Cameroon Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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CAMEROON
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Every foreign national visiting Cameroon for business requires either a short-term or long-term visa. Temporary visas are good for three months, whereas long-stay visas are good for six months. Both permit single and multiple entries.
It’s worth noting that each bigger group is further subdivided into smaller ones with extra criteria. Your staff must offer an explanation for their travel and apply for the relevant visa. Among the categories are:
- Tourists: Valid for one to thirty days.
- Short stay: For visitors visiting from one day to three months, such as business travellers, students, and volunteers.
- Long stay: The above-mentioned guests are planned stays ranging from three to six months.
Probation Periods
- Employees have a six-month probation term, whereas supervisors have an eight-month probation period.
Notice Periods
A contract of employment with an indefinite length can be cancelled at any moment by either side. The party initiating the contract termination must provide a notification of contract termination. A formal notice outlining the grounds for the termination must be supplied. The notice period begins on the date of such notification and cannot be offset against the worker’s leave duration.
The Minister of Labour establishes the notice period. During the notice period, the employee may take one day off every week to hunt for a new job. Severance pay is paid to employees with two or more years of employment, as specified by the Ministry of Labour. After two years of service, employees are eligible for severance money.
If the employment is under 1 year, the notice period is 15 days. If the employment is between 1-5 years, the notice period is one month; and if the employment is more than five years, the notice period is two months.
Minimum Wage
- The basic wage in Cameroon is 36,270 CFA francs per month, and it applies to all employees in all industries.
Working Hours
- The typical workweek is 40 hours. Night work is performed between 10 p.m. and 6 a.m., with 12 hours of respite between each night of labour. Female employees and children are not permitted to work at night unless they are executives or work in fields other than physical labour.
Overtime
Overtime labour conducted in accordance with the current decree entitles the worker to the following compensation:
- Extra during the day: – the first eight hours: 20% of the hourly compensation; – the next eight hours: 30% of the hourly salary; – the third instalment of hours, up to 20 hours each week: 40% of the hourly salary; – overtime work conducted on Sundays: 40% of the hourly income.
- Overtime throughout the night: 50% of the hourly wage.
- Overtime undertaken in accordance with the circumstances specified in Art. 10(3):
– fifty percent of the hourly wage.
Non Compete
- Employers can impose restrictions on employees through non-compete agreements or a clear condition in the employment contract. Such limitations must be reasonable and for a specific period of time.
- Employees in higher positions of employment have a higher level of fiduciary responsibility. Once clear provisions are established in the non-compete agreement or the employment agreement between the parties, the extent of the employee’s responsibilities will be known.
Severance
- Severance pay is paid to employees with two or more years of employment, as specified by the Ministry of Labour. After two years of service, employees are eligible for severance money.
- The Minister in charge of Labour determines the amount of remuneration.
Termination
- Fixed-term contracts can only be terminated for egregious misbehaviour, unforeseen circumstances, or both parties’ express approval.
- Contracts with indefinite terms can be cancelled at any moment by either the employer or the employee. Notice of termination must be given, the length of which is determined by the Minister in charge of Labour and is dependent on the employee’s seniority and occupational category. Generally, the employee is entitled to one day off each week throughout the notice period to hunt for another work.
Collective Bargaining
N / A
Enforcement
- According to the law on judicial organization, Cameroon’s judicial system consists of the following courts: Customary Law Courts; Courts of First Instance; High Courts; Military Courts; Lower Courts of Administrative Litigation; Lower or Regional Audit Courts; Courts of Appeal; and The Supreme Court.
- Administrative courts at the lower levels: Capable of hearing administrative cases in the first instance. (Because these courts are not yet operational, the Supreme Court’s administrative bench continues to hear administrative cases at first instance for the time being.)
PAID TIME OFF
Annual Vacation
- The employee gains the entitlement to annual leave at the rate of one and a half days each month of effective service (18 working days of annual leave), which is paid for by the employer. Workers under the age of 18 are given 2.5 days of service every month (30 working days of yearly leave). Mothers’ yearly leave is raised by two working days for each child under the age of six, or by one day if the mother’s cumulative leave does not reach six days. Furthermore, taking into account seniority in the organization, annual leave is enhanced at the rate of 2 working days per each complete period, whether continuous or not, of 5 years of service.
- The foregoing legal standards are the very minimum, and contract parties can agree on longer periods of paid leave through collective or individual agreements.
Sick
- In most cases, employees are entitled to a minimum 5 days of paid sick leave every year.
- If an employee suffers injury or illness on the job, the employer is obligated to pay for medical treatment.
Maternity
- Female employees are entitled to 14 weeks of maternity leave, beginning four weeks before the delivery, which is paid for by social security, known as the CNPS. In the event of a medical emergency, this can be extended by six weeks. Maternity leave commences 4 weeks before the due date of the child’s birth. If the time of confinement occurs after the due date, the maternity leave will begin in its full capacity once the period of confinement begins. Maternity leave is compensated at the expecting mother’s regular rate of pay by social security. For up to 15 months following the birth, the mother is entitled to breastfeeding breaks of up to one hour every day.
Paternity
- Paternity leave can be taken by fathers using their ten days of paid family leave.
Family
- Workers are typically normally entitled to 10 days of paid leave each year for family occasions.
- Mothers with children under the age of six are normally entitled to two additional days of leave for each kid living in the home, or one day if the mother’s total leave does not exceed six days.
National Holidays
- Cameroon has a total of 10 paid public holidays.
Other Paid Time Off
N / A
STATUTORY EMPLOYEE BENEFITS
Unemployment
Aside from the employer providing severance pay to the employee, there are no other legal provisions that allow an unemployed person to obtain benefits.
Workers Compensation
There is statutory workers compensation but there is a disability work benefit.
Disability/Work Injury Benefit
- Cameroon’s work injury benefit law dates from 1977. Employed people, apprentices, seafarers, students in technical schools, those in vocational retraining and rehabilitation, and people working in the national civic and development service are all included. However, public workers and self-employed individuals are not eligible. According to the estimated level of risk, the employer contributes the majority of money for such benefits, equivalent to 1.75 percent, 2.5 percent, or 5 percent of gross payroll.
Social Security
- Employees are required to contribute to the National Social Insurance Fund (NSIF) at a specific rate computed on the basis of their earnings for their collective personal welfare. The employer withholds this contribution at the point of collection.
- Only the part covering the old age pension, permanent and complete disability pension, and survival pension is paid by the employee. The rate is 4.2 percent depending on taxable pay, with a monthly ceiling of XAF 750,000. (i.e. XAF 9 million per year).
- The optional insurance premium for this contribution is 8.4 percent.
Retirement
- Pension de vieillesse normale (old-age pension): Age 60 with at least 20 years of coverage and at least 180 months of paid or credited contributions, including at least 60 months in the past ten years.
- Contributions may be credited in specific circumstances, such as while collecting sickness, maternity, or work injury benefits.
- Pension de vieillesse anticipée (early pension): Age 50 with at least 20 years of coverage and at least 180 months of paid or credited contributions, including at least 60 months in the past ten years.
Health
- Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
- Private workers compensation is available in Cameroon.
Retirement
- Private retirement/pension schemes are available in Cameroon.
Health
- Private healthcare is available in Cameroon.
Insurance
- Private life insurance is available in Cameroon.
PERSONAL INCOME TAX
Tax Year
- Tax year runs from January 1st to December 31st.
Tax Tables
The progressive tax system in Cameroon has 11% as the lowest and 38.5% as the highest bracket. The local currency is XAF.
Taxable Income | Rates of Taxes |
0 – 2 000 000 | 11% |
2 000 001 – 3 000 000 | 16.50% |
3 000 001 – 5 000 000 | 27.50% |
5 000 000 + | 38.50% |
Taxation Method
- Taxes are levied on income earned during the calendar year. The taxation method is a progressive tax system in Cameroon.
Double Taxation
Cameroon has multiple double taxation agreements.
Residence Requirements
Individuals of foreign nationality who reside in Cameroon for more than 183 days (in a calendar year) will be deemed tax domiciled in Cameroon and will be liable to payroll taxes and social contributions unless they can establish that the job they undertake in Cameroon is of an accessory character.
Payroll Calendars
Employees are not required to be paid on a set schedule.
Payrolls can be done weekly, biweekly, fortnightly, or monthly.
Rebates & Tax Credits
Taxes paid overseas are not considered tax credits unless specifically stated by DTTs.
The private investment tax incentive scheme established by Law No. 2013/04 of 18 April 2013 applies to investment operations including the establishment, extension, renewal, refurbishment, and/or transformation of activities carried out in Cameroon.
The following are the primary tax benefits associated with Cameroon’s private investment regime:
- During the installation phase, tax breaks are available for a maximum of five years.
- During the exploitation phase, tax breaks are available for a maximum of 10 years.
- Tax breaks for established businesses are available for a maximum of five years.
- Possibility of a distinct edge for prioritized industries.
Exemptions from or reductions in payment of many taxes, tariffs, and other fees are provided to investors as tax and customs incentives.
Conventions and agreements made by the authorities which provide customs and tax exemptions and waivers must be approved in advance by the Minister in charge of finance, according to the 2017 Finance Law.
Health Insurance
- Social protection refers to a combination of policies and programs aimed at reducing and preventing poverty and vulnerability throughout the life cycle. Child and family benefits, maternity protection, unemployment support, employment injury benefits, sickness benefits, health protection, old-age benefits, disability benefits, and survivors’ benefits are the nine basic areas of need covered by social security (ILO, 2017).
Unemployment
- Aside from the employer providing severance pay to the employee, there are no other legal provisions that allow an unemployed person to obtain benefits.
Social Security
- Employees are required to contribute to the National Social Insurance Fund (NSIF) at a specific rate computed on the basis of their earnings for their collective personal welfare. The employer withholds this contribution at the point of collection.
- Only the part covering the old age pension, permanent and complete disability pension, and survival pension is paid by the employee. The rate is 4.2 percent depending on taxable pay, with a monthly ceiling of XAF 750,000. (i.e. XAF 9 million per year).
- The optional insurance premium for this contribution is 8.4 percent.
PAYROLL ELEMENTS
Income
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
- Bonus payments are widespread and are spelled out in an employee’s contract. Despite the prevalence of incentive payments in Cameroon, it is crucial to highlight that bonuses are not legally mandated.
Allowances
However, a wide range of allowances are tax-free, including, but not limited to, family allowances and benefits, benefits paid by any state authority by virtue of the law, special allowance to cover inherent duty, temporary allowances, benefits, and life annuities paid to victims of an industrial accident or other rightful claims. The cost of a vacation for an expatriate worker or their family is likewise not taxed.
Benefits in Kind
On the basis of taxable income, benefits in kind are assessed as follows:
Housing constitutes 15% of the total.
- 4 percent for electricity.
- Water is 2% of the total.
- 5% for each servant.
- 10% of the total cost of the automobile.
10% is allocated to food.
Furthermore, unless expressly exempted by a contrary regulation, any financial allowance reflecting benefits in kind must be included in the basis of assessment within the limits of the foregoing rates.
Expat employees’ and their families’ vacation expenses are not taxed.
Investment Income
- Normally, capital gains are taxed at the full CIT rate.
- Net overall capital gains arising from the transfer of shares and stocks; income from bonds; income from debts, deposits, surety-bonds, and current accounts; profits realized from the transfer of shares; reimbursement of sums put at the disposal of the company by a manager or a partner as an advance or a loan; and capital gains on the transfer of natural resource rights shall be subject to 16.5 percent WHT.
- For transfers completed outside of Cameroon, the Cameroonian law enterprise and the transferor are equally and severely accountable to pay the monies payable under such transfer.
- Dividends are subject to a 16.5 percent WHT. Dividends, on the other hand, are classified as proceeds for CIT purposes, and the tax deducted at source is utilized as an instalment for CIT payment.
- Interest is subject to a 16.5 percent WHT. Interest, on the other hand, should be recognized as proceeds for CIT purposes, and the tax withheld at source shall be utilized as an instalment for CIT payment.
- External loans with a maturity duration of at least seven years signed on or after January 1, 2014, are free from the WHT.
- Royalties obtained from foreign entities are liable to CIT and must be included in taxable income subject to CIT, subject to double tax treaties (DTTs).
Retirement Funding
- Pension de vieillesse normale (old-age pension): Age 60 with at least 20 years of coverage and at least 180 months of paid or credited contributions, including at least 60 months in the past ten years.
- Contributions may be credited in specific circumstances, such as while collecting sickness, maternity, or work injury benefits.
- Pension de vieillesse anticipée (early pension): Age 50 with at least 20 years of coverage and at least 180 months of paid or credited contributions, including at least 60 months in the past ten years.
Health Insurance
Social protection refers to a combination of policies and programs aimed at reducing and preventing poverty and vulnerability throughout the life cycle. Child and family benefits, maternity protection, unemployment support, employment injury benefits, sickness benefits, health protection, old-age benefits, disability benefits, and survivors’ benefits are the nine basic areas of need covered by social security (ILO, 2017).
Risk Insurance
N / A
Taxable Income
Personal income tax (PIT) is a direct tax placed on all natural persons’ incomes. All natural people with their fiscal residence in Cameroon or earning income from Cameroonian sources are subject to this tax, including:
- Wage earners, pensioners, and annuitants; Traders, farmers, and artisans; Landlords; and Liberal Professionals.
Personal income tax is levied on the following types of income:
- Wages, salaries, pensions, and annuities;
- Profits made by merchants, artisans, farmers, and liberal professionals;
- Revenue from land;
- Capital-gains income
- Revenue from related activities.
Allowable Deductions
Cameroon’s tax structure allows for a deduction of business expenditures up to 30% of taxable salary. Furthermore, the sum designated to pay the employee’s social contributions is a deductible charge.
- Any individual subject to PIT is entitled to an annual abatement of XAF 500,000 for earnings and salary.
- Interest costs are completely deductible.
However, the deduction of interest on sums of money left or placed at the disposal of local corporations by partners or connected firms that control at least 25% of the share capital or corporate voting rights is limited to:
- One and a half times the quantity of equity (1.5). Interest on the portion of the loan that exceeds this limit is subject to CIT and distribution tax at 16.5 percent. 25 percent of profit before CIT and before deduction of the abovementioned interests and depreciation taken into account in establishing such profit.
- Otherwise, interest on the overpayment is not deductible. In this situation, the extra interest paid is added back for CIT purposes and liable to a 16.5 percent distribution tax.
- When both instances exist, the tax authorities will select the one that results in the greatest tax burden.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
- Income taxes are calculated on a sliding basis ranging from 11% to 38.5 %. The employer is expected to deduct taxes from employee pay and send the amounts to the authorities by the 15th of each month.
- The payroll tax is 2.5 percent of total earnings and in-kind benefits. All businesses are liable to a professional tax (business licensing tax) at varied rates depending on their annual revenue.
Unemployment
- Aside from the employer providing severance pay to the employee, there are no other legal provisions that allow an unemployed person to obtain benefits.
Social Security
- Employees are required to contribute to the National Social Insurance Fund (NSIF) at a specific rate computed on the basis of their earnings for their collective personal welfare. The employer withholds this contribution at the point of collection.
- Only the part covering the old age pension, permanent and complete disability pension, and survival pension is paid by the employee. The rate is 4.2 percent depending on taxable pay, with a monthly ceiling of XAF 750,000. (i.e. XAF 9 million per year).
- The optional insurance premium for this contribution is 8.4 percent.
Workers Compensation
There is no statutory workers compensation but there is a disability work benefit.
Disability/Work Injury Benefit
- Cameroon’s work injury benefit law dates from 1977. Employed people, apprentices, seafarers, students in technical schools, those in vocational retraining and rehabilitation, and people working in the national civic and development service are all included. However, public workers and self-employed individuals are not eligible. According to the estimated level of risk, the employer contributes the majority of money for such benefits, equivalent to 1.75 percent, 2.5 percent, or 5 percent of gross payroll.
ADMINISTRATION
Income
Cameroon Payroll and EOR
- Monthly pay-as-you-earn (PAYE) returns must be filed by employers within 15 days after the end of the month.
- The PIT return must be declared/filed no later than the 15th day of the month after wage/salary payment. When filing the Annual Tax Return, a regularization must be reported by the 15th of March after the fiscal year’s end.
- The tax administration may send a pre-completed return of collected revenue or any other taxable item, together with the tax amount owing, to any natural or legal person who pays taxes or duties in accordance with applicable laws and regulations.
- Non-professional taxpayers (workers) must make a declaration with the tax office of their domicile by 30 June of each year, according to the finance law for fiscal year 2021.
- The yearly summary income tax return can be signed up for online using a form issued by the tax authorities.
Payroll Taxes
- Income taxes are calculated on a sliding basis ranging from 11% to 38.5 %. The employer is expected to deduct taxes from employee pay and send the amounts to the authorities by the 15th of each month.
- The payroll tax is 2.5 percent of total earnings and in-kind benefits. All businesses are liable to a professional tax (business licensing tax) at varied rates depending on their annual revenue.
Unemployment
- Aside from the employer providing severance pay to the employee, there are no other legal provisions that allow an unemployed person to obtain benefits.
Social Security
- Employees are required to contribute to the National Social Insurance Fund (NSIF) at a specific rate computed on the basis of their earnings for their collective personal welfare. The employer withholds this contribution at the point of collection.
- Only the part covering the old age pension, permanent and complete disability pension, and survival pension is paid by the employee. The rate is 4.2 percent depending on taxable pay, with a monthly ceiling of XAF 750,000. (i.e. XAF 9 million per year).
- The optional insurance premium for this contribution is 8.4 percent.
Workers Compensation
There is no statutory workers compensation but there is a disability work benefit.
Disability/Work Injury Benefit
- Cameroon’s work injury benefit law dates from 1977. Employed people, apprentices, seafarers, students in technical schools, those in vocational retraining and rehabilitation, and people working in the national civic and development service are all included. However, public workers and self-employed individuals are not eligible. According to the estimated level of risk, the employer contributes the majority of money for such benefits, equivalent to 1.75 percent, 2.5 percent, or 5 percent of gross payroll.
Statutory Benefits
- For your organization to remain compliant, all employees must get the statutory benefits mandated by law. Cameroon, for example, has ten public holidays on which employees should be excused. The country also has a vacation requirement, with employees being entitled to 1.5 days of leave for every month worked. They should get an extra two days every month after five years. Cameroon does not have a national healthcare system, but they do offer social protection. Cameroon also provides a Disability/Work Injury Benefit. They also offer a National Social Insurance Fund. Employees are allowed a minimum of 5 paid days of sick leave every year.
- Employees are also entitled to 10 days of paid time off for family occasions. Mothers with children under the age of six should be granted two additional days of leave for each child who lives at home, or one day if the mother’s total leave does not exceed six days.
Employee Benefits
- For employee benefits in Cameroon it is best to start with those that are legally guaranteed. For example, the country observes 10 national holidays, and employees should be entitled to paid time off on those holidays. In most cases, all employees are entitled to at least 18 days of paid yearly leave.
- In Cameroon, most female employees are entitled to 14 weeks of paid maternity leave. Paternity leave can be taken by fathers using their ten days of paid family leave.
LEGISLATION
- Constitution of the Republic of Cameroon 1972
- Labour Code 1992
- Decree No. 93/578 of 15 July 1993 laying down the substantive and form applicable to collective labour agreements
- Penal Code 1967
- Law No. 2011/024 of 14 December 2011 on the fight against trafficking and trafficking in persons
- Order No 015 / MTPS / SG / CJ of 26 May 1993 determining the conditions and the period of notice
- Decree on Deviations of Legal Working Hours
- Decree No. 95-677 of 18 December 1995
- Law No. 98/004 OF 4 April 1998 on Guidance of education in Cameroon
- Order No. 17 of 27 May 1969 on Child Labour
- Civil Status Registration Ordinance No. 81-02 of 29 June 1981
- Law No. 69 / LF / 18 OF 10 November 1969 establishing an old-age insurance plan, disability and death
- Social Security Profile for Cameroon 2017 (SSPTW Africa 2017)
STATUTORY BODIES
N / A
