In a decisive step towards improving transparency and accountability, Cameroon’s Finance Law of 2023 introduced a comprehensive framework imposing clear obligations on beneficial owners of legal entities operating in the country, regardless of their corporate or personal income tax status. This framework encompasses three key aspects:
1. Identification of beneficial owners
Representatives of legal entities are responsible for identifying and verifying the identity of their beneficial owners. Beneficial owners are natural persons who directly or indirectly own twenty percent (20%) or more of the share capital or voting rights of a legal entity.
In cases where no natural person meets this threshold, those who control the legal entity by any means are considered beneficial owners. For general partnerships, all partners of the general partnerships are considered beneficial owners, while specific criteria apply to limited partnerships.
In trust, fiduciary and related structures, various roles, including settlors, trustees, protectors and beneficiaries, can be considered ultimate beneficial owners.
2. Declaration of beneficial owners:
When identifying beneficial owners, representatives of legal entities are required to report their information to the tax authorities.
This declaration must include detailed personal information, such as names, addresses and identification numbers, as well as supporting documents. The declaration must be made within specific deadlines, in particular on request or during any change of beneficial owner.
3. Maintaining a register of beneficial owners:
Legal entities must maintain an internal register of ultimate beneficial owners containing complete and up-to-date information. This register, as well as supporting documents, must be kept for a minimum period of five years from the cessation of activities.
Rigorous verification processes must be conducted before entering information into the register to ensure the accuracy and reliability of the data.
Compliance Obligations and Implications
Failure to comply with these beneficial ownership compliance obligations can result in significant penalties, highlighting the importance of complying with the stipulated requirements.
Legal entities and directors must proactively report ultimate beneficial ownership information at various intervals, including when preparing, submitting the annual tax return and within 45 days of any changes. The necessary documents, in particular the statutes, registration certificates and proof of inspection, must accompany these declarations.
Conclusion
Cameroon’s Finance Law for 2023 marks an important step towards increased transparency and accountability in the area of beneficial ownership. By adhering to the obligations outlined, legal entities operating in Cameroon can demonstrate their commitment to complying with the latest regulatory standards and protecting their business interests.
