The General Anti-Abuse Rule (GAAR) in Cameroon: An Overview of its Implementation and Effectiveness/MAKOGE Tatiana Eposi
- S Chen
- Jan 28
- 3 min read
Updated: 7 days ago
The General Anti-Abuse Rule (GAAR) in Cameroon: An Overview of its Implementation and Effectiveness
MAKOGE Tatiana Eposi
XIAMEN UNIVERSITY
Abstract
The fight against Base Erosion and Profit Shifting (BEPS) has escalated into a critical global concern, prompting nations to implement various measures to protect their tax bases. In Cameroon, the enactment of a General Anti-Abuse Rule (GAAR) through the 2019 Finance Law represents a pivotal legislative development aimed at counteracting BEPS. This paper delves into the nuances of GAAR in Cameroon, elucidating its scope, operational framework, procedural intricacies, and the challenges associated with its implementation and effectiveness.
Introduction
Article M 33 bis of Cameroon’s General Tax Code now provides a substantial advancement in the alignment of domestic tax legislation with international standards. GAAR empowers the tax administration to disregard transactions deemed fictitious or abusive, serving as a deterrent against tax avoidance strategies that undermine fiscal integrity.
Application and Mechanism of GAAR
Cameroon's GAAR possesses a broad applicability, extending to all forms of taxes. It predominantly targets two categories: fictitious transactions that lack economic substance and abusive transactions that, while legally permissible, primarily aim to circumvent tax obligations. To invoke GAAR, the tax authority must establish the presence of a tax advantage, substantiate the fictitious or abusive character of the transaction, and demonstrate that any economic rationale is overshadowed by tax motives.
Procedural Aspects of GAAR
The procedural framework governing GAAR in Cameroon emphasizes transparency and the protection of taxpayers' rights. Taxpayers receive notification from the administration regarding the intent to invoke GAAR, providing them with a 30-day period to justify their transactions. In cases of ongoing disputes, an advisory committee on tax abuse is tasked with reviewing the situation and providing recommendations prior to the tax administration's final determination.
Implementation Challenges and Effectiveness of GAAR
Despite the robust foundation GAAR provides, its implementation in Cameroon encounters several challenges. These include the need for extensive training and awareness-raising initiatives for tax administration personnel, development of sophisticated tools and methodologies for identifying and scrutinizing suspicious transactions, management of disputes and litigation, and the balancing act between curbing abusive practices and fostering an appealing business environment. The ultimate effectiveness of GAAR hinges on the quality of the legislative framework, the capacity of the tax administration to recognize and address abusive transactions, and the level of international collaboration in tax matters. Initial observations indicate that GAAR has had a deterrent effect on certain entities engaged in aggressive tax planning; however, a thorough evaluation of its impact on tax revenue and BEPS practices remains forthcoming.
Future Perspectives and Recommendations
To enhance the long-term efficacy of GAAR, it is imperative for Cameroon to persist in aligning its anti-BEPS initiatives with global standards, invest in capacity building within the tax administration, improve transparency and taxpayer education initiatives, and bolster international cooperation concerning tax matters. These strategic actions will position Cameroon to cultivate a fairer tax landscape and effectively combat BEPS.
Conclusion
GAAR represents a vital legislative instrument in Cameroon’s arsenal against BEPS. While its effectiveness is contingent upon various factors, preliminary evidence suggests it is making strides in deterring abusive tax practices. By committing to capacity-building efforts, promoting transparency, and fostering international collaboration, Cameroon stands to reinforce its anti-BEPS protocols and enhance its fiscal resilience.
Reference
The General tax code Cameroon
The 2019 finance law
Fiche Technique de la Division de la Législation et des Relations Fiscales International. DGI CAMEROUN
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