In a decisive stride towards enhancing transparency and accountability, the 2023 Finance Law of Cameroon introduced a comprehensive framework imposing clear obligations on the beneficial owners of legal entities operating within the country, regardless of their corporate or personal income tax status. This framework encompasses three key aspects:
1. Identification of Ultimate Beneficial Owners
Representatives of legal entities are responsible for identifying and verifying the identities of their beneficial owners. Beneficial owners are individuals 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 partnership companies, all partners in general partnerships are considered beneficial owners, while specific criteria apply to simple limited partnerships.
In trust, fiduciary, and related structures, various roles, including settlors, trustees, protectors, and beneficiaries, may be considered ultimate beneficial owners.
2. Declaration of Ultimate Beneficial Owners:
Upon identifying beneficial owners, representatives of legal entities are required to declare their information to the Tax Administration.
This declaration must include detailed personal information, such as names, addresses, and identification numbers, along with supporting documentation. The declaration must be made within specific timelines, especially upon request or during any changes in beneficial ownership.
3. Maintenance of a Register of Ultimate Beneficial Owners:
Legal entities must maintain an internal register of ultimate beneficial owners containing comprehensive and up-to-date information. This register, along with supporting documents, must be retained for a minimum 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 may result in significant penalties, emphasizing the importance of adhering to the stipulated requirements.
Legal entities and administrators must proactively declare information about ultimate beneficial owners at various intervals, including during the establishment, annual tax return submission, and within 45 days of any modifications. Necessary documents, including articles of association, registration extracts, and proof of control, must accompany these declarations.
Conclusion
The 2023 Finance Law of Cameroon marks a significant step towards enhanced transparency and accountability in the realm of beneficial ownership. By adhering to the outlined obligations, legal entities operating in Cameroon can demonstrate their commitment to complying with the latest regulatory standards and safeguard their business interests.