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GDT revenues exceed 2022 target in Jan-Oct

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Annual GDT revenue targets are set by the Law on Financial Management for the corresponding year. The department’s statistics show that the 2022 target was surpassed in October. Hong Menea

GDT revenues exceed 2022 target in Jan-Oct

Revenues collected by the General Department of Taxation (GDT) have been on a progressive rise, buoyed by greater general understanding of tax obligations and more effective law enforcement in the area, as well as overall improvements in the economic situation, observers have said.

Using a 4,050 KHR/USD conversion rate, the GDT on November 15 reported its revenues for the first 10 months of 2022 at $2.94595 billion, or 104.48 per cent of the $2.81955 billion target set for this year. The 10-month total marked a year-on-year increase of $624.31 million, or 26.9 per cent.

Annual GDT revenue targets are set by the Law on Financial Management for the corresponding year. The department’s statistics show that the 2022 target was surpassed in October.

In late September, GDT director-general Kong Vibol disclosed that the department expects to collect 110-115 per cent of the full-year 2022 target by end-December. For reference, the GDT said it collected $2.78192 billion in revenues in 2021, or 124.02 per cent of the full-year target.

Similarly, Prime Minister Hun Sen on November 8 voiced optimism that the GDT’s revenues would top 115 per cent of the annual target by end-2022, or $3.242 billion. He was speaking at this year’s Cambodia-Vietnam Investment and Trade Promotion Forum held in Phnom Penh.

In October alone, revenues came to $252.25 million – up 21.24 per cent year-on-year – equivalent to 8.95 per cent of the full-year target and 8.56 per cent of the 10-month total.

The figures provided by the GDT on November 15 indicate that the January-September total was revised up by just over $0.3 million from the $2.69338 billion cited in a report issued by the department on October 11 that showed that $254.06 million was collected in September alone.

Speaking to The Post on November 16, Federation of Associations for Small and Medium Enterprises of Cambodia (FASMEC) president Te Taingpor commented that the GDT’s revenues continue to be in positive growth territory.

This, he claimed, is due to the rising number of businesses operating in Cambodia and increasing contributions from real estate and other sectors, broader and more successful promotion of taxpayers’ obligations, and novel methods of paying taxes.

“The increased tax revenue collection shows that Cambodia’s economic activity is moving forward well, and is an important source of income for the state to invest,” Taingpor said.

Hong Vanak, director of International Economics at the Royal Academy of Cambodia, underscored that the GDT would have collected considerably more revenues had the state not provided tax breaks for tourism and other sectors still bruised from the Covid-19 crisis.

Regardless, he said, the uptick in revenues signals post-Covid recovery, following the slowdowns seen in 2020-2021.

And as a bonus, the bilateral free trade agreement (FTA) with China and the Regional Comprehensive Economic Partnership (RCEP), both of which became effective on January 1, 2022 in the Kingdom, coupled with a separate two-way FTA with South Korea that is set to enter into force next month, will woo inbound investment down the road, he said.

“Taxes represent the revenues of local businesses. With local businesses doing well, greater awareness of tax obligations and more effective law enforcement, tax revenues will ratchet up even higher, without a doubt,” Vanak said.

The draft Law on Financial Management for 2023, approved by the Council of Ministers on October 28, sets a 14.46539 trillion riel target for the GDT’s revenues, or $3.57170 billion, which is up 26.68 per cent from the 2022 goal.

The draft law will now be sent to the National Assembly (NA) for a vote. If approved, the document will be forwarded to the Senate for review, after which it will be returned to the NA to proceed with a signature from the King – or acting head of state – to become law.

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