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Cameroon Resurrects Plan to Abolish Tax Exemptions on Imported Products

rice
Rice Imports

As part of the budgetary orientation debate (BOD) preparatory to the draft finance law 2023, the Minister of Finance, Louis Paul Motaze, oexpressed, on 5 July in Parliament, the government’s desire to remove tax exemptions on imported consumer products such as rice, fish and wheat.

 

The Finance Minister exlpained that among other things, the government will carry out a systematic review of all existing tax expenditures, with a view of eliminating tax exemptions that are ineffective or irrelevant to the evolution of public policies.

For instance, the government’s import-substitution policy requires that exemptions on certain products, which are a burden on the balance of trade and are targeted under this policy, such as rice, fish and wheat, be reduced or gradually eliminated. said the Finance Minister. He said that the planned elimination is intended to promote the local competitiveness of these goods on a larger scale.

However, this is not the first time that we have heard such talk without seeing the effects. In 2019, for example, still in the framework of the DOB, the Cameroonian government already announced the gradual restoration of customs duties on tax-free products (rice, wheat, fish, etc.).

In return, it was planned to allocate part of the resulting revenue to local development funds for these sectors. But in the end, these announcements did not materialise in the 2020 finance law.

In 2020, the government had announced that it would reduce tax expenditure in the framework of the 2021 finance law. This included an increase in customs duty from 5% to 10% for fish and rice, an increase in customs duty from 0% to 5% for wheat, and an increase in customs duty from 5% to 30% for maize and soya cake. All these measures were not implemented without official explanations.

But one explanation for the government’s multiple retropedals may be found in a note produced in 2020 by the International Monetary Fund (IMF). In this document, the IMF considers that the removal of certain exemptions could certainly increase revenues and reduce the risks of corruption in Cameroon. But the institution notes that most tax exemptions apply to basic foodstuffs (fish, rice, wheat and milk). “Given the security and socio-political situation, it is difficult to reduce them,” the Bretton Woods institution said.



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