The 2025 Finance Law has introduced new tax deductibility rules in Cameroon, impacting the use of foreign accounting and tax services. These changes aim to enhance tax efficiency, prevent base erosion and profit shifting (BEPS), and promote local expertise within the CEMAC region.
Here’s what this article will be explaining concerning the Corporate Tax Deductions Rules;
Key Changes in Corporate Tax Deductions
Effective January 1, 2025, fees paid to non-CEMAC service providers for accounting and tax services rendered to Cameroonian entities are no longer deductible.
Previously, businesses could deduct up to 2.5% of their taxable profit for such expenses, but this provision has now been entirely removed.
Objectives of the New Corporate Tax Deductions Rules
The new tax policy seeks to promote local expertise, strengthen tax compliance, and protect the national and regional tax base. We are of the opinion that below are the key motivations behind these changes:
1. Encouraging the Use of Local Services
By excluding tax deductibility for accounting and tax services provided by non-CEMAC entities, the law incentivises businesses to engage local or regional service providers.
This measure supports the growth of the accounting and tax advisory industry within CEMAC and aligns with regional economic integration policies.
2. Preventing Base Erosion and Profit Shifting (BEPS)
Companies often use cross-border service transactions to shift profits and reduce tax liabilities in Cameroon. By disallowing deductions for these specific expenses, the law aims to curb tax avoidance and preserve Cameroon’s corporate tax revenue.
3. Enhancing Tax Transparency and Compliance
Local service providers operating within CEMAC are subject to regional tax laws and regulatory oversight.
Ensuring that payments for accounting and tax services remain within jurisdictions where tax authorities can monitor compliance strengthens tax administration and enforcement.
4. Reducing Outflows of Foreign Currency
Cameroon and other CEMAC countries have foreign exchange controls to manage capital outflows. This measure indirectly reduces foreign currency outflows by discouraging payments to non-CEMAC service providers, helping stabilise the regional balance of payments.
5. Aligning with International Tax Practices
Many countries impose restrictions on the deductibility of cross-border service fees to prevent aggressive tax planning.
This provision aligns with global tax regulation trends, particularly the OECD’s BEPS framework, which seeks to prevent tax base erosion through intercompany transactions.
Impact on Businesses
- Companies operating in Cameroon must now rely on CEMAC-based accounting and tax service providers if they wish to deduct these costs.
- Businesses engaging non-CEMAC firms for such services will face higher effective taxation, as these expenses will no longer reduce taxable profits.
- Non-compliant deductions identified during tax audits will be disallowed, potentially leading to additional tax liabilities and penalties.
This legislative change marks a significant departure from the previous regime, which permitted limited deductibility (2.5% of taxable profit).
By completely excluding such expenses from tax-deductible costs—unless sourced within CEMAC—Cameroon is reinforcing its commitment to regional economic self-sufficiency and tax revenue protection.