AN ASSESSMENT INTO  THE CHALLENGES OF TAX MANAGEMENT IN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the Study

Tax is a monetary obligation imposed by the government on individuals based on their earnings from the provision of goods and services (Bassey, Godwin & Adanma, 2015). A country's tax system significantly influences other macroeconomic indicators. There is a direct correlation between the tax structure and the amount of economic growth and development in both established and emerging nations. Undoubtedly, the amount of taxes collected is directly correlated with the degree of economic activity in a country (Okwara & Amori, 2017). In the colonial period, the colonial government would enact laws to impose taxes on people, including individuals and corporations. Taxation is a fundamental aspect of fiscal policy in Cameroon, serving as a crucial means of financing government operations, public services, and infrastructure development (Alade, 2015). Nevertheless, the proficient and successful administration of tax resources encounters many obstacles, impeding the country's capacity to maximise revenue generation and utilization. Cameroon's tax system has developed throughout time in response to economic changes, legislative revisions, and international commitments (Rogoff, 2016). The tax system consists of many categories of taxes, such as income tax, value-added tax (VAT), customs charges, and excise duties. Each tax has a certain role in generating total revenue. Furthermore, Cameroon has been subjected to regional and international tax agreements and efforts with the purpose of fostering tax cooperation, transparency, and adherence to tax regulations. Although the Cameroonian government has made steps to modernise tax administration and improve compliance, there are still considerable issues that remain (Anderson, 2018). These issues include administrative, economic, social, and institutional aspects, creating barriers to efficient tax administration. The intricacy of tax legislation, bureaucratic protocols, and administrative obstacles lead to inefficiencies in the process of tax collection and enforcement. The performance of tax administration organisations is further hindered by limited resources, antiquated technology, and poor training (Deloitte, 2018). A significant proportion of economic activity in Cameroon is conducted in the informal sector, which is characterised by irregular employment arrangements, cash transactions, and low formalization. The presence of the informal sector poses difficulties in collecting taxes, since several enterprises and people intentionally avoid paying regular taxes, leading to financial losses for the government. Tax evasion, fraudulent activities, and non-compliance erode the integrity of the tax system, depriving the government of essential income. Inadequate enforcement procedures, pervasive corruption, and a dearth of deterrent measures are significant factors that contribute to the extensive prevalence of tax evasion throughout several sectors of the economy. The behaviour and compliance of taxpayers are influenced by socio-economic variables such as poverty, inequality, and cultural attitudes towards taxes (Myslimi & Kacani, 2016). Unfavourable views on inequity, insufficient openness, and scepticism towards government institutions are factors that lead to limited levels of voluntary tax compliance among certain groups of the population. Cameroon's incorporation into the worldwide economy exposes it to the intricacies of international commerce, such as tariff obstacles, trade pacts, and concerns related to transfer pricing. To tackle these problems, it is necessary to collaborate with foreign partners and comply with international tax rules and best practices (Ocheni, 2015). Considering the importance of taxes in promoting economic growth and maintaining fiscal stability in Cameroon, it is crucial to conduct a thorough evaluation of the obstacles that tax administration faces in the nation. Therefore, the study assess  the challenges of tax management in Cameroon.

1.2 Statement of the Problem

Tax administration is crucial in influencing the economic environment of a country by generating necessary funds for government activities, constructing infrastructure, and supporting social welfare initiatives. In Cameroon, like in several developing nations, efficient tax management is crucial for achieving sustained economic growth and development (Ocheni, 2015). Nevertheless, tax management in Cameroon has many obstacles that impede its efficiency and efficacy. Notwithstanding the Cameroonian government's attempts to enhance tax management, there are various ongoing problems that hinder the efficient collection and use of taxes. The difficulties include a variety of issues, including administrative inefficiencies, limited infrastructure, rampant tax fraud, and corruption (Rogoff, 2016). Furthermore, the intricacy of the tax system, along with insufficient taxpayer education and adherence, worsens the issue. In addition, the socio-economic conditions of Cameroon, which include an informal economy and a varied cultural environment, provide extra challenges for tax management. The informal sector, which represents a substantial proportion of economic activity, often operates outside the scope of regular taxes, resulting in financial losses for the government. Moreover, the way people see and approach taxes, as well as their beliefs about how accountable the government is, have an impact on how taxpayers behave and comply with tax regulations (Alade, 2015). Given these difficulties, it is essential to carry out a thorough evaluation of the variables that contribute to the inefficiencies in tax management in Cameroon. Comprehending these difficulties is essential for creating specific interventions and policy changes to improve tax compliance, revenue generation, and overall economic progress. Hence, the study assess  the challenges of tax management in Cameroon.

1.3 Objectives of the Study

The broad objective of the study is to assess the challenges of tax management in Cameroon.  The specific objectives is as follows

To assess the level of compliance with tax regulations among businesses and individuals in Cameroon.

To assess whether lack of training programs for tax authority staff affect tax management in Cameroon

To examine whether lack of technological infrastructure affect tax management in Cameroon.

Examine the challenges of tax authorities in the management of tax payments in Cameroon.

1.4 Research Questions

The following questions have been prepared for the following

To assess the level of compliance with tax regulations among businesses and individuals in Cameroon.

To assess whether lack of training programs for tax authority staff affect tax management in Cameroon

To examine whether lack of technological infrastructure affect tax management in Cameroon.

Examine the challenges of tax authorities in the management of tax payments in Cameroon.

1.5 Significance of the Study

Organizationally, the study's results will have a major impact on Cameroonian firms since a trustworthy tax system is key to attracting investors and expanding existing enterprises. Businesses may benefit from a better understanding of the difficulties associated with tax administration if they are better able to deal with the complexity of regulations, meet their tax responsibilities, and participate actively in the formal economy. 

The results of this research may help policymakers solve the problems with tax management by providing evidence for new policies and solutions. Improvements in tax compliance, simplification of tax administration procedures, and, finally, revenue mobilisation for public services and government operations may result from policy interventions informed by this study.

Academia: This research contributes to our understanding of taxes in developing nations, with a focus on Africa. Contributing to academic debate and providing a foundation for future study and scholarly inquiry, it offers empirical insights into the dynamics of tax management difficulties.

1.6 Scope of the Study

The study focuses on the challenges of tax management in Cameroon. Empirically, the study will assess the level of compliance with tax regulations among businesses and individuals in Cameroon,  assess whether lack of training programs for tax authority staff affect tax management in Cameroon, examine whether lack of technological infrastructure affect tax management in Cameroon and examine the challenges of tax authorities in the management of tax payments in Cameroon. 

Geographically, the study is delimited to the Directorate General of Taxation (DGT).

1.7 Limitations of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8Definition of terms

Tax Management: Tax management refers to the process of planning, organizing, and controlling tax-related activities within an organization or jurisdiction to ensure compliance with tax laws and regulations while optimizing tax liabilities and maximizing tax benefits.

Tax Administration: Tax administration encompasses the activities and processes undertaken by government authorities or agencies responsible for implementing and enforcing tax laws, assessing and collecting taxes, providing taxpayer services, and conducting audits and investigations to ensure compliance.

Challenges: Challenges refer to obstacles, difficulties, or issues that hinder the efficient and effective management, administration, and collection of taxes. These may include administrative inefficiencies, regulatory complexities, taxpayer non-compliance, enforcement difficulties, and structural limitations within the tax system.

Revenue Mobilization: Revenue mobilization refers to the process of generating income or funds for government expenditures through taxation, including direct taxes (e.g., income tax, corporate tax) and indirect taxes (e.g., value-added tax, excise duty), as well as non-tax sources such as royalties and fees.