The Ministry of Economy and Finance has submitted a request to Prime Minister Hun Sen to postpone the implementation of a capital gains tax for two more years until January 1, 2024.
The move aims to restore and boost economic growth for the “new normal”, in what has been termed “living with Covid-19”, ministry spokesman Meas Soksensan told The Post on January 26.
He said the government had issued Resolution No 122 dated December 16 on the implementation of a strategic framework and programmes to rehabilitate and stimulate Cambodia’s economic growth for 2021-2023 during life with Covid-19 in the “new normal”.
Over the past two years, the government has introduced a number of measures to alleviate the fiscal burden of the private sector and stabilise businesses, especially those that have been hardest hit by the Covid-19 crisis, he added.
Although the Covid situation has eased to some extent, some sectors have not been able to resume normal business activities, and they need further support, he underlined.
To facilitate the recovery of those sectors, the government will continue to prepare the necessary relevant measures to relieve the fiscal burden of enterprises and improve the quality of services provided by the ministry’s General Department of Taxation (GDT), he said.
“In this regard, the Ministry of Economy and Finance has submitted a request to the prime minister to delay the implementation of the capital gains tax for another two years, to January 1, 2024 as prescribed in letter No 257 MEF GDT dated 19 January 2022,” Soksensan said.
Cambodian Valuers and Estate Agents Association (CVEA) president Chrek Soknim lauded the ministry’s request, saying it will help restore and boost economic activity.
“We are pleased with the proposal for a two-year postponement for the implementation of the capital gains tax – the real estate and construction sectors have also been affected by the spread of the Covid-19 crisis,” he said. “Covid-19 has also made real estate activity seem stagnant or less active.”
“Of course, we will work with the government to encourage property owners who have benefited from sales to pay tax in order to contribute to the national budget, but now the sector has not recovered to where it was yet,” he added.
Soknim noted that capital gains tax applies in Vietnam, Thailand and Singapore.
American Chamber of Commerce in Cambodia president Anthony Galliano told The Post on January 26 that there is a high probability that the implementation of the capital gains tax will be delayed again given the mention in the “Strategic Framework and Programmes to Rehabilitate and Stimulate Cambodia’s Economic Growth in Living with Covid-19 in the New Normal for 2021-2023” stating “examine the feasibility of postponing the implementation of the Capital gain tax until 2023, to boost investments”.
“Therefore my expectations are that the capital gain tax will be postponed at least until 2023 given the anticipation that Covid will still adversely impact the economy,” he said.
Capital gains tax will be levied on taxpayers’ gains from the sale, transfer or establishment of property rights, or the registration of ownership or possession rights, according to Prakas No 346, which was signed by minister Aun Pornmoniroth on April 1, 2020.
Individuals will be required to pay a 20 per cent capital gains tax rate on calculated profits from the sale of certain assets including land, buildings, stocks, bonds, licences, patents and currencies.
GDT deputy director Ken Sambath said in a seminar early last year that the government decided to waive tax on capital gains made through the sale or transfer of agricultural land that remains in production and whose owner or operator resides in the same commune as the farmland.
Exemption also extends to immovable property sales and transfers among relatives as outlined in the regulation on stamp duty tax – between siblings, parents and children, parents-in-law and children-in-law and grandparents-in-law and grandchildren-in-law (but not between siblings-in-law), as well as assets sold or transferred for “public benefit” as stated in the Law on Expropriation, he added.