In addition to the Finance Law, Cameroon’s 2025 fiscal landscape has been notably shaped by a
major reform of local taxation through the enactment of Law No. 2024/020 of 23 rd December
2024 on local taxation. This new law comprehensively overhauls the previously outdated
Cameroonian local taxation system established under Law No. 2009/019 of 15 th December 2009.
Among its numerous innovations, one measure stands out: the introduction of Additional Council
Tax (ACT) on the Special Income Tax (SIT) known as withholding tax (WHT). This reform
stems from Section 82 C, paragraph 1 of the new law, which states: “additional council taxes are
hereby instituted on the following taxes and duties for the benefit of councils: (…) excise duties,
the special income tax, and registration duties on public procurement.” Section 83 C, paragraph
2 of the same law specifies that these additional taxes are calculated on the principal amount of
the SIT at a rate of 5%. While this innovation raises no significant concerns in relation to
registration duties and excise duties, it becomes legally questionable when applied to the SIT,
which is a tax targeting non-resident. This measure represents a genuine legal anomaly for three
fundamental reasons. Specifically, it imposes a local tax on non-resident individuals and increases
the SIT rate, in disregard of tax treaties signed by the Republic of Cameroon.
Firstly, ACTs were designed to be levied on the users of services provided by local governments.
By nature, they are intended solely for Cameroonian tax residents, who are the only ones likely to
benefit from services delivered by Decentralized Local Authorities (DLAs). However, with
respect to the SIT, Section 225 paragraph 1 of the General Tax Code (GTC) stipulates that:
“Subject to international tax treaties, a special income tax is instituted on income paid to legal or
natural persons domiciled outside Cameroon, by legal or natural persons established in
Cameroon, the State or local authorities (…)”. These provisions clearly indicate that the SIT is
payable by foreign service providers. As non-residents, foreign providers cannot benefit from the
local social services rendered by municipal authorities. It follows, therefore, that ACT logically
cannot apply to a non-resident. As a matter of fact, this reform represents a legal inconsistency,
devoid of all logic.
secondly, this new provision undoubtedly leads to an increase in the SIT rate, potentially harming
the business environment. In fact, Section 83 C, paragraph 2 of the new law provides that ACT
are calculated on the principal amount of the SIT at a rate of 5%. In practical terms, this increases
the SIT rates provided for by section 225 b as follows: from 15% to 15.75% for the standard rate,
from 10% to 10.5% for the intermediate rate and from 3% to 3.15% for the reduced rate.
Although this rate increase may appear marginal, it could have serious consequences for
taxpayers in cases involving substantial payments. It would further heighten the tax burden and
could ultimately suffocate foreign service providers. There is a legitimate concern that this
increase in the SIT rate could discourage the said providers. It could also hinder economic
growth, when it is obvious that most foreign services deal with technical assistance which aim is
to enhance the production capabilities of local entities.
Lastly, instituting ACT in addition to the SIT, the legislature failed to consider the international
tax treaties signed by Cameroon. Indeed, the legislation does not condition this measure on
compliance with such treaties, meaning that foreign providers from countries having tax
agreements with Cameroon are not explicitly exempted. Yet, upon review, none of the existing
treaties mentions ACT. Since tax treaties take precedence over domestic law, this new measure
should not be enforceable against service providers from countries that have tax treaties with
Cameroon. This would create a situation where some foreign service providers are subject to
ACT while others are exempt. Such a discriminatory practice is likely to generate fiscal injustice,
economic and social inequality.
Conclusively, the imposition of Additional Council Tax on the Special Income Tax, as introduced
by the new local taxation law in Cameroon, constitutes a serious legal inconsistency for three
main reasons. Notably, local tax levied on non-residents, increase on the SIT rate, thereby
intensifying the fiscal burden and failure to take international tax treaties into account. The
implementation of this new rule could deter investment and constrain economic growth. It is
therefore necessary for the tax administration to suspend its application and for the legislature to
consider repealing it in order to strike a better balance between promoting local development and
encouraging economic activity in Cameroon.
Authors: Jean Didier Ozoto, Tax & Legal Consultant Supervisor: Albert Désiré Zang, Managing Partner