Africa

Incentives for the production of the digital economy in Cameroon (by Achare Takor)

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Through Achare Takor

Over the past decade, information technology (IT) has revolutionized the way people and businesses do their daily business around the world. There is ample evidence that the rise of technology has been a major driver of fundamental economic change, including the growth in global production and the distribution of intangible goods and services. As a result, the digital economy has become the new axis of economic growth for developing countries.

As ICTs are set to become the engine of development in Cameroon in its role as a hub in the Central African sub-region, the 2021 tax regime has been updated to promote innovative ICT start-ups. Eligibility for the benefits of the start-up promotion program is subject to the agreement of approved management centers dedicated to start-ups. The specific obligations of approved management centers are specified in an act issued by the Minister responsible for finance.

ICT start-ups whose status is confirmed by an approved management center will be able to claim several incentives:

a) During the incubation phase, which must not exceed 5 years, companies that fall into this category are exempt from all taxes, duties, levies and payments, with the exception of social security contributions

b) At the end of the incubation phase, in the event of the start-up being sold, a reduced rate of the tax gain of 10% – instead of the standard 16.5% – will be applied to the increase in the value of investments over the life of the property.

c) If the company enters the operational phase at the end of the incubation, it will benefit for a period of five (5) years:

– exemption from the business license tax,

– exemption from registration fees on deeds of incorporation, extension or increase in capital,

– exemption from all taxes and employer charges on salaries paid to their employees, excluding social charges,

– application of a reduced rate of 5% of income tax on income from movable property on dividends paid to shareholders and interest paid to investors.

At the end of the fifth year of activity, the policies of ordinary tax law will become applicable.

The development of a dedicated policy to support ICT start-ups testifies to the Cameroonian government’s commitment to the development of the digital economy. If properly implemented, these tax incentives should attract investment to Cameroon. Secondary benefits of these policies include increased employment, capital transfers, research and technological development, and structural development in less developed regions. While it is difficult to come close to the value of these tax incentives in general, proper implementation is likely to improve overall economic well-being through increased economic growth and public tax revenues.

Author: Achare Takor, Head of Intellectual Property Office, Centurion Law Group

Short Link: https://wp.me/pcj2iU-3zBz

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