Taxing E-Commerce in Cameroon: Myth or Reality? By Asanji Burnley, President of CACLiTA, 13 July 2017


The European Commission opines that:
“Electronic Commerce is about doing business electronically. It is based on the processing and transmission of data, including text, sounds and video. It encompasses many diverse activities including electronic trading of goods and services, online delivery of digital content, electronic fund transfers, electronic share trading, electronic bills of lading, commercial auctions, online sourcing, public procurement, direct consumers marketing and after sales services.”

The Organization for Economic Co-operation and Development (OECD) defines e-commerce as the sale or purchase of goods or services conducted over computer networks by methods specifically designed for the purpose of receiving or placing of orders. The goods or services are ordered by those methods, but the payment and the ultimate delivery of the goods or services do not have to be conducted online. It further adds that an e-commerce transaction can be between enterprises, households, individuals, government and other public or private organizations. To be included are orders made over the web, extranet or electronic data interchange. The method of placing the order defines the type.

The spread of globalization in the last two decades has fueled the development of world trade. This has been made possible through the development of Information and Communication Technology (ICT) which has had the greatest influence on society. Beyond the development of Global system for mobile communications (GSM), the advent of the Internet and its related infrastructure has driven huge transformation in the way business is done across the globe. Whereof a great percentage of commercial activities are now being conducted electronically. The internet has recently accounted for the exponential growth is world trade.

The advent of the internet has changed the way firms, customers and suppliers interact, the nature of firms, the working, basis and intensity of competition across industries globally. This growth has untold consequences which are manifolds for example consequences on the tax administration in their direct and indirect taxation. Contrary to traditional commercial activities where details such as amount involved, parties to the transactions as the amount, parties to the transaction and the place in which the transaction was carried out can easily be established, e-commerce, mainly occurs in the virtual and borderless world of the internet, with a network of computers within which untraceable trade can be carried on from obscure or even unidentifiable locations.

With e-commerce now accounting for 80 percent of all global commerce, there is an urgent need to regulate these transactions to meet tax policy objectives of broadening the tax base and eliminating erosion. Taxing e-commerce will ensure equal treatment of national production and imports of the same product in order to avoid market distortion. The lack of a standard legal framework can lead to double taxation or double non-taxation; and different regimes for taxation of electronic goods sold electronically and sales of national products in the non-electronic market can distort overall market equity.

In Cameroon we are witnessing the rise of an average class who are more and more occupied. They are work laden and thus use the computer or smartphones daily coupled with the advent of the 3G and 4G network in the country. This group is very exigent on the quality of life but as well as what they consume.

From studies carried out by CACLiTA, many people in the social class have spent long months without going to the market to buy. Many have done their buying online, via specialized internet sites. This is e-commerce in simple terms, i.e. electronic commerce, a virtual meeting point, where demand and supply meets and clashes.

It was revealed during the 2nd edition of the Afrikebiz salon in 2015 in Douala, that, the penetration rate of e-commerce is just about 02%. The Afrikebiz salon is a manifestation that regroups operators of the e-commerce installed on the African continent, to reflect on the ways and means to advance the development of the online commerce in Africa.

This low penetration rate can be explained by two factors, the low rate of internet access, which is the principal raw material for e-commerce. Going by statistics only approximately 400,000 Cameroonians have access to internet on a population of a little above 20million inhabitants. Also, the cost of the internet connection in the country is high as compared to other countries of the same level such as Ivory Coast and Senegal.

Cameroon has a huge potential to be an internet champion in Africa. This assertion was also reiterated by The Director of Google for Francophone Africa – Mr. Tidjane Deme who declared in an interview to Ecofin agency that “There are a certain number of countries today that I look at with much envy. Take a country like Cameroon, whose university level of education is so high. The level of literacy is very high and the country is bilingual. This is a wonderful cocktail to succeed on the internet. But the connectivity is a huge problem. Resolving. Cameroon’s connectivity problem, and you will get a potential champion of internet.”

This unexploited potentials could well explain the arrival to Cameroon of big online commerce operator – Jumia or Cdiscount.This sector is in gestation and many actors are now fighting for a part of the market. For a better understanding of this e-commerce environment it is important to examine who does what and how? The e-commerce environment is subdivided into three parts;

Firstly, those who are defacto considered marketers who propose goods to internet users. They include; Afrisop24, Wandashop, Weshopup, Jumia, Africashops, Yar-technologie, Sellamquick, and Cdiscount. Next to this marketers are attached intermediaries. They ensure the bridge between the seller and the buyer. They are Kaymu, Carmudi, Lamudi and Zorodeal.

Secondly, just like in all market systems, money is at the centre of all debates, there exist payment platform such as Afrikpay, Orange Money, MTN Mobile Money, and Banks supplying credit cards, Visa, Mastercard, such as ECOBANK, and Afriland First Bank.

Thirdly, once paid, you need to be delivered your goods, Campost, DHL, Solex tgv etc, they take charge to deliver the different commands.

Despite the low internet penetration, predominance of cash payment, the skepticism of the populations, the surge has started and definitely will grow. The government of Cameroon has thus timidly started to bring this sector under its tax base, as it has been tax free because of the difficulty to identify the physical location of the e-commerce. International online deliveries present the greatest challenge, especially when the supplier has no presence at all in the jurisdiction of the customer.

Despite the challenge of taxing e-commerce, the government of Cameroon with the advent of the Economic Partnership Agreement with the European Union, which saw a depletion of a tax portion had to reorient its taxation modus operandi. The President of the Republic, President Paul Biya, prescribed in a circular letter of the 26th July 2016 relating to the preparation of the Budget for the 2017 financial year for a continuation of the optimization of the Tax system.

This optimization of the tax system is aimed at widening the tax base, and securing of revenue and the circuit of their collection. It is also aimed at the strengthening of the fight against tax avoidance and evasion, and the simplification of taxation arrangements.
Broadening the tax base is inevitable especially with the budgetary increase of the 2017 budget which has witnessed a 5,25% own revenue increase as opposed to 2016. (According to the 2017 finance law of Cameroon). The finance law for the financial year 2017 brought significant development and innovation to the tax legislation in force.

Taxing e-commerce is a global challenge for governments and business alike. It is also not without its controversies. Taxation of e-commerce is however still a grey area in Cameroon. This is evident in the lacuna in the country’s tax legislation as regards e-commerce.

The internet’s virtual natures makes e-commerce intangible in many ramifications, multi-jurisdictional and susceptible to shielding in tax havens, thus posing serious challenges to the effectiveness of tax authorities. Even though the magnitude and true effect of e-commerce on tax revenue has not been fully ascertained and may appear relatively small as yet, its long term effect/ implications and influence on fiscal policy administration requires close attention.The greatest challenge to tax regimes is their ability to respond by adjusting and adapting to the ever increasing e-commerce demands.It is notable that the ease with which e-commerce is transacted poses a major challenge to tax authorities with particular reference to tax enforcement and collection; the sometimes indeterminate location of trading parties complicates issues. The tax payer is not immune to challenges as they often suffer the fate of double taxation as has been seen in other countries.

E-commerce gets more of the headlines, probably because it’s recognized as such an important new feature of the global economy. It is thus important to ask fundamental questions about the way Cameroon’s taxation system works – whether it  targets company profits or private consumption.

The technology that makes e-commerce what it is puts more of a spotlight on the possible challenges to effective taxation – just how do you tax a cyber-business, or all those sales over the Net? E-commerce makes international trade in particular so much easier, and so the debate about taxation moves up the international level, too.

At the domestic level, one of the most important issues is how governments can take advantage of the opportunities presented by e-commerce technologies to improve taxpayer service, whether it’s electronic filing, electronic transfer of payments, or just Internet access to tax-related information.

The challenge Cameroon’s tax authorities faces in the e-commerce technological revolution, is due in large part to inexistent tax legislation on e-commerce, weak infrastructure, high cost of the internet, narrow coverage of the network (including the quality of internet service), and lack of electricity.

Firstly, the lack or inexistent legislation governing the e-commerce sector in Cameroon poses a huge barrier to the taxation of the sector. As the taxation services are forced to use the existing normal trade legislature to enforce on e-commerce which is a problem as the issue of the physical presence of the organization or company for the taxation bases. With e-commerce where the buyer and the seller are all found in the virtual space, it becomes a herculean task to determine the basis of taxation.

Secondly, the weak technological infrastructure of the taxation services plays in the disfavor of Cameroonian taxation authorities to be able to monitor and effectively tax the e-commerce transactions. This technological gap is also extended to the lack of qualified tax enforcement officials in ICT who can effectively monitor and track e-commerce transactions.

Thirdly, the high cost of the internet is also a barrier to taxing of e-commerce. In Cameroon the cost of internet remains relatively high, thus reducing the exposure of the buyers of services and goods online. This high internet cost also reduces the taxation drive into the e-commerce sector as not all the tax services in the various regions are up to date with internet access as it is not easily affordable.

The narrow coverage of the network by services providers of the internet services is also a major challenge. Cameroon has tax services which are located in some hinterlands which are not covered by the network and as such poses as a barrier to the taxation of e-commerce.

The absence of banking mechanisms in the e-commerce sector in Cameroon is a huge barrier to the taxation of the e-commerce. In Cameroon e-commerce transactions are mostly realized by cash payment upon delivery of goods purchased online or by mobile money transfer. Thus rendering its taxation almost impossible unless the company declares that transaction. But with the involvement of the banking sector, it will permit some traceability of the various transaction and the government tax authority can go into an agreement with the banking sector to assist them in revenue collection from income made through e-commerce transactions.

Lastly, the lack of electricity plays a great part as a barrier to the taxation of e-commerce. For without electricity, e-commerce cannot be realized as well there will be no basis for any taxation of the e-commerce transaction.

Despite the huge e-commerce potential of Cameroon, the challenge of taxing the sector remains a hurdle. The main question revolving around the taxation of e-commerce business transactions in Cameroon is how to establish a general policy for e-commerce and specific tax regimes to ensure no loss of revenue in duties and taxes, including regulation of the market share between electronic imports and local production.

Also another area of concern is whether to expand internet network to tax e-commerce activities, or to invest their scarce resources to regulate the taxation of mobile money transactions (which are already thriving). The best approach should result in investment in both areas, taking into account an anticipated growth in e-commerce transactions in Cameroon.

Extensive future demand for e-commerce facilities in Cameroon is both a business opportunity and a great challenge for revenue authorities, who should develop appropriate taxation strategies in terms of investment and readiness.

At the domestic level, one of the most important issues is how government can take advantage of the opportunities presented by e-commerce technologies to improve taxpayer services, whether it is electronic filing, electronic transfer of payments, or just Internet access to tax-related information. E-commerce taxation in Cameroon is a reality and no longer a myth .


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