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$20M collected as deadline looms for right-hand-drive tax payments

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Right-hand-drive trucks along Street 2004 on August 21. Heng Chivoan

$20M collected as deadline looms for right-hand-drive tax payments

The General Department of Customs and Excise of Cambodia (GDCE) has collected $19.73 million in levies on previously-untaxed right-hand-drive (RHD) vehicles in the 90 days to October 4, in Phase II of its campaign to get owners of such vehicles to comply with their tax obligations by the October 8 deadline or risk seizure, according to its chief.

Owners of RHD vehicles that were recently grandfathered-in as street legal without modification were instructed to register by July 31 for vehicle identification and new special number plates reserved for RHD vehicles, and subsequently fulfil their tax obligations by October 8.

Barring potential policy changes, owners who failed to meet either requirement face confiscation by the authorities starting on October 9.

“Once the deadline expires, there’ll be no choice – no matter how urgently you want to pay the taxes or fines, it’ll be impossible since there’d be no more legal channels,” GDCE director-general Kun Nhem told a press conference at department headquarters on October 5.

However, he revealed that talks of a potential extension are underway for owners who registered their vehicles on or before July 31, considering that the applicable levies have not been paid on at least 3,838 units.

Nhem shared that of the 9,814 identified RHD vehicles in Cambodia, the applicable taxes and fees have been paid on a total of 5,976 units (60.89 per cent) as of October 4. He also remarked that freight vehicles made at least 10 years ago accounted for more than 90 per cent of the vehicles taxed.

The campaign’s second phase kicked off on July 7, a day after Prime Minister Hun Sen allowed owners to pay their dues without modifying their RHD vehicles. It followed the 303-day first phase, which ran from September 2021 to June 2022.

The GDCE chief attributed the relatively low sum of money collected in the second phase to the low import tax rates of applicable vehicles, which he noted were mostly older sand, rock and gravel haulers – unlike tourism-related vehicles, which generally command higher tariffs.

“The older the vehicle, the lower the tax rate. On the other hand, these tax revenues form part of strategic plans to raise funds for the government,” he said.

For reference, in Phase I, plus July 1-6, owners of 7,040 RHD vehicles paid their levies, either in part or in full, to the tune of $41.56 million.

Speaking to The Post, Hong Vanak, director of International Economics at the Royal Academy of Cambodia, likened the campaign to a government reform based on a crackdown on illegally-imported vehicles that aims to strengthen the implementation of the law and plug loopholes, as well as ensure stable revenue streams for state coffers.

He commented that with a more efficient and transparent tax and customs collection regime, the state could bring in significantly larger amounts of revenue each year, to be used to develop the country.

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