AN EXAMINATION OF THE OBSTACLES TO EFFECTIVE TAX MANAGEMENT IN CAMEROON

CHAPTER ONE INTRODUCTION 1.1 Background of the Study Taxation is a financial obligation mandated by the government on individuals and entities based on their income generated from goods and services (Bassey, Godwin & Adanma, 2015). The tax system of any nation has a profound impact on broader macroeconomic indicators. There is a clear and direct connection between how a country's tax structure is designed and the level of economic progress it experiences, both in advanced and developing economies. In fact, the revenue collected through taxation is often reflective of the level of economic activity within a country (Okwara & Amori, 2017). During the colonial era, the governing authorities imposed various forms of taxes on individuals and corporate bodies. Today, taxation remains a cornerstone of Cameroon’s fiscal policy, acting as a key tool for financing government operations, delivering public services, and developing infrastructure (Alade, 2015). However, the country continues to face significant hurdles in effectively managing and utilizing tax revenues. These challenges hamper the government’s ability to generate and apply tax resources optimally. Cameroon’s tax framework has evolved over time due to economic changes, legal reforms, and global tax obligations (Rogoff, 2016). The current system comprises several tax types, including personal income tax, value-added tax (VAT), customs duties, and excise taxes. Each tax plays a vital role in the country’s revenue generation. Furthermore, Cameroon is party to various regional and international tax agreements aimed at enhancing cooperation, promoting transparency, and ensuring compliance with tax standards. Despite efforts by the Cameroonian government to modernize tax administration and increase compliance levels, several significant challenges persist (Anderson, 2018). These include administrative inefficiencies, economic constraints, social dynamics, and institutional weaknesses, all of which collectively hinder effective tax administration. The complexity of tax laws, bureaucratic hurdles, and administrative delays contribute to inefficiencies in tax collection and enforcement. The performance of tax agencies is further constrained by limited resources, outdated systems, and insufficient training (Deloitte, 2018). A large share of Cameroon’s economic activities takes place in the informal sector, characterized by irregular work arrangements, cash-based transactions, and minimal regulatory oversight. This sector complicates tax collection efforts, as many businesses and individuals deliberately avoid taxation, leading to substantial revenue losses. Tax evasion, fraudulent behavior, and general non-compliance undermine the credibility of the tax system and deprive the government of much-needed funds. Weak enforcement mechanisms, widespread corruption, and a lack of effective deterrents significantly contribute to the high incidence of tax evasion across various economic sectors. The behavior and attitudes of taxpayers are also influenced by socio-economic conditions such as poverty, inequality, and cultural perceptions of taxation (Myslimi & Kacani, 2016). Public distrust in government, perceptions of unfairness, and limited transparency lead to low levels of voluntary tax compliance in many segments of the population. Cameroon’s participation in the global economy further complicates tax administration due to factors like trade barriers, international agreements, and transfer pricing concerns. Addressing these challenges requires collaborative efforts with international partners and strict adherence to global tax standards and best practices (Ocheni, 2015). Given the pivotal role that taxes play in driving economic growth and maintaining financial stability, a detailed examination of the obstacles facing tax administration in Cameroon is essential. To overcome these barriers, it is important for policymakers, tax authorities, and other stakeholders to understand the root causes and develop targeted strategies that enhance tax administration, boost compliance, and maximize revenue collection. 1.2 Statement of the Problem Efficient tax administration is vital to a country’s economic development, as it provides the funds needed for government functions, infrastructure development, and social welfare programs. In Cameroon, like in many other developing nations, the success of long-term economic growth depends significantly on how well taxes are administered (Ocheni, 2015). However, the Cameroonian tax system faces numerous persistent issues that obstruct its effectiveness. Despite various reforms and modernization efforts by the government, tax administration continues to struggle with serious challenges, including poor infrastructure, systemic inefficiencies, tax fraud, and corruption (Rogoff, 2016). The complexity of tax laws, inadequate awareness among taxpayers, and low levels of compliance further aggravate the situation. Cameroon’s socio-economic realities—such as the prevalence of an informal economy and diverse cultural influences—create additional difficulties. The informal sector, which makes up a significant portion of the country’s economy, largely evades formal taxation, thereby causing considerable financial leakage. Public perception and attitudes toward taxes, along with questions surrounding government accountability, also shape taxpayer behavior and compliance (Alade, 2015). These challenges necessitate a comprehensive evaluation of the various factors that weaken tax administration in the country. Understanding these underlying issues is crucial for crafting targeted solutions and policy reforms that will improve tax compliance, optimize revenue collection, and foster sustainable economic development. Therefore, this study seeks to investigate the major challenges facing tax management in Cameroon. 1.3 Objectives of the Study The general aim of this study is to assess the challenges associated with tax management in Cameroon. The study also aims to achieve the following specific objectives: i. To evaluate the extent of tax evasion and non-compliance among taxpayers in Cameroon. ii. To investigate the procedures involved in tax compliance and management in Cameroon. iii. To explore the role of tax authorities in managing tax payments within the country. 1.4 Research Questions This study is guided by the following research questions: i. What is the extent of tax evasion and non-compliance among taxpayers in Cameroon? ii. What are the processes involved in tax compliance and management in Cameroon? iii. What role do tax authorities play in managing tax payments in Cameroon? 1.5 Significance of the Study This study holds significance for several groups: Business Organizations: For companies operating in Cameroon, a fair, transparent, and efficient tax regime is essential for building investor confidence and enabling growth. Gaining a deeper understanding of the challenges in tax management can help businesses better navigate the system, remain compliant, and actively contribute to the formal economy. Policymakers: The findings of this research can support the development of well-informed policies and strategic frameworks that directly address the issues identified in tax administration. These policy recommendations can strengthen compliance, simplify tax procedures, and enhance government revenue mobilization. Academic Community: The study makes an important academic contribution by expanding knowledge on taxation challenges in developing countries, particularly within the African context. It provides data-driven insights into tax management issues and serves as a foundation for further academic research and discussion. 1.6 Scope of the Study This research focuses on understanding the role of taxation in supporting social programs in the Nanga Eboko municipality of Cameroon. The study will specifically examine the extent of tax evasion and non-compliance among taxpayers, the processes involved in tax compliance and administration, and the responsibilities of tax authorities in managing tax payments in Cameroon. 1.7 Limitations of the Study As with any research endeavor, this study faced a few limitations. Financial constraints restricted the researcher’s ability to access all the necessary literature, materials, and data-gathering tools such as internet access, questionnaires, and interviews. Consequently, the sample size was kept moderate. In addition, the researcher had to balance this study with other academic responsibilities, which limited the amount of time available for conducting extensive research. 1.8 Definition of Terms Tax Management: This refers to the planning, coordination, and oversight of all tax-related activities within a jurisdiction or organization to ensure legal compliance while minimizing tax liabilities and maximizing benefits. Tax Administration: This encompasses all the duties carried out by government bodies responsible for enforcing tax laws, assessing and collecting taxes, offering taxpayer services, and conducting audits and investigations to promote compliance. Challenges: These are the various difficulties or obstacles that impede the smooth administration, management, or collection of taxes. They may include administrative lapses, complex regulations, non-compliance, poor enforcement, and other systemic issues. Revenue Mobilization: This is the process through which governments collect income through various forms of taxation—both direct and indirect—as well as from non-tax sources like fees and royalties, to fund public expenditures. REFERENCES Alade, O. R. (2015). Revenue generation as a major source of income for the state government: An empirical analysis of two parastatals. International Journal of Economics, Commerce and Management, 3, 1346-1366. Anderson, A. (2018). Effective taxation of Nigerian informal system. Bassey, E. B., Godwin, O. E. & Adanma, E. S. (2015). Empirical assessment of the efficiency of the Nigeria tax system. Research Journal of Finance and Accounting, 6(14); 27-36. Deloitte, M. (2018). 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