## 1.  CEMAC-WAEMU: Customs Duty Rates

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### Introduction and objectives
- Harmonization pursued to reduce distortions from disparate and complex tax regimes (multi-tier taxes and rates, mobility of tax base, low yield, uncertainties about price stability, weak investors’ confidence).
- WAEMU established a common external tariff (CET) in the mid-1990s; CEMAC harmonized earlier, starting in 1964.
- Membership:
  - WAEMU: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
  - CEMAC: Cameroon, Central African Republic, Chad, the Republic of Congo, Equatorial Guinea, and Gabon.
  - WAMZ: The Gambia, Ghana, Guinea, Nigeria, and Sierra Leone (WAMZ has not harmonized its external tariff).
- Harmonization aims:
  - establish a common protection of regional production vis-à-vis the rest of the world;
  - expand intra-zone trade;
  - generate revenue for government.

### Convergence frameworks: surveillance and fiscal relevance
- Convergence criteria purpose: induce member countries to implement policies fostering sustainable and harmonious growth; fiscal policy and tax revenue are key monitored variables.
- WAEMU:
  - three-tier classification: key, first-order, second-order criteria.
  - Noncompliance responses:
    - key criterion (basic fiscal balance): sanctions;
    - first-order criteria (inflation rate, public debt ratio, domestic and external arrears): instruction to submit corrective reform program within one month from notification;
    - second-order criteria (wage bill ratio, tax ratio, domestically financed capital ratio, current account ratio): no sanctions.
- CEMAC:
  - two-category classification: failure to observe five convergence criteria (same as WAEMU key and first-order) prompts demand to submit a corrective program; surveillance indicators nonbinding.
- WAMZ:
  - primary criteria: inflation rate, gross external reserves, central bank financing of the budget deficit, overall budget deficit;
  - secondary criteria: domestic arrears, tax ratio, wage bill ratio, domestically financed capital expenditure, real interest rate, real exchange rate;
  - No disciplinary action attached to noncompliance.
- Comparative note:
  - Only inflation is common principal criterion across the three zones.
  - CEMAC and WAEMU focus less on external sector variables than WAMZ due to operations account arrangement with France supplying foreign exchange to BEAC and BCEAO if needed.

### External tariff regimes before harmonization: structure and disparities
- Historical milestones:
  - UDEAC created December 8, 1964; common external tariff adopted December 1965 and simplified in June 1993; preferential tariff for intra-UDEAC trade took effect January 1, 1994.
  - UDEAC replaced by CEMAC on February 5, 1998.
- Common pre-harmonization taxes (1993): customs duty, fiscal duty, statistical tax — not uniformly applied across countries.
  - All 12 surveyed countries enacted a fiscal duty.
  - All CEMAC and most WAEMU countries imposed a customs duty (Benin and Togo exceptions).
  - All countries except Cameroon and Niger levied a statistical tax.
- Key numeric disparities in 1993:
  - Customs duty maximums: 90 percent in Central African Republic, Chad, and the Republic of Congo vs. 15 percent in Côte d’Ivoire and Senegal.
  - Fiscal duty maxima: 260 percent in Cameroon and Gabon vs. 180 percent in Côte d’Ivoire.
  - Combined tariffs (excluding VAT): as high as 405 percent in Gabon compared with 195 percent in Côte d’Ivoire.
  - Country-specific cumulative maximum tariffs: Gabon 405 percent; Cameroon 315 percent; Central African Republic and Republic of Congo 180 percent; Chad 155 percent.
  - Intra-WAEMU variations: Côte d’Ivoire and Mali used multiple rates; Burkina Faso, Niger, Senegal used single-rate customs duty; Benin and Togo imposed only a fiscal duty and a statistical tax.
  - Statistical tax: up to 12 percent in Senegal (highest rate cited).
  - Surcharges example: Senegal levied surcharges at rates ranging between 5 percent and 20 percent on several basic goods and luxury commodities.
  - Fiscal duty maximum range cited as 0-260 percent in context of most frequently applied vs. maximum rates.

### Differences within and between zones
- Between zones:
  - CEMAC allowed a complementary import (protection) tax set independently by countries; WAEMU adopted CET without such complementary tax.
  - CEMAC exhibited generally higher and wider-ranging import tax rates than WAEMU in 1993.
- Within zones:
  - CEMAC: marked disparities with Gabon and Cameroon as high-rate countries; other members less protective.
  - WAEMU: two-group pattern (three-tax group vs. fiscal+statistical group) but substantial heterogeneity in rates, exemptions, and surcharges.

### Benefits from harmonization: expectations and observed constraints
- Expected benefits:
  - reduction in harmful tax competition and protectionist tendencies;
  - increase in investment, employment, and growth;
  - expansion of tax base through increased intra-zone trade and factor mobility;
  - greater transparency and predictability in fiscal policy, lowering risk premiums and promoting investment.
- Conditions and limitations observed:
  - Evidence that tax harmonization has not significantly increased intra-zone trade for CEMAC and WAEMU; reasons include:
    - lack of production diversification — members’ principal exports are raw materials and imports are mainly manufactured goods not supplied by other members;
    - inadequate communication and transport infrastructure raising transportation costs (contrast with EU experience).
  - Tax competition dynamics: high-rate countries may grant concessions to retain investment, eroding revenues and undermining service delivery.
  - Factor mobility caveats: while labor mobility can increase host-country tax bases and generate remittances to origin countries, long-run challenges (limited absorptive capacity, diminishing marginal returns, technological change) lie beyond scope.

### Implementation and policy framework (selected milestones)
- CEMAC streamlined CET adopted June 21, 1993 and put into effect January 1, 1994.
- WAEMU instituted a single customs duty in January 2000 following Fund advice; prior regimes included multiple-tier tariffs (customs duty, fiscal duty, statistical tax).

### Box 3. IMF’s Fiscal Affairs Department’s Revenue Technical Assistance to the WAEMU
- IMF advice covered design of new taxes, risk assessment, and revenue administration, including review of progress toward compliance with the reformed taxes.
- Road map for enforcement of the CET in January 2000 included:
  - (i) the reduction of the maximum rate of the combined customs and fiscal duties to 30 percent by July 1, 1998, and to 25 percent on January 1, 1999;
  - (ii) the classification of goods in four groups by January 1, 1999;
  - (iii) a reduction in tariffs applied to intra-WAEMU trade; and
  - (iv) the elimination of exemptions granted under the investment code and foreign-financed projects.
- Progress across countries:
  - Strongest in Côte d’Ivoire.
  - Mali observed the rate limit.
  - Niger reformed its exemption policy.
  - No estimate available for Burkina Faso and Togo.
- Estimated revenue effects (1997 data, zero import elasticity, unchanged domestic tax policies):
  - Estimated revenue losses (in percent of GDP) from enactment of the new external tariff:
    - Côte d’Ivoire: 0.8 percent
    - Mali: 0.9 percent
    - Senegal: 1.7 percent
    - Niger: 1.8 percent
  - Benin would gain 0.9 percent of GDP in revenue, as the reform would lead to rate hikes.
- Proposed mitigation measures by Fund missions:
  - Reduction in tax exemptions (Benin, Mali, and Senegal)
  - Improved coordination among tax agencies (Benin and Mali)
  - Enhanced training (Côte d’Ivoire, Mali, and Niger)
  - More equipment, materials, and supplies
  - Financial incentives for tax officials (Côte d’Ivoire, Benin, and Niger)
- Tariff structure and additional protection:
  - Base: ad valorem value of imports; classification in four groups. Four groups: Category 1 (essential commodities), Category 2 (raw materials and equipments), Category 3 (intermediate and a few selected goods), Category 4 (consumer goods).
  - WAEMU allowed cyclical import tax (CIT) set at 10 percent for selected producers (agriculture, livestock, fishery, and agro industry).
  - Example reductions:
    - Gabon: cumulative maximum rate fell from 405 percent in 1993 to 30 percent in 1994.
    - Côte d’Ivoire: combined fiscal and customs tariffs fell from 195 percent in 1993 to 20 percent in 2000.
- Community solidarity tax and other levies:
  - WAEMU: Prélèvement Communautaire de Solidarité (PCS) levied on all taxable imports at the rate of 1 percent.
  - CEMAC: levies a 1 percent tax on all non-CEMAC imports to finance its institutions.
  - CEMAC law prohibits imposition of other taxes apart from the CET and the service tax; WAEMU act does not give explicit instructions, resulting in WAEMU levying a tax for ECOWAS.
- Differences in harmonized rates (Table 1 data preserved):
  - Category 1 Essential goods: CEMAC 5, WAEMU 0
  - Category 2 Raw materials and equipments: CEMAC 10, WAEMU 5
  - Category 3 Intermediate and selected goods: CEMAC 20, WAEMU 10
  - Category 4 Other consumer goods: CEMAC 30, WAEMU 20
  - Harmonized rate structure higher in CEMAC than in WAEMU by as much as 10 percentage points.

### Implementation, deviations, and impacts on intra-zone trade
- CEMAC implementation:
  - All CEMAC countries adopted new customs duty at prescribed rates; most levy service tax at moderate rates (1–2 percent).
  - Significant departures and exact deviations:
    - Equatorial Guinea imposes a fiscal duty 15 percent–40 percent;
    - Chad levies additional import tax at 25 percent on sugar and a tax earmarked for rural action fund;
    - Central African Republic imposes two additional taxes at 0.25 percent each and charges tax-exempt imports an 8 percent processing fee;
    - Cameroon imposes tax earmarked for computerization.
  - Only Gabon applies harmonized external tariff without significant deviation.
  - Several countries levy export taxes (Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, and Gabon); Cameroon and Central African Republic also levy a quality control tax.
- WAEMU implementation:
  - Implemented harmonized tariff structure: single customs duty, statistical tax, CIT, and RPT. RPT expiry postponed from end-2003 to end-2005.
  - Producers in Burkina Faso, Côte d’Ivoire, Mali, and Senegal benefited from RPT. Côte d’Ivoire, Mali, Senegal sought additional protection via CIT. Benin, Guinea-Bissau, Niger, and Togo did not request RPT or CIT.
  - Deviations and exact levies:
    - Senegal and Benin impose other taxes, some at high rates;
    - Togo imposes a 4 percent stamp duty on imports in addition to 1 percent statistical tax;
    - Burkina Faso levies toll tax on all imports at variable rates.
  - Most WAEMU countries have export taxes with different names and bases (exit tax and road tax in Benin; DUS in Côte d’Ivoire; special re-export tax in Niger and Togo).
- Assessment:
  - Broad compliance overall, but significant departures (Equatorial Guinea, Chad, Central African Republic, Senegal, Benin) through additional import taxes and high surcharges (up to 40 percent in Equatorial Guinea; up to 20 percent in parts of Senegal).
  - Deviations translate into price distortions, potential nontariff barriers, and uncertainties about effectiveness of common tax policies; they hinder expansion of intra-WAEMU trade.

### Institutional weaknesses affecting implementation
- Institutional framework top-heavy on policymaking, to detriment of implementation and enforcement.
- Decision-making authorities: conference of heads of state and council of ministers; technical organs: Executive Secretariat in the CEMAC and Commission in WAEMU.
- Concentration of legislative and executive authority complicates accountability.
- Lack of prioritization of extensive agenda limits effective implementation.

### Box 4. Institutional Framework of the CEMAC and the WAEMU
- Conference of heads of state:
  - Highest authority in both unions; determines economic and financial policies and gives policy directions to councils of ministers.
  - WAEMU treaty assigns explicit responsibilities for harmonization of legislations, including tax laws (Article 60); CEMAC treaty limits Conference to "giving broad orientations."
  - Decisions of the conference, called “acts,” are binding on member states.
- Council of ministers and administrative bodies:
  - CEMAC Executive Secretariat:
    - Appointed for "five years."
    - Responsibilities include administration, recommendations for policy reforms, enforcement of CEMAC decisions, and preparation of progress reports.
  - WAEMU Commission:
    - Makes recommendations on economic matters and submits progress reports to the regional parliament; must forward copy to national legislatures.
    - "Does not empower the commission to ensure effective implementation of the decisions."
- Judicial oversight and external control:
  - Court of Justice of the WAEMU and the Judicial Chamber of the CEMAC interpret treaties.
  - Auditor general provides external control; in WAEMU these are separate institutions, in CEMAC combined.
  - "Members of the Court of Justice and the Judicial Chamber are appointed for a six-year term by the conference of heads of state."
  - Decisions of the Court of Justice and the Judicial Chamber are "final and enforceable."
- Compliance incentives, limitations, and weaknesses:
  - Transfer of tax authority to supranational institutions is "conducive to more stability and predictability of tax policy."
  - Enforcement gap: "Noncompliance is virtually cost-free because no penalty or sanction is attached to the failure to comply fully with the tax directives."
  - Administrative capacity constraint: "lack of expertise of the administrative bodies in their many areas of responsibilities."
- Unfinished agenda: institutional and design reforms (summary):
  - Alternative to full supranational enforcement: central fund with financial rewards and sanctions financed by profits of common central banks, regional institutions, and community levies (PCS, PC).
  - Central fund resources distributed to members "that are in full compliance"; noncomplying countries forfeit their share. Assessment by regional courts.
  - Proposal: set up small units in each country to collect community levies at point of entry and transfer proceeds to central fund.
  - Design reforms:
    - Corporate income tax (CIT) in the WAEMU: recommended elimination because it is "a disincentive for domestic producers in selected sectors (agriculture, livestock, fisheries, and agro-industries)." Repeal could be phased; during transition revenue considered regional and deposited in proposed central fund.
    - Sanctions for noncompliance: need "graduated but stronger sanctions" (examples: downgrading from member status to observer; suspension from meetings; publication of appraisal reports).

### Compliance actions and country implementation status (Box 4 & Box 5 highlights)
- WAEMU:
  - Niger: "appears to be deviation-free."
  - Togo: "seems to have implemented the main elements" but levies a high stamp duty on imports.
- CEMAC:
  - Gabon: "the only country that appears to have satisfactorily complied with the key provisions of the reformed tariff."
  - Main departures: continued imposition of surcharges and other disguised import taxes (Chad, Gabon, Senegal noted).
  - Equatorial Guinea: "The effective implementation of the CET ... is also required."
- Box 5: Measures to enhance compliance (country-specific exact recommendations):
  - Cameroon
    - eliminate the additional import tax of "0.45 percent" earmarked for the computerization of the ministry of finance;
    - remove the quality control tax of "0.95 percent."
  - Central African Republic
    - remove the additional import taxes, each at "0.25 percent," earmarked for the Council of Customs Brokers and computerization of the ministry of finance;
    - eliminate the exemption-processing fee of "8 percent" levied on tax-exempt imports.
  - Chad
    - eliminate the supplementary tax of "25 percent" on imported sugar;
    - remove the additional "1 percent" tax on imported animal, and plants earmarked for the Rural Action Fund;
    - eliminate the import prepayment tax of "4 percent."
  - Equatorial Guinea
    - implement the CET; and
    - eliminate the fiscal duty of "15–40 percent" on imports.
  - Gabon
    - eliminate the "20 percent" surcharge on imported edible fats and oil, soap, poultry products, cigarettes, and flour.
  - Benin
    - remove the "5 percent" surcharge on imported television sets;
    - remove the additional "0.15 percent" tax on imports earmarked for road works.
  - Burkina Faso
    - eliminate taxes levied at specific rates for the Chamber of Commerce on imports (rice, sugar, cement, metal products, and vehicles).
  - Côte d’Ivoire
    - "no available information on eventual deviations from the harmonized taxes."
  - Senegal
    - eliminate the "1 percent" surcharge on selected imported textiles;
    - remove the import tax surcharge of "10 percent" on millet, and sorghum, and "20 percent" on onions, potato, banana, rice, and cigarettes.
  - Togo
    - eliminate the stamp duty of "4 percent" on imports.

### Appendix Table 2. WAEMU: Main Import features and selected rates (selected exact figures)
- Statistical tax rates: 1.00%; 2%; 2%
- Regional integration tax rates: 1%; 1% of imports of cat. III Non-CEMAC; 2.5% for excise goods
- Export duty sample rate: 17.50%
- Fiscal duty rate band: 15%-40%
- Council of customs brokers rate: 0.25%
- Computerization of the MoF rates: 0.45%; 0.25%
- Exemption processing fee rate: 8.00%
- Supplementary tax rate: 25%
- Storage and custody tax: CFAF 30/day/50 kgs
- Transit tax examples: 0.80%; 3%, 5%
- Quality control rate examples: 0.95%; 0.3% for cotton
- Stumpage fee rate examples: 2.50%; 1%, 2.7%; 3% to 9%
- Reforestation fee: 5%
- Factory gate tax: 2.25%
- Road tax on logs: 2.5%
- Research and control tax: 0.50%
- Exit tax on plant/animal exports: 0.5%-30%
- WAEMU statistical tax common rate: 1% (and 3% for exports in one listing)
- ECOWAS levy common rate: 0.5% (one listing 1%-4%)
- Declining protection tax (TDP) example rates: 2.5% - 5%; 10%-20%
- Information technology tax: CFAF 2000/declaration
- Television tax: 5%
- Temporary import tax on foreign passenger vehicle: CFAF 5,000/vehicle
- Stamp duty rates: 4%
- Additional import tax: CFAF 2,200/liter
- Truck transit fee example: CFAF 5,000 per truck for trucks carrying 1.5 ton of merchandise
- Notes and footnotes preserved in source regarding rate specifics and exemptions.

*Source: _wp0612 - 1.  CEMAC-WAEMU: Customs Duty Rates*

### 1.  CEMAC-WAEMU: Customs Duty Rates ...................................................................14

### 1.  CEMAC-WAEMU: Customs Duty Rates ...................................................................14

### Introduction and objectives
- Harmonization pursued to reduce distortions from disparate and complex tax regimes (multi-tier taxes and rates, mobility of tax base, low yield, uncertainties about price stability, weak investors’ confidence).
- WAEMU established a common external tariff (CET) in the mid-1990s; CEMAC harmonized earlier, starting in 1964.
- WAEMU membership: Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
- CEMAC membership: Cameroon, Central African Republic, Chad, the Republic of Congo, Equatorial Guinea, and Gabon.
- WAMZ membership: The Gambia, Ghana, Guinea, Nigeria, and Sierra Leone; WAMZ has not harmonized its external tariff.
- Harmonization aims:
  - establish a common protection of regional production vis-à-vis the rest of the world;
  - expand intra-zone trade;
  - generate revenue for government.

### Convergence frameworks (Box 1): surveillance and fiscal relevance
- Convergence criteria purpose: induce member countries to implement policies fostering sustainable and harmonious growth; fiscal policy and tax revenue are key monitored variables.
- WAEMU:
  - three-tier classification: key, first-order, second-order criteria.
  - Noncompliance responses:
    - key criterion (basic fiscal balance): sanctions;
    - first-order criteria (inflation rate, public debt ratio, domestic and external arrears): instruction to submit corrective reform program within one month from notification;
    - second-order criteria (wage bill ratio, tax ratio, domestically financed capital ratio, current account ratio): no sanctions.
- CEMAC:
  - two-category classification: failure to observe five convergence criteria (same as WAEMU key and first-order) prompts demand to submit a corrective program; surveillance indicators nonbinding.
- WAMZ:
  - primary criteria: inflation rate, gross external reserves, central bank financing of the budget deficit, overall budget deficit;
  - secondary criteria: domestic arrears, tax ratio, wage bill ratio, domestically financed capital expenditure, real interest rate, real exchange rate;
  - No disciplinary action attached to noncompliance.
- Comparative note:
  - Only inflation is common principal criterion across the three zones.
  - CEMAC and WAEMU focus less on external sector variables than WAMZ due to operations account arrangement with France supplying foreign exchange to BEAC and BCEAO if needed.

### External tariff regimes before harmonization: structure and disparities
- Historical milestones:
  - UDEAC (Union Douanière et Economique de l’Afrique Centrale) created December 8, 1964; common external tariff adopted December 1965 and simplified in June 1993; preferential tariff for intra-UDEAC trade took effect January 1, 1994.
  - UDEAC replaced by CEMAC on February 5, 1998.
- Common pre-harmonization taxes (1993): customs duty, fiscal duty, statistical tax — not uniformly applied across countries.
  - All 12 surveyed countries enacted a fiscal duty.
  - All CEMAC and most WAEMU countries imposed a customs duty (Benin and Togo exceptions).
  - All countries except Cameroon and Niger levied a statistical tax.
- Key numeric disparities in 1993:
  - Customs duty maximums: 90 percent in Central African Republic, Chad, and the Republic of Congo vs. 15 percent in Côte d’Ivoire and Senegal.
  - Fiscal duty maxima: 260 percent in Cameroon and Gabon vs. 180 percent in Côte d’Ivoire.
  - Combined tariffs (excluding VAT): as high as 405 percent in Gabon compared with 195 percent in Côte d’Ivoire.
  - Country-specific cumulative maximum tariffs: Gabon 405 percent; Cameroon 315 percent; Central African Republic and Republic of Congo 180 percent; Chad 155 percent.
  - Intra-WAEMU variations: Côte d’Ivoire and Mali used multiple rates; Burkina Faso, Niger, Senegal used single-rate customs duty; Benin and Togo imposed only a fiscal duty and a statistical tax.
  - Statistical tax: up to 12 percent in Senegal (highest rate cited).
  - Surcharges example: Senegal levied surcharges at rates ranging between 5 percent and 20 percent on several basic goods and luxury commodities.
  - Fiscal duty maximum range cited as 0-260 percent in context of most frequently applied vs. maximum rates.

### Differences within and between zones
- Between zones:
  - CEMAC allowed a complementary import (protection) tax set independently by countries; WAEMU adopted CET without such complementary tax.
  - CEMAC exhibited generally higher and wider-ranging import tax rates than WAEMU in 1993.
- Within zones:
  - CEMAC: marked disparities with Gabon and Cameroon as high-rate countries; other members less protective.
  - WAEMU: two-group pattern (three-tax group vs. fiscal+statistical group) but substantial heterogeneity in rates, exemptions, and surcharges.

### Benefits from harmonization (theoretical and observed constraints)
- Expected benefits:
  - reduction in harmful tax competition and protectionist tendencies;
  - increase in investment, employment, and growth;
  - expansion of tax base through increased intra-zone trade and factor mobility;
  - greater transparency and predictability in fiscal policy, lowering risk premiums and promoting investment.
- Conditions and limitations observed:
  - Evidence that tax harmonization has not significantly increased intra-zone trade for CEMAC and WAEMU; reasons include:
    - lack of production diversification — members’ principal exports are raw materials and imports are mainly manufactured goods not supplied by other members;
    - inadequate communication and transport infrastructure raising transportation costs (contrast with EU experience).
  - Tax competition dynamics: high-rate countries may grant concessions to retain investment, eroding revenues and undermining service delivery.
  - Factor mobility caveats: while labor mobility can increase host-country tax bases and generate remittances to origin countries, long-run challenges (limited absorptive capacity, diminishing marginal returns, technological change) lie beyond scope.

### Implementation and policy framework (selected milestones)
- CEMAC streamlined CET adopted June 21, 1993 and put into effect January 1, 1994.
- WAEMU instituted a single customs duty in January 2000 following Fund advice; prior regimes included multiple-tier tariffs (customs duty, fiscal duty, statistical tax).

*Source: _wp0612 - 1.  CEMAC-WAEMU: Customs Duty Rates*

### Box 3. IMF’s Fiscal Affairs Department’s Revenue Technical Assistance to the WAEMU

### Box 3. IMF’s Fiscal Affairs Department’s Revenue Technical Assistance to the WAEMU

### IMF advice, objectives, and road map for CET enforcement
- IMF advice covered the design of new taxes, risk assessment, and revenue administration, including the review of progress toward compliance with the reformed taxes.
- Road map for enforcement of the Common External Tariff (CET) in January 2000 included:
  - (i) the reduction of the maximum rate of the combined customs and fiscal duties to 30 percent by July 1, 1998, and to 25 percent on January 1, 1999;
  - (ii) the classification of goods in four groups by January 1, 1999;
  - (iii) a reduction in tariffs applied to intra-WAEMU trade; and
  - (iv) the elimination of exemptions granted under the investment code and foreign-financed projects.

### Progress across countries
- Progress toward achieving these goals:
  - Strongest in Côte d’Ivoire.
  - Mali observed the rate limit.
  - Niger reformed its exemption policy.
- No estimate was available for Burkina Faso and Togo (footnote).

### Estimated revenue effects (1997 data, zero import elasticity, unchanged domestic tax policies)
- Estimated revenue losses (in percent of GDP) from enactment of the new external tariff:
  - Côte d’Ivoire: 0.8 percent
  - Mali: 0.9 percent
  - Senegal: 1.7 percent
  - Niger: 1.8 percent
- Benin would gain 0.9 percent of GDP in revenue, as the reform would lead to rate hikes.

### Proposed mitigation measures by Fund missions
- Reduction in tax exemptions (Benin, Mali, and Senegal)
- Improved coordination among tax agencies (Benin and Mali)
- Enhanced training (Côte d’Ivoire, Mali, and Niger)
- More equipment, materials, and supplies
- Financial incentives for tax officials (Côte d’Ivoire, Benin, and Niger)

### Tariff structure, additional protection, and preferential intrazone trade
- External tariff common features:
  - Base: ad valorem value of imports; classification in four groups based on social factors, degree of transformation, usefulness in production, and ease of administration. Four groups: Category 1 (essential commodities), Category 2 (raw materials and equipments), Category 3 (intermediate and a few selected goods), Category 4 (consumer goods). Goods hard to categorize placed in higher tariff group.
  - Rates: single customs duty regime had four rates; service tax was also single-rated.
- Additional protection mechanisms:
  - CEMAC: temporary surcharge (rates not in excess of 30 percent, countries free to set rate).
  - WAEMU: regressive protection tax (RPT) — all qualifying imports bear the same RPT rate.
  - WAEMU also allowed cyclical import tax (CIT) for selected producers (agriculture, livestock, fishery, and agro industry), set at 10 percent.
    - CIT could be imposed if imported prices fell, making domestic substitutes uncompetitive; permanent nature and 10 percent rate create a greater protective niche than CEMAC.
  - Example reductions cited: cumulative maximum rate of customs duty, fiscal duty, and complementary tax in Gabon dropped from 405 percent in 1993 to 30 percent in 1994; in Côte d’Ivoire the combined fiscal and customs tariffs fell from 195 percent in 1993 to 20 percent in 2000.

### Community solidarity tax and other levies
- WAEMU: Prélèvement Communautaire de Solidarité (PCS) instituted to compensate revenue loss from elimination of customs duties on intra-WAEMU trade; levied on all taxable imports, including goods of category 0, at the rate of 1 percent. Proceeds may finance elimination of regional disparities, shortfalls due to unforeseen exogenous factors, and budgets of community institutions.
- CEMAC: also levies a 1 percent tax on all non-CEMAC imports to finance its institutions.
- CEMAC law explicitly prohibits imposition of other taxes apart from the CET and the service tax; WAEMU act does not give explicit instructions, resulting in WAEMU levying a tax for the larger ECOWAS organization.
- Both zones call for rollback of exemptions, but lack of consensus on a common investment code hindered achievement; CEMAC prohibits exemptions beyond those listed in the tax law, while WAEMU did not fully control exemptions.

### Differences between CEMAC and WAEMU tariff regimes
- Rates (Table 1 data preserved):
  - Category 1 Essential goods: CEMAC 5, WAEMU 0
  - Category 2 Raw materials and equipments: CEMAC 10, WAEMU 5
  - Category 3 Intermediate and selected goods: CEMAC 20, WAEMU 10
  - Category 4 Other consumer goods: CEMAC 30, WAEMU 20
- Harmonized rate structure higher in CEMAC than in WAEMU by as much as 10 percentage points.
- WAEMU lower rate structure after harmonization in 2000 reflects efforts to enhance competitiveness and reduce incentives for expansion of the informal sector.
- Both use four-tier structure and four-digit HS code, but subcategory classifications may differ across countries.
- WAEMU explicitly levies a statistical tax; CEMAC authorizes a service tax but considers it a national tax.

### Implementation, deviations, and impacts on intra-zone trade
- CEMAC implementation:
  - All CEMAC countries adopted new customs duty at prescribed rates, most levy service tax at moderate rates (1–2 percent).
  - Significant departures: Equatorial Guinea imposes a fiscal duty 15 percent–40 percent; Chad levies additional import tax at 25 percent on sugar and a tax earmarked for rural action fund; Central African Republic imposes two additional taxes at 0.25 percent each and charges tax-exempt imports an 8 percent processing fee; Cameroon imposes tax earmarked for computerization. Only Gabon applies harmonized external tariff without significant deviation.
  - Several countries levy export taxes (Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, and Gabon); Cameroon and Central African Republic also levy a quality control tax.
- WAEMU implementation:
  - WAEMU countries implemented harmonized tariff structure: single customs duty, statistical tax, CIT, and RPT. Imports taxed per four-tier classification, though mapping may not exactly conform to directive.
  - RPT expiry postponed from end-2003 to end-2005. Producers in half of member countries (Burkina Faso, Côte d’Ivoire, Mali, and Senegal) benefited from RPT. Côte d’Ivoire, Mali, Senegal sought additional protection via CIT. Benin, Guinea-Bissau, Niger, and Togo did not request RPT or CIT.
  - Deviations: Senegal and Benin impose other taxes, some at high rates; Togo imposes a 4 percent stamp duty on imports in addition to 1 percent statistical tax; Burkina Faso levies toll tax on all imports at variable rates. Niger appears compliant with WAEMU provisions.
  - Most WAEMU countries have export taxes with different names and bases (exit tax and road tax in Benin; single exit tax called DUS in Côte d’Ivoire; special re-export tax in Niger and Togo).
- Assessment:
  - Broad compliance with the common external tariff in both zones overall.
  - Significant departures in several countries (Equatorial Guinea, Chad, Central African Republic, Senegal, Benin) through additional import taxes and high surcharges (up to 40 percent in Equatorial Guinea; up to 20 percent in parts of Senegal).
  - Deviations translate into price distortions, potential nontariff barriers, and uncertainties about effectiveness of common tax policies; they hinder expansion of intra-WAEMU trade.

### Institutional weaknesses affecting implementation
- Institutional framework is top-heavy on policymaking, to detriment of implementation and enforcement.
- Two main decision-making authorities: conference of heads of state and council of ministers; only technical organs are the Executive Secretariat in the CEMAC and the Commission in WAEMU.
- Concentration of legislative and executive authority in governments complicates accountability and attribution of poor performance.
- Lack of prioritization of extensive list of economic development and financial subjects expected to be reviewed by CEMAC Executive Secretariat and WAEMU Commission limits effective implementation.

*Box 3. IMF’s Fiscal Affairs Department’s Revenue Technical Assistance to the WAEMU*

### Box 4. Institutional Framework of the CEMAC and the WAEMU

### _wp0612 - Box 4. Institutional Framework of the CEMAC and the WAEMU

### Conference of heads of state: authority and scope
- The Conference of heads of state is the highest authority in both the CEMAC and the WAEMU and "determines the economic and financial policies of the union and gives policy directions to the councils of ministers."
- WAEMU treaty: assigns explicit responsibilities to the Conference of heads of state for harmonization of legislations, including tax laws (Article 60); it "set priorities, objectives and guidelines for tax harmonization."
- CEMAC treaty: more general; limits the Conference to "giving broad orientations."
- The higher degree of delineation of responsibilities in the WAEMU "should lead to more clarity and accountability in policy formulation."
- Decisions of the conference, called “acts,” are binding on member states in both unions.

### Council of ministers, committees, and administrative bodies
- Council of ministers: decision-making body in both CEMAC and WAEMU; responsible for harmonization of tax policy; assisted by a committee of experts composed of representatives of member states to review and prepare the agenda.
- CEMAC Executive Secretariat:
  - Appointed for "five years."
  - Responsibilities include: (i) administration of the union; (ii) recommendations for policy reforms in all domains covered by the treaty; (iii) enforcement (unlike the WAEMU Commission) of CEMAC decisions; and (iv) preparation of progress reports on achieving the objectives of the union.
- WAEMU Commission:
  - Administrative body responsible for making recommendations on economic matters and submitting a progress report on economic integration to the regional parliament.
  - Must forward a copy of its report to national legislatures (a key difference from CEMAC).
  - Unlike the CEMAC Executive Secretariat, the WAEMU Commission "does not empower the commission to ensure effective implementation of the decisions."

### Judicial oversight and external control
- Court of Justice of the WAEMU and the Judicial Chamber of the CEMAC: responsible for interpreting the treaties of the unions.
- Auditor general: external control of government operations is the responsibility of the auditor general as provided by the treaties.
- Institutional arrangement:
  - In the WAEMU the Court of Justice and the auditor general are two separate institutions.
  - In the CEMAC these functions are combined.
- Appointment and term: "Members of the Court of Justice and the Judicial Chamber are appointed for a six-year term by the conference of heads of state."
- Decisions of the Court of Justice and the Judicial Chamber are "final and enforceable."

### Compliance incentives, limitations, and current weaknesses
- Modern features of the reformed taxes are expected to promote awareness and compliance; transfer of tax authority to supranational institutions is "conducive to more stability and predictability of tax policy."
- Simplification of the tax system should "facilitate revenue administration."
- Current enforcement gap: regional courts are responsible for assessing compliance, but "Noncompliance is virtually cost-free because no penalty or sanction is attached to the failure to comply fully with the tax directives."
- Administrative capacity constraint: "lack of expertise of the administrative bodies in their many areas of responsibilities" contributes to slow progress.

### Unfinished agenda: institutional and design reforms (summary of proposed actions)
- Institutional framework options:
  - Full supranational enforcement agency considered unrealistic (member countries unlikely to relinquish sovereignty).
  - Alternative: create a system of financial rewards and sanctions via a central fund in each zone.
    - Funding sources: profits made by the common central banks (in the CEMAC and the WAEMU) and other regional institutions like development banks, and the community levies (PCS in the WAEMU, PC in CEMAC).
    - After appropriations for regional institution budgets, central fund resources will be distributed to members "that are in full compliance with the community regulations." Noncomplying countries will forfeit their share.
    - Assessment to be made by regional courts, which "should be staffed with judges of impeccable credentials of competence and independence."
    - Implementation detail: CEMAC Executive Secretariat and WAEMU Commission can set up in each country "a small unit tasked with collecting the community levies at point of entry and transferring the proceeds to the central fund."
    - WAMZ alternative: "ECOWAS central fund could be financed by the balance of the community levy and a share of the central bank profit of each member country. Budgetary contributions will be required in the absence of sufficient profits or in the event of losses."
- Design reforms:
  - Corporate income tax (CIT) in the WAEMU: "a disincentive for domestic producers in selected sectors (agriculture, livestock, fisheries, and agro-industries)" and "should be eliminated."
    - Note: "The repeal may be phased over a few years to facilitate the adjustment" and during the transition "the revenue collected should be considered regional ... and deposited ... in the proposed central fund."
  - Sanctions for noncompliance: current sanctions are "few and harmless"; need "graduated but stronger sanctions" (examples: downgrading from member status to observer; suspension from participating in meetings, including the conference of heads of state and ministerial councils; publication of appraisal reports on noncomplying members).

### Compliance actions and country implementation status
- WAEMU compliance:
  - Niger: compliance with harmonized external tariff "appears to be deviation-free."
  - Togo: "seems to have implemented the main elements of the external tariff" (but levies a high stamp duty on imports).
- CEMAC compliance:
  - Gabon: "the only country that appears to have satisfactorily complied with the key provisions of the reformed tariff."
  - Main departure across both zones: continued imposition of surcharges, often at high rates.
    - Key measure: "elimination of surcharges and other disguised import taxes levied by the CEMAC and WAEMU countries (particularly Chad, Gabon, and Senegal)."
  - Equatorial Guinea: "The effective implementation of the CET ... is also required."
- WAMZ recommendation:
  - Members should implement, as Ghana did, the WAEMU tariff reform. This would entail:
    - "(i) a sharp reduction in protection in Nigeria;"
    - "(ii) the elimination of fiscal duty in Guinea;"
    - "(iii) an overhaul of external tariffs in The Gambia and Sierra Leone."

### Box 5: Measures to enhance compliance with harmonized tariff (country-specific measures)
- Cameroon
  - eliminate the additional import tax of "0.45 percent" earmarked for the computerization of the ministry of finance; and
  - remove the quality control tax of "0.95 percent."
- Central African Republic
  - remove the additional import taxes, each at "0.25 percent," earmarked for the Council of Customs Brokers, and the computerization of the ministry of finance; and
  - eliminate the exemption-processing fee of "8 percent" levied on tax-exempt imports.
- Chad
  - eliminate the supplementary tax of "25 percent" on imported sugar;
  - remove the additional "1 percent" tax on imported animal, and plants earmarked for the Rural Action Fund; and
  - eliminate the import prepayment tax of "4 percent."
- Equatorial Guinea
  - implement the CET; and
  - eliminate the fiscal duty of "15–40 percent" on imports.
- Gabon
  - eliminate the "20 percent" surcharge on imported edible fats and oil, soap, poultry products, cigarettes, and flour.
- Benin
  - remove the "5 percent" surcharge on imported television sets; and
  - remove the additional "0.15 percent" tax on imports earmarked for road works.
- Burkina Faso
  - eliminate taxes levied at specific rates for the Chamber of Commerce on imports, particularly on rice, sugar, cement, metal products, and vehicles.
- Côte d’Ivoire
  - "no available information on eventual deviations from the harmonized taxes."
- Senegal
  - eliminate the "1 percent" surcharge on selected imported textiles; and
  - remove the import tax surcharge of "10 percent" on millet, and sorghum, and "20 percent" on onions, potato, banana, rice, and cigarettes.
- Togo
  - eliminate the stamp duty of "4 percent" on imports.

*Source: _wp0612 - Box 4. Institutional Framework of the CEMAC and the WAEMU*

### Appendix Table 2. WAEMU: Main Impor

### Appendix Table 2. WAEMU: Main Impor

### Customs duties and harmonization features
- Classification of goods: yes (listed for multiple countries).
- Application of harmonized rates: yes (listed for multiple countries).
- Temporary surcharge: June 2000 application 2/.
- Statistical tax:
  - Base: SGS-certified imports; All imports; Imports and ...
  - Rate: 1.00%; 2%; 2%
  - Exemptions: yes (listed)
- Regional integration tax:
  - Base: Non-CEMAC imports
  - Rate: 1%; 1% of imports of cat. III Non-CEMAC; 2.5% for excise goods
  - Exemptions: yes (listed)
- Export duty:
  - Base: Export value of logs; Fob or reference value; Fob value
  - Rate: 17.50%; Variable 3/; Variable 4/; Variable 5/
- Other customs features noted:
  - Fiscal duty:
    - Base: All imports 6/
    - Rate: 15%-40%
  - Council of customs brokers:
    - Base: Imports and exports
    - Rate: 0.25%
  - Computerization of the MoF:
    - Base: Imports and exports
    - Rate: 0.45%; 0.25%
  - Exemption processing fee:
    - Base: Tax-exempt imports
    - Rate: 8.00%
  - Supplementary tax:
    - Base: Selected imports
    - Rate: 25%
  - Storage and custody tax:
    - Base: Merchandise not cleared
    - Rate: CFAF 30/day/50 kgs
  - Transit tax:
    - Base: Petroleum products; Value of goods; Fob value
    - Rate: Variable; 0.80%; 3%, 5%; 3%, 5%

### Forest, export quality and sector levies (sample country rates)
- Quality control:
  - Base: Value of selected goods; Value of goods
  - Rate: 0.95%; 0.3% for cotton
- Stumpage fee:
  - Base: Exports value; Export value of logs; Value of logs
  - Rate: 2.50%; 1%, 2.7%; 3% to 9%
- Reforestation fee:
  - Base: Fob value of exported logs
  - Rate: 5%
- Factory gate tax:
  - Base: Exports value
  - Rate: 2.25%
- Road tax:
  - Base: Fob value of exported logs
  - Rate: 2.5%
- Research and control tax:
  - Base: Exports
  - Rate: 0.50%
- Exit tax:
  - Base: Exports of animals and plant products
  - Rate: 0.5%-30%

### WAEMU country common external tariff elements and selected other levies
- Statistical tax (WAEMU countries listed):
  - Base: All imports for local market, transit and re-exports; All imports; All imports/exports; All non-WAEMU imports; All imports
  - Rate: 1%; 1%; 1%; 1% (imports), 3% (exports); 1%; 1%
  - Exemptions: yes; yes; no (where indicated)
- Regional integration tax (PCS):
  - Base: Non-WAEMU imports
  - Rate: 1%; 0.50% (in one listing)
  - Exemptions: yes in most listed, no in at least one case
- ECOWAS levy:
  - Base: Non-ECOWAS imports
  - Rate: 0.5%; 1%-4%
  - Exemptions: yes in some cases, no in others
- Declining protection tax (TDP):
  - Base: Selected imports
  - Rate: 2.5% - 5% 1/; 10%-20%  (where indicated)
  - Exemptions: yes (where indicated)
- Cyclical import tax (CIT):
  - Base: Sugar, wheat flour, rice; Selected non-WAEMU
  - Rate: Variable; 2/ (variable where indicated)
  - Exemptions: yes (where indicated)
- Export duty examples:
  - Base: Weight; Value of cashew nuts
  - Rate: Variable 3/; 10%
- Other import/export taxes and fees (selected entries with exact rates):
  - Information technology tax:
    - Base: Customs declaration
    - Rate: CFAF 2000/declaration
  - Radio tax:
    - Base: Imports of radio sets
    - Rate: CFAF 500/set
  - Television tax:
    - Base: Value of imported TV set
    - Rate: 5%
  - Temporary import tax:
    - Base: Foreign passenger vehicle
    - Rate: CFAF 5,000/vehicle
  - Special re-export tax:
    - Base: Value of selected items; Value of re-exports; Sales in airport shops
    - Rate: 8%; Varies with destination; 1%-4%
  - Toll tax:
    - Base: All imports
    - Rate: Variable 4/
  - Tax on textiles:
    - Base: Selected imported textiles
    - Rate: 1%
  - Surcharges:
    - Base: Selected imports
    - Rate: 10%, 20% 5/
  - Transit tax:
    - Base: Selected goods in transit
    - Rate: Variable rates 6/
  - Exit tax:
    - Base: Value of exports
    - Rate: Variable rate
  - Road tax:
    - Base: All imports & exports
    - Rate: 0.15%
  - Stamp duty:
    - Base: Statistical tax; All imports
    - Rate: 4%; 4%
  - Additional import tax:
    - Base: Volume
    - Rate: CFAF 2,200/liter

### Country-specific numeric highlights (exact values excerpted)
- Statistical tax rates: 1.00%; 2%; 2%
- Regional integration tax rates: 1%; 1% of imports of cat. III Non-CEMAC; 2.5% for excise goods
- Export duty sample rate: 17.50%
- Fiscal duty rate band: 15%-40%
- Council of customs brokers rate: 0.25%
- Computerization of the MoF rates: 0.45%; 0.25%
- Exemption processing fee rate: 8.00%
- Supplementary tax rate: 25%
- Storage and custody tax: CFAF 30/day/50 kgs
- Transit tax examples: 0.80%; 3%, 5%
- Quality control rate examples: 0.95%; 0.3% for cotton
- Stumpage fee rate examples: 2.50%; 1%, 2.7%; 3% to 9%
- Reforestation fee: 5%
- Factory gate tax: 2.25%
- Road tax on logs: 2.5%
- Research and control tax: 0.50%
- Exit tax on plant/animal exports: 0.5%-30%
- WAEMU statistical tax common rate: 1% (and 3% for exports in one listing)
- ECOWAS levy common rate: 0.5% (one listing 1%-4%)
- Declining protection tax (TDP) example rates: 2.5% - 5%; 10%-20%
- Information technology tax: CFAF 2000/declaration
- Television tax: 5%
- Temporary import tax on foreign passenger vehicle: CFAF 5,000/vehicle
- Stamp duty rates: 4%
- Additional import tax: CFAF 2,200/liter
- Truck transit fee example: The rate is CFAF 5,000 per truck for trucks carrying 1.5 ton of merchandise.

### Notes, exemptions, and footnotes (text preserved)
- 1/ The data for the Republic of Congo are not available partly because of several years of civil war.
- 2/ A 20% tax is levied on edible fats and oils, soap, poultry products, cigarettes and flour. Since end-2003, this tax has been discontinued for mineral water and industrial lubricants.
- 3/ The rates are 10.75% for timber, 8.15% for coffee, 6.08% for cotton, 4.75% for processed wood, 5% for diamonds, 3% for gold, 0.3% for cotton and 0.5% for other items.
- 4/ The rates are 1% for coffee and cocoa, 15.8% for logs (plus CFAF 650 per cubic meter), 9% for plywood (plus CFAF 650 per cubic meter).
- 5/ The rates are 3.5% for manganese and 20% for logs.
- 6/ Except alcohol, tobacco, and wine, for which the rates are specific.
- 7/ Including coffee, pepper, cocoa, tobacco, and rubber.
- WAEMU footnotes:
  - 1/ Declining rate starting in July 1999.
  - 2/ The rate is 10% for soybeans, rapeseeds, groundnuts oils. This tax is also levied on sugar, flour, rice and cigarettes.
  - 3/ The rate (in CFAF/kg) is 160 for cocoa, 10 for coffee, cashew and shea nuts, 1% - 25% for logs. The rate on cola nuts is ad valorem and set at 14%.
  - 4/ Tax levied for the Chamber of Commerce at a rate of CFAF 75/ton on rice, sugar, and cement; CFAF 150 per ton on metal products; CFAF 3,000 per vehicle, and CFAF 500/ton for other imports.
  - 5/ The rate is 10% for millet and sorghum and 20% for onions, potatoes, bananas, cigarettes, and rice.
  - 6/ Specific tax ranging from CFAF 200 to CFAF 1,500 per item. Applied to wool and fine hair fabric, synthetic fiber fabric, bed and table linen, tobacco products, and alcoholic beverages.
  - The rate is CFAF 5,000 per truck for trucks carrying 1.5 ton of merchandise.

*Sources: Article IV Consultation Reports of the Fund (the year appearing under the name of the country is that of the report).*

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