Cameroon, Republic of

There is specific taxation of groups within the CEMAC area.

Where a joint stock company and a private limited company own either registered stock in a joint stock company or shares in a private limited company, the net proceeds of the share in the second company paid to the first during the financial year shall be deducted from the total net profit of the latter, less a percentage for costs and charges. This percentage is fixed at 10% of the total amount of the proceeds. This system shall apply when all of the following conditions are met:

• The stocks or shares owned by the parent establishment represent at least 25% of the capital of the subsidiary firm.
• The parent and subsidiary firms have their registered office in a CEMAC state (Cameroon, Central African Republic, Chad, Gabon, Equatorial Guinea, and Republic of Congo).
• The stocks or shares allotted at the time of issue are still registered in the name of the participating company that undertakes to retain them for at least two consecutive years in registered form.

Transfer pricing

There are provisions in the GTC that relate to transfer pricing.

Within the framework of a tax audit, the documents required for the justification of transfer pricing shall be presented to the tax inspectors at the start of the procedure. Items such as business transactions, payments in consideration for intangible rights, allocations of costs and expenses (head office costs, agreements to share costs, disbursements, etc.), financial transactions, etc. are particularly targeted for close scrutiny.

Companies in the large taxpayers unit shall declare participation in companies that are equal to or more than 25% of the share capital of the latter, as well as the documentation to justify their transfer pricing policy for intra-group transactions, at the same time as their annual tax return.

Thin capitalisation

The deduction of interests on sums of money left or placed at the disposal of local entities by partners or related companies who directly or indirectly own at least 25% of the share capital or corporate voting rights is capped at:

• one and a half times the amount of equity or
• 25% of profit before corporate tax and before deduction of the said interests and amortisations taken into account in determining such profit.

Otherwise, interests on the excess amount shall not be deductible.

The deduction above is applicable where the following conditions are met:

• The existence of a written and duly registered loan agreement.
• The subscribed share capital has been fully paid up.

Controlled foreign companies (CFCs)

We are not aware of any special provisions for CFCs. Indeed, subject to the provisions of international conventions and the provisions relating to group taxation mentioned above, revenue from stocks and shares held in a company based abroad shall be subject to income tax in Cameroon.