and exchanged. Securities are composed of shares, bonds and other debts issued by public or private legal entities. In this arena, investors come to invest capital, issuers come to raise funds and intermediaries to put the first two together. The stock exchange market thus appears as a real means of financing the economy. In this perspective, it allows companies, the State and decentralized territorial collectivities to raise funds in order to finance projects. Thus, the Central Africa States created a common market called “Bourse des Valeurs Mobilières de l’Afrique Central” (BVMAC). Consisting of compartments, A and B for shares and C for bonds, it represents the only regulated market for countries of the sub region. However, this market has so far not been used to its full potential, a clear indicator being the low volume of transactions carried out. In order to promote this market, the Cameroonian legislator inspired by the CEMAC regulation has set a series of tax benefits. Therefore, what are the tax incentives applicable in the stock exchange market operations in Cameroon? The question posed is of great interest in practice through the tax planning that emerges and which is analyzed as a real advantage for the operators on this market. These different tax incentives relate to tax reductions (I) and tax exemptions (II).
- Tax reductions
The tax reductions applicable here relate to the corporate income tax and tax on movable capital (distribution tax). With regard to corporate income tax (CIT), companies whose ordinary shares are admitted to the A and B market of the BVMAC share compartment benefit from a reduced CIT rate of 25% (instead of 33%) and a reduced rate of 1.5% (instead of 2.2%) of the advance payment and the minimum CIT as defined in section 108 of the General Tax Code. This same reduced rate of 25% of CIT also benefits companies whose securities are admitted to compartment C reserved for bonds. As well, it benefits entities which are deemed to make public offering in accordance with the provisions of the OHADA Uniform Act relating to Commercial Companies and Economic Interest Group. This is what emerges from a combined reading of sections 109 and 109 (a) of the GTC. However, it should be noted that the cancellation of the shares of companies benefiting from the aforementioned tax reductions within four (4) years from the date of admission entails forfeiture of the reduced rate of CIT. Another sanction may consist of the recall of the previously exempted taxes plus the penalties provided for by the GTC. As for the tax on income from movables capital, the reduced rate applicable to dividends and interest on bonds as well as other remunerations from securities of individuals or organizations is set at 10% (instead of 16.5%) for the bonds with maturity period of less than five (5) years. Whenever the maturity period is five (5) years or more, the applied rate is 5% (instead of 16.5%). This is the rationale of the provisions of section 111 paragraph 1 of the GTC. These various tax reductions are part of truly attractive taxation of the stock market sector, which is also noticeable through tax exemptions.
- Tax exemptions
The tax exemptions relating to the stock exchange market relate to income earned and to deeds and agreements on the transfer of securities. The proceeds are exempt from corporate tax, income tax on movables capital or any other similar levy in accordance with section 111 paragraph 2 of the GTC. In particular, interest on government bonds and decentralized territorial collectivities as well as net capital gains realized by natural or legal persons are exempted from tax on income. As regard to agreements for the transfer or acquisition of securities, they are exempted from registration duty. As evidence of this, section 112 of the GTC provides that: “agreements and deeds relating to the transfer of securities listed on the securities market are exempt from registration duty”. Through these measures, the Cameroonian legislator is following the logic of the CEMAC regulation on the specific tax regime for operations listed on the BVMAC, which provides for similar tax exemptions under the same conditions. However, it should be noted that the Cameroonian legislator prohibits judges, arbitrators and public administrations from rendering judgements and issuing orders in favor of individuals on the basis of unregistered deeds. This is what emerges from section 362 of GTC. Thus, in order to prevent any inadmissibility in the event of possible dispute, stock market actors should contact a competent tax adviser for better tax optimization.
In conclusion, this analysis shows that the stock exchange sector in Cameroon benefits from a set of incentives. These include tax reductions and tax exemptions. The targeted taxes deal with registration duty, corporate income tax and tax on income from movable capital. Actors should Comply with the rules laid down by the legislator. Failure to do so leads to the loss of these various benefits and the application of tax sanctions such as tax recall, fines and penalties.