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Kingdom mulls tax as e-commerce booms

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In just eight years, Cambodia has seen an increase of active internet users from about 28,000 to 7.1 million. Photo supplied

Kingdom mulls tax as e-commerce booms

The Cambodian government is studying the possibility of introducing a tax on e-commerce sales and designing policies to support the expansion of the sector, as online trade is accelerating economic growth in the Kingdom.

The comments came on Wednesday at a discussion seminar on online taxation, or e-tax, led by Finance Minister Aun Pornmoniroth. The conference focused on the progress of e-commerce in Cambodia in the context of the global digital economy.

In a statement, the Ministry of Economy and Finance (MEF) noted a remarkable increase in the use of technology across most business sectors, with consumers especially embracing new methods for online payments.

The comments reflected a US Department of Commerce report released this year.

“Cambodians are adopting e-commerce both as consumers and merchants, and there is significant untapped market potential in the sector fueled by exploding internet access, high smartphone penetration and a young, growing middle class,” the report said.

The US government noted in just eight years, Cambodia has seen an increase of active internet users from about 28,000 to 7.1 million, while the number of active social media users in the Kingdom has grown to 4.9 million.

The MEF said the development of digital technologies is transforming the Kingdom’s traditional business methods. It said the new domestic economic model will be greatly influenced by e-commerce and the online consumer culture.

“This new trend requires the Cambodian government to prepare and adjust relevant policies and regulations to seize all opportunities, to boost the growth of e-commerce, and to minimise any risk that can be caused by technology,” the statement said.

It said while a tax on e-commerce is being developed regionally and globally, Cambodia has no actual mechanism to collect fiscal revenue from e-commerce operations.

The MEF did not detail what type of online business is defined as e-commerce or what type or size of a business transaction would be subject to tax obligations in the future.

Ros Seilava, an under-secretary at the MEF, told The Post on Wednesday that the ministry is at the “study stage” for the development of online trading and is looking for ways to push the growth of this sector.

“Cambodia’s e-commerce is at an early stage of development, so we might not decide to impose a tax immediately. We’re studying the actual development and designing some policies and regulation to help the sector grow smoothly,” he said.

The development of e-commerce in Cambodia has been hindered by a lack of regulation, MEF officials said. An e-commerce law has been under review by the Council of Ministers for several years but has not been made public.

And despite the positive trend, the US report described several challenges.

The report said: “E-commerce is relatively undeveloped compared to Cambodia’s neighbours. Impediments to its development include inadequate internet infrastructure, limited audiences, delivery system challenges, and minimal credit card use.

“Other impediments include the high cost of electricity and a lack of trained ICT professionals.”

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