Search

Search form

Key outcomes for EuroCham’s Tax Forum 2016

Content image - Phnom Penh Post
From left to right: Anthony Galliano, H.E Vann Puthipol, Eng Ratana, and Thibaud Sournia. Photo supplied

Key outcomes for EuroCham’s Tax Forum 2016

On September 21, EuroCham Cambodia held its “Tax Forum 2016” with well over 400 attendees, reflecting the avid interest in the dynamically changing tax system in Cambodia and the opportunity for business professionals to resolve looming tax questions.

His Excellency Kong Vibol, Director General of the General Department of Taxation (GDT), gave the keynote presentation and further furnished 15 senior tax officials from the GDT, who either participated in panel discussions or responded to questions from conference members.

Legal and tax experts delivered presentations on pertinent trending tax topics and engaged in dialogue with the audience through panel discussions. The event was an enormous success with incredibly positive feedback. There were several key conclusions reached, which emerged throughout the conference.

The base of taxpayers in Cambodia is expanding as a result of the abolishment of the estimated regime, greater inclusion of small taxpayers, and assertive policing by the GDT, targeting companies still reluctant to register as taxpayers. Tax revenue rose to $1.3 billion in 2015, up 22 percent from 2014, and have increased to US$829 million in the first half of 2016, a surge of 18 percent, compared to a GDT of 7 percent. His Excellency noted tax revenues as a percentage of GDT are a paltry 20 percent, compared to an average of 30 to 40 percent in most countries.

Content image - Phnom Penh Post
Anthony Galliano, Chairman of the Eurocham Tax Committee. Photo supplied

Although the GDT has had success in broadening the taxpayer base, there is still a long way to go in capturing those businesses still evading registering as a taxpayer. In a recent survey, the GDT discovered that as much as 50 percent of businesses obliged to register in the Chamkarmon district had failed to do so.

The Ministry of Economy and Finance, through Notification No. 039, recently announced visits to businesses to collect data and inspect constitutive documents. The GDT intends to continue its door to door examinations of businesses to further capture those outlying offenders. This is a very resolute initiative by the GDT, with tools such as digital mapping. So, those remaining non-compliant offenders should register forthwith.

The increased scale of audits has significantly contributed to the GDT’s coffers. The number of audits has risen by more than 300 percent since 2014 and the GDT is on track to execute close to 3,000 audits in 2016. Existing taxpayers are feeling the pinch as a result of heightened oversight. It is not unusual for a company to be confronted with two audits at one time.

Audience members raised concern over GDT Instruction No. 1127, which reminded taxpayers of existing invoicing requirements and stipulated the use of the Khmer language, use of quality ink and paper, and maintaining records in good condition for 10 years. Despite the grumbling, the GDT remained firm, save the acceptance of technical terms permitted in English only.

There were, also, several positive developments. The GDT has remodelled its tax branches to be more user-friendly and have trained its staff to be more customer-oriented, recognising in the past tax department personnel may have been “nasty” and “unfriendly” at times. His Excellency mentioned that tax payment options will be extended, likely to include ANZ Royal and potentially Wing. Tax filing online will shortly become a reality, relieving taxpayers of the requirement to physically visit tax branches to lodge their tax forms.

Content image - Phnom Penh Post
His Excellency Kong Vibol, Director General of the GDT. Photo supplied

The most monumental announcement was by His Excellency Kong Vibol who mentioned that the GDT is considering the elimination of the 1 percent minimum tax under certain circumstances where a taxpayer can provide an audited report and demonstrate full transparency. It is believed that the overwhelming majority of taxpayers do not pay profit tax, so the minimum tax has been a safety net. His Excellency made it clear that the GDT is a partner in the company of the taxpayer, and stated, “I want my 20 percent”, referring to the 20 percent annual tax on profit.

Finally, His Excellency disclosed that taxes will not increase in the next two years.

Anthony Galliano is the chairman of the Eurocham Tax Committee and CEO of Cambodian Investment Management

RECOMMENDED STORIES

  • Breaking: PM says prominent human rights NGO ‘must close’

    Prime Minister Hun Sen has instructed the Interior Ministry to investigate the Cambodian Center for Human Rights (CCHR) and potentially close it “because they follow foreigners”, appearing to link the rights group to the opposition Cambodia National Rescue Party's purported “revolution”. The CNRP - the

  • Rainsy and Sokha ‘would already be dead’: PM

    Prime Minister Hun Sen on Sunday appeared to suggest he would have assassinated opposition leaders Sam Rainsy and Kem Sokha had he known they were promising to “organise a new government” in the aftermath of the disputed 2013 national elections. In a clip from his speech

  • Massive ceremony at Angkor Wat will show ‘Cambodia not in anarchy’: PM

    Government officials, thousands of monks and Prime Minister Hun Sen himself will hold a massive prayer ceremony at Angkor Wat in early December to highlight the Kingdom’s continuing “peace, independence and political stability”, a spectacle observers said was designed to disguise the deterioration of

  • PM tells workers CNRP is to blame for any sanctions

    In a speech to workers yesterday, Prime Minister Hun Sen pinned the blame for any damage inflicted on Cambodia’s garment industry by potential economic sanctions squarely on the opposition party. “You must remember clearly that if the purchase orders are reduced, it is all