Cameroon Introduces Local Development Tax to Boost Municipal Infrastructure

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Business in Cameroon | The Cameroonian government has proposed a new “Local Development Tax” as part of the local taxation reform bill presented by the Minister of Finance to parliament. The revenue from this tax will go directly to municipalities to support essential services.

“This tax will be collected in exchange for basic services provided to the population, such as public lighting, sanitation, garbage collection, ambulance services, water supply, and electrification. The revenue from the Local Development Tax will primarily fund infrastructure projects,” states the bill, which is likely to pass due to the ruling Cameroon People’s Democratic Movement (CPDM) party’s majority in the National Assembly.

If adopted, the tax will be deducted from the base salaries of workers in both public and private sectors, ranging from CFA3,000 to CFA30,000 annually, depending on income levels.

For example, workers earning base salaries between CFA62,000 and CFA75,000 will have an annual deduction of CFA3,000, equivalent to CFA250 per month. Those earning between CFA75,001 and CFA100,000 will contribute CFA6,000 annually or CFA500 monthly. Base salaries from CFA100,001 to CFA125,000 will incur an annual deduction of CFA9,000, or CFA750 monthly. Salaries between CFA125,001 and CFA150,000 will see a yearly deduction of CFA12,000, equal to CFA1,000 per month. The highest deduction, CFA30,000 annually (CFA2,500 per month), will apply to those earning over CFA500,000 per month.

The government argues that this tax, along with others outlined in the bill, aims to strengthen decentralization by providing municipalities with additional financial resources. According to the Finance Minister, this local taxation reform is expected to generate CFA126.4 billion in additional revenue for municipalities.

In 2023, municipalities collected CFA261 billion, representing 7.3% of the state’s own resources. The government’s goal is to double this amount, increasing it to at least 16% of state resources.

“This bill reflects our ambition to ensure a stronger financial base for decentralized local governments,” said Finance Minister Louis-Paul Motazé during the presentation.