A Supportive Tax Rate Will Boost Female Entrepreneurship

Introduction

Women in Cameroon are indispensable to socio-economic development. They perform unpaid care work in addition to being engaged in informal economic activity. Official statistics indicate that women created 33% of Small and Medium-sized Enterprises (SMEs) in 2022, and they currently hold 42% of managerial positions. Women face the same administrative and taxation requirements as men, but their dual role as care providers and their dominant position in the informal market require careful consideration when formulating policies that promote their individual freedom and dignity. SMEs in Cameroon are subject to a 33% corporate tax rate with lengthy tax reporting and payment procedures and almost inaccessible deductions. As a result, we must continue to optimize the current tax regime to ensure it supports women-led businesses and informal production units.

Beyond the tax rate, declaring and paying taxes are equally cumbersome for most SMEs, which exacerbates other problems they face. Women-led businesses also face other obstacles that impact their revenues, survival rates, and profitability. To create a supportive and fair system, policymakers must understand crucial factors, such as taxation, that negatively affect women. Section I discusses the current tax rate and the steps associated with paying taxes, while Section II outlines the impact of the current tax rate on women-led businesses, followed by a brief analysis of how these interact with other factors such as access to credit and the freedom to trade. We conclude with actionable policy recommendations to support a level playing field that will boost human dignity.

Taxes and How to Pay Them 

SMEs in Cameroon pay taxes based on their size and their revenues in Cameroon. There are various laws and regulations that govern taxes for SMEs. For example, in the Finance Law of 2025, SMEs that register with an approved management center do not pay a business license fee for two years. While this reduces the overall tax bill for SMEs, it is not sufficient for some businesses, the majority of which close before they reach their third year. Companies with a turnover exceeding XAF 3 billion, they are subject to a corporation tax rate of 33%, while those with a lower turnover pay a reduced rate of 27.5%. The corporate tax rate should not be reduced, but we should minimize other taxes such as local taxes and business license tax, to name a few.

The system is further complicated by the fact that SMEs are categorized into different taxation systems, with a flat rate for those who earn below XAF 10 million, while SMEs who earn between XAF 10 million and XAF 50 million are subject to a simplified taxation system and an actual earnings taxation system for those above XAF 50 million.  Over 99% of businesses in Cameroon are SMEs, and the share of micro-SMEs dominates; they rarely make exorbitant sales numbers, which requires simpler and more intuitive tax administration. Additionally, there is a minimum tax of 2.2% or 5.5% on turnover, which can also be offset against Corporate Income Tax (CIT).

i.       Impact of Taxes on Women-led Businesses 

a). Taxes may Discourage Business Registration

The current tax rate for SMEs is acceptable, after it was lowered to 25% from 35% in the Finance Law of 2025. However, there are a multitude of other taxes that impact SMEs and discourage Informal Sector Production Units (IPUs) from formalizing their activities. However, a total of 84% of SMEs have declared taxes since their inception, even as they face persistent challenges in formalizing their businesses due to lengthy and cumbersome administrative procedures. Furthermore, a multitude of taxes that include property tax, taxes on rental contracts, and local taxes add to the corporate tax, making the rate too high for SMEs. However, the government has implemented a range of support programs that aim to reduce the tax burden on SMEs even as issues such as corruption and inefficient processes continue to hinder business growth. Multiple taxes, as opposed to the current corporate tax rate, slow the development of SMEs, especially those led by women.

b). Lower Investment Rates of Women-Led Businesses 

Taxation significantly influences the revenue generation and investment capabilities of female entrepreneurs in Cameroon. A study by the Institute of National Statistics (INS) revealed that 34.2% of entrepreneurs identified taxation as a major barrier to starting and running their businesses. Burdensome tax rates and tax administration discourage investment, as women who formalize their businesses are less likely to reinvest in their businesses. This is not driven by the tax rate alone, but equally by the cost of tax compliance, which prevents continuous improvements in the business. Tax administration also causes more businesses to stay in the informal sector and hinders capital investments that stunt growth. This also explains Cameroon’s large informal sector, with over 90% of the workforce operating in the informal sector, with 50% of women operating in the sector as well. We can credibly conclude that a mix of the tax rate and the tax administration process of declaring and paying taxes) impacts the revenues and investment of women-led businesses.

c). The Current Tax System Encourages More Informality 

Cameroon has several business formalization centers across all ten regions, and the European Union created a platform allowing individuals to register their business in 24 hours. While these have caused the number of registered businesses to increase, women are discouraged from formalizing their activities due to complex tax regulations and high compliance costs. This supports our view that the corporate tax rate is not the problem, but rather compliance and tax administration. This equally explains why, while women make up 51% of the population, they only lead 23% of manufacturing businesses.

d). High Tax Rates Reduce Survival Rates of Women-Led Businesses

The World Bank’s Women, Business and the Law report noted that Cameroon scores only 60 out of 100 regarding women’s entrepreneurship laws, indicating significant gaps that prevent women-led businesses from flourishing. High compliance costs and inadequate support mechanisms create a less supportive environment for women entrepreneurs to sustain their operations.

ii.     Tax Policy Impacts all Areas of Business

Tax policy in Cameroon intersects with other factors such as limited access to finance, archaic gender norms, and cultural stereotypes. Kouam et al. (2025) find that the current corporate tax rate amplifies complex compliance frameworks that impact investments in human capital, innovation, and stock, to name a few. Most female entrepreneurs have low margins and operate in the services sector, such as beverage and food; many reviews and a cumbersome declaration and payment process negatively impact their activity. Higher compliance costs increase the tax burden on these small firms, reducing available capital and lowering operational profitability, which drives more women-led enterprises further into the informal sector.

Policy Recommendations 

To improve the situation for female entrepreneurs in Cameroon, policymakers must consider several reforms aimed at creating a more conducive business environment:

• Tax Incentives: We need to simplify tax administration and make it easy for citizens to declare and pay their taxes on all phones – smartphones and non-smartphones.

• Simplifying Tax Compliance: Women entrepreneurs need short step-by-step tutorials to enable them to properly declare and pay taxes.

• Maintain the Current Corporation Tax Rate: Policymakers should not increase the current tax rate, but should not cut it either. The corporation tax rate must not go below 25% to ensure long-term sustainability in public finances. We welcome the cuts to property taxes and taxes on tenancy agreements, as this will improve cash flow for millions of businesses.

• Support Programs: Establishing government-backed programs specifically designed for women can help address barriers related to financing and market access. Initiatives like mentorship programs or networking opportunities can provide valuable support.

• The government should adopt AI, and integrate it into the tax declaration process to ensure that policymakers understand in real time what parts of the tax system can be amended to lower the burden on civil society. 

Conclusion

Women in Cameroon face the same tax environment as men, but the impact of burdensome requirements and a difficult tax administration lowers investment and discourages innovation. Policymakers must make it easy for women who do not own smartphones to pay taxes from their phones through USSD codes. The current corporation tax rate should not be lowered under any circumstance, but other taxes and local taxes can be amended to provide some breathing space for entrepreneurs.

Reference List

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Authors

Henri Kouam, Executive Director

Dr. Egbe-Njie Fride, Research Fellow

Dinga Tambi, Research Fellow

Dr. Langmi Degha, Research Fellow