Gicam proposes strategies to unlock the full potential of property tax

The employers’ group in Cameroon, GICAM, has suggested several measures to unlock the full potential of the current property tax in the country. Despite an estimated yearly potential of FCFA 100 billion, the tax directorate, DGI, has been struggling to collect just FCFA 4 billion annually.

According to the DGI’s ten-year report from 2010 to 2020, the property tax reached its highest point in 2016 at FCFA 3.9 billion but has steadily decreased since then, hitting its lowest in 2019 at FCFA 2.2 billion. The tax applies to any individual or legal entity owning “de facto or de jure” real estate in Cameroon. It is 0.1% of the value of the property.

GICAM suggests a three-way approach to boost collection. Firstly, it called on the tax authorities to “make it compulsory for each party in a real estate transaction to present their unique identification number (NIU) to the notary. This will enable them to be located and tracked”. Secondly, Gicam suggested “a reduction of registration fees for residential leases where the lessee is a private individual, to facilitate their presentation for registration, and consequently, to have information on the owner”. Here, the organization suggests reducing the registration fees for private leases by 80%, from 5% to just 1% of the taxable base.

Finally, the employers’ organization invites the government to involve decentralized local authorities in the tax collection strategy. Specifically, Gicam believes that the CTDs should be integrated into the land information communication chain, “because of their ability to cross-check information”.

Lack of transparency on property   ownership

Currently, there is no guarantee that the implementation of these measures will be a game-changer. After the failed door-to-door strategy and attempts to attract taxpayers with incentives for voluntary declarations, the government believed it had found the right solution in 2017 by proposing to link the payment of this tax to monthly electricity bill payments. However, following a presidential directive that year, the government withdrew the proposal, only to reintroduce it in the 2023 finance act with some modifications. But even this time, it did not succeed.

Indeed, regardless of the relevance of this tax encouraged by the IMF, which sees it not only as an opportunity to increase non-oil revenues but also as an appropriate means to ensure transparency in property ownership in Cameroon, the collection methods deployed by the government are quite complex to implement. The first difficulty lies in accessing official documents such as land titles, property certificates, or building permits. In many cases, due to administrative hassles and delays, it often takes many years to obtain one or all of these documents. However, the planned reform requires property taxpayers to “provide the references of their title deeds or any other document in lieu thereof”, when “making their online declaration”.

Another problem is that, under the method proposed by the government, property tax collection is subject to close collaboration between several players, which is a very challenging task. “The services in charge of land records, land affairs, and the technical services of decentralized local authorities, which issue property titles, building or siting permits, construction specifications, and other similar documents, are required to send a copy to the tax authorities within three months of their issue (…). ) notaries are required to transmit electronically to the tax authorities, the status of property transfers drawn up by them, within three months of the signing of said deeds”, reads the 2023 Finance Act, which thus highlights the role that should be played by every player to ensure transparency.

Commenting on the government’s plan to link the payment of property tax to the electricity bill, senior tax inspector Alain Symphorien Ndzana Biloa points out that 70-80% of Eneo electricity company subscribers are tenants, and therefore not liable for property tax. Most of them have no lease contract to justify their status as non-owners to the tax authorities. As a tax official pointed out, property owners were already unaccustomed to signing lease contracts with their tenants, and have become even more reluctant to sign this document since the government implemented measures aimed at collecting more property tax.

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