Regulating Virtual Asset Services in the CEMAC Zone: A look at the updated Financial Market Regulation

On December 14, 2022, the Financial Market Regulator of the CEMAC Zone (Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon), infused a breath of fresh air into crypto platforms with the publication of updated financial market regulation (the “Updated regulation”) that establishes a legal framework for crypto platforms operating within the zone.

This move follows several warnings from the regulator and national authorities (Such as Cameroon’s Minister of finance) regarding the lack of regulation for cryptoasset offerings in the CEMAC zone, as well as calls for companies offering cryptoassets to discontinue illegal fundraising operations.

Despite this, on April 22, 2022, the President of the Central African Republic enacted a law recognizing bitcoin as an alternative to the fiat currency of the CEMAC Zone applicable in this country.

In reaction to the above law, the Banking Commission of Central Africa in charge of regulating financial institutions within the CEMAC Zone issued a decision in May 2022 prohibiting regulated financial institutions and their partners from facilitating any kind of cryptoasset transactions.

The publication of the updated regulation introducing a legal framework for crypto platforms in the CEMAC zone is a positive development for the industry.

This updated regulation outlines the services considered virtual asset (“VA”) services and the providers of these services.

Virtual asset services

According to the updated regulation, virtual asset services consist of offering one or more of the following services or operations:

• providing custody for VAs on behalf of others;
• facilitating the exchange of VAs for legal tender or other VAs;
• operating trading platforms for VAs;
• offering other VA-related services such as receiving and transmitting orders for third parties, managing portfolios for third parties, giving advice, and making investments.

Virtual asset service providers

The updated regulation introduced a new category of actors in the market known as “Market Intermediaries”.

These intermediaries are defined as individuals or entities who regularly provide financial services, but must be accredited to do so.

A subset of Market Intermediaries is “Virtual Asset Service Providers” who specifically offer services related to virtual assets.

It is worth noting that the updated regulation, also includes virtual asset services as a type of financial service.

Overall, while waiting for the implementing instrument of the regulation, it is plausible to say a legal framework for crypto platforms in the CEMAC zone is a sign of relief for the industry.

For more information please see 4M Legal and Tax

Foreign worker permits just got more expensive in Cameroon: What employers need to know

In Cameroon, the employment of foreign workers is subject to a special procedure to obtain a work permit by way of authorization from the Minister in charge of Employment and Vocational Training (“MINEFOP”).

Starting in 2023, obtaining a work permit entails payment of an official administrative fee instituted by the 2023 Finance Law, which was not the case before. This fee applies to visas affixed on the employment contract of all natural persons of foreign nationality on Cameroonian territory, subject to international conventions.

The instituted fee is equivalent to a two (2) month wage and gross salary for non-African workers, and the equivalent to one (1) month wage and gross salary for African workers, with a 50% reduction.

To guarantee transparency, security, sincerity, and reliability in processing, collecting, and managing the above fee, MINEFOP on 6 January 2023 issued a circular letter clarifying the application modalities of the provisions of the 2023 Finance Law instituting the fee.

Here are some key things to note from the circular letter:

• an obligation to indicate in the employment contract, all premiums, allowances (including transport and accommodation), and other benefits in kind granted to the foreign worker in the exercise of his/her professional activity in Cameroon;
• in determining the cost of the visa,the gross salary includes all premiums, allowances, and other benefits in kind. The cost must be approved by the Director in charge of Labor at MINEFOP and signed by the Minister in a visa cost evaluation form;
• to pay the required fee, this is done at the Intermediary Revenue Agent at MINEFOP, and a receipt issued where the amount is less than or equal to four (4) million, and in account number: 12003 11003 15850500015-48 opened in the books of CAMPOST, where the amount is greater than four (4) million.

For more information please see  4M Legal and Tax

Investment opportunities in Cameroon for the year 2023

As is the case at the end of each year, the President of the Republic of Cameroon makes his traditional end-of-year speech every 31 December at 8:00 pm. In this speech, he outlines the investment priority areas of Cameroon for the upcoming year.

On 31 December 2022, the President, after recalling the difficulties and successes of the year 2022 in his speech and taking into consideration the favorable investment climate in Cameroon, presented the top sectors for investment for the 2023 Financial Year which essentially are on; natural resources and infrastructure projects.

With regard to natural resources, we have the following investment priority areas  

• Commencing exploitation of the Kribi-Lobe iron ore. The project includes constructing an iron enrichment plant; an approximately 20-kilometer-long pipeline; and a 60-megawatt power plant.
• Commencing exploitation of the Mbalam-Nabeba iron deposit. The project includes a 540-kilometer-long railway line between Nabeba in Congo and the Kribi Port where a mineral terminal will be constructed.
• Commencing exploitation of the Bipindi–Grand Zambi iron ore. The project includes developing an iron and steel complex for the local processing of iron; constructing a pipeline; and several basic facilities.

• Energy: Commissioning Phase I of the Nachtigal Hydropower Dam and commencing work to connect the South and North interconnected grids.
• Energy: Constructing new energy infrastructures and solar energy development, particularly in the northern part of Cameroon.
• Water: Completing the Project to supply drinking water to the City of Yaounde and its environs from River Sanaga.
• Water: Finalizing procedures to launch the mega-project to supply drinking water to the City of Douala and its environs.
• Water: Constructing water production facilities in other urban and rural localities.

• Promoting “Made in Cameroon” products.
• Coordinating the implementation of the import-substitution Policy.

With regard to infrastructure, we have the following investment priority areas  

• Constructing about 700 kilometers of road, including asphalting the Ebolowa-Akom II-Kribi stretch.
• Resuming construction work on the Mora-Dabanga-Kousseri, Babadjou-Bamenda, and Kumba-Ekondo Titi road sections.
• Launching construction work on the urban section of the Yaounde-Nsimalen motorway.
• Accelerating work on the Douala-Yaounde motorway.

• Rehabilitating and modernizing the Tiko, Bertoua and Kribi airports.

Interested to know more about these projects and their current status, please contact 4M Legal and Tax, our member firm in Cameroon.

Tax obligations for foreign business activities in Cameroon

As early as the 70s, Cameroon negotiated and signed several important texts aimed mainly at avoiding double taxation of income from foreign business activities in Cameroon and preventing tax evasion or establishing mutual assistance rules in tax-related matters.

As of December 31st, 2022, there are ten tax treaties in force in Cameroon. These include bilateral treaties between Cameroon and countries such as the French Republic; Canada; Tunisia; the Swiss Confederation; the Republic of South Africa; the Federal Republic of Germany; and the Kingdom of Morocco and multilateral conventions such as the double taxation convention on income between CEMAC member states; the convention on mutual administrative assistance in tax matters drawn up in 1988 and amended in 2010; and the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting.

Other than the above treaties, foreigners (natural persons or companies) without a head office in Cameroon but carrying out business activities therein are subject to registration and tax declaration formalities.

Registration and tax declaration of foreign business activities in Cameroon

In Cameroon, save the existence of a treaty for the avoidance of double taxation of income, foreigners without a head office in Cameroon but carrying out business activities therein must be registered with the tax administration and make the required tax declarations.

For the registration and tax declaration formalities, the foreigner must appoint a solvent representative accredited by the tax authorities. Upon this registration, a Tax Identification Number (TIN) shall be granted to the foreigner to make the required tax declarations.

In consideration of the income derived from their activities in Cameroon, these foreigners are required to spontaneously declare and make an advance payment representing either 2%, 5%, 10%, 14%, or 20% of their turnover generated during the previous month no later than the 15th of each month, depending either on their tax system or the nature of their activities. This advance payment is increased by 10% for the additional communal centimes.

Furthermore, these foreigners shall file an annual declaration of the results obtained from their operations during the previous year no later than the 15th of March of each year.

From the above, respecting the registration and tax declaration formalities shall enable foreigners without a head office in Cameroon to securely carry out business activities.

The specific case of foreign operators of electronic commerce (e-commerce) platforms in Cameroon

Operators of e-commerce platforms with no head office in Cameroon must apply to be registered with the Cameroonian tax authorities, failure of which, access to the said platform shall be suspended on the Cameroonian territory.

The formalities for registration, declaration, and payment of taxes collected by the e-commerce platforms can be done online through the Internet portal of the tax administration.

For more information on this topic please contact our member 4M Legal and Tax