Going On IPO In Cameroon Can Attract Companies 25% Corporate Tax Rate Instead Of 33% Going Forward

African startups are not notorious for going public, especially through Initial Public Offerings (IPO) on stock exchanges, but Cameroon wants to change that narrative. To that effect, the central African country is introducing a new provision under the proposed finance law of 2021. This week, November 12, parliament in Yaounde will tear through a government proposal, under the 2021 finance law, relating to the promotion of the stock market sector. By the terms of the proposed law, companies which gom ahead to list their ordinary shares on the Central African Securities Exchange (Bvmac) will benefit from the application of reduced rates of tax on companies as follows: 

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  • A reduced rate of corporation tax of 25%, instead of the existing 33% corporation tax rate; and a reduced rate of 1.5% of the deposit and the minimum collection of corporation tax. 
  • Also, companies that issue securities on the Bvmac bond market benefit from the application of a reduced corporate tax rate of 25%.
The best and worst performing African stock exchanges in 2019. Source: Securities Africa

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In the same vein, companies which are deemed to make a public offering in accordance with the provisions of the Ohada Uniform Act relating to commercial companies and economic interest groups, and which agree to admit and exchange all or part of their equity and debt securities listed on the Bvmac, benefit from the application of a reduced corporate tax rate of 25%, from the date of admission of the securities.

As of July 31, 2020, Bvmac, based in Douala, the Cameroonian economic capital, posted a capitalization of CFAF 149.5 billion, for only four companies listed in the entire Cemac region (Cameroon, Central Africa, Gabon, Equatorial Guinea and Chad). These are the Cameroonian companies SEMC, Socapalm, Safacam and SIAT Gabon. Which means that a lot of companies are still reluctant to go public.

In terms of equities, the capitalization of Bvmac reached around 1% of Cameroon’s GDP, while those of the stock exchanges of Nigeria and West Africa, based in Côte d’Ivoire, already reached 10 respectively and 26% of the GDP of the countries concerned in 2018, according to the Absa Africa Financial Markets Index.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer