(Business in Cameroon) – Cameroon will raise 20 billion FCFA in additional revenue during fiscal year 2022 thanks to the tax on money transfers, estimates the General Directorate of Taxes. According to a source authorized to manage, to ensure that the expected resources are effectively mobilized, the tax administration has teamed up with operators who have the technical capacities to trace all money transactions made by companies offering money transfer services.
Enacted by the 2022 finance law and entered into force in January 2022, the tax on money transfers is equivalent to 0.2% of the value of transactions made via any traceable technical platform (such as internet, mobile phone, transfer, telex , fax). The tax is also applicable when electronic money transferred via mobile money or financial institutions is withdrawn in cash.
In correspondence dated January 4, 2022, the Directorate General of Taxes informed various money transfer operators that they are required to collect the said tax. The correspondence also reveals that the tax is not applicable for transactions made to pay taxes and customs duties or for banking transactions. As well, “cash deposits in electronic wallets do not fall within the scope of this tax,” we are learning.
“To mitigate the socio-economic impact of the tax on money transfers, the costs of sending and withdrawing are not included in the basis for calculating the tax», Explains the correspondence adding that charges are also excluded from the basis for calculating VAT. For example, to withdraw 50,000 XAF from a mobile money account, a user will have to pay a money transfer tax of 100 XAF (0.2%) plus VAT and withdrawal fees imposed by operators.
Despite the explanations provided by the tax department, there is still a controversy around this tax approved by parliamentarians and voted by the President of the Republic. Part of public opinion is questioning the advisability of the tax in a difficult economic context. Others cite a risk of double taxation because the tax is levied on both deposits and withdrawals.
As for the government, it sees e-money transfers as a profitable tax niche given the growth of the e-money segment over the past ten years. According to data published by the Bank of Central African States (BEAC), in 2020, Cameroon held 19.5 million out of the 30.1 million Mobile Money accounts identified in the CEMAC region. This represents 64.8% of the global accounts. At the same time, it is three times greater than the number of accounts opened in Congo (7.1 million) and 10 times greater than the number of accounts identified in Gabon (2.7 million). “Regarding the number of transactions, payment service providers operating in Cameroon represented 73.13% of the workforce registered in the community. [CEMAC],», Adds the BEAC.
Brice R. Mbodiam