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Phone retailers ordered to pay tax on inventories

A member of the economic police sits next to boxes of phone handsets last week during a raid on a shop selling mobile devices with unpaid duty in central Phnom Penh.
A member of the economic police sits next to boxes of phone handsets last week during a raid on a shop selling mobile devices with unpaid duty in central Phnom Penh. Heng Chivoan

Phone retailers ordered to pay tax on inventories

Following raids on phone shops selling grey-market devices last week, the government is giving retailers a two-week window to declare their stock of mobile phone handsets and pay the relevant taxes or face hefty fines.

Many of the capital’s vendors have already received a notice from the General Department of Customs and Excise (GDCE) giving them 15 days, starting from October 30, to declare the number of mobile devices in their store for which duty has not been paid.

Any mobile device found to be undeclared after the grace period will be deemed illegal and sellers could face heavy fines, the notice said.

Vendors will be given till January 31 to pay any back taxes owed on the mobile devices in accordance with the customs law. The payments can be made in instalments, the notice added.

Illegally imported phones are regularly brought into Cambodia by travellers with customs officials being unable to monitor all these imports, said an official at the GDCE, who wished to be unnamed because he was not authorised to speak on the issue.

“Smuggled phones flow in through travellers, who keep them in their luggage, and which cannot be checked 100 per cent of the time” the official said.

“After the deadline, the authorities will check phone shops if they are suspected of continuing to sell undeclared phones.”

The directive comes after two phone shops in Phnom Penh – Nika and New Phone Shop – were raided last week, with officials netting more than 6,000 smuggled smartphones.

The raids and the subsequent notice have unlicensed distributors of mobile phones on guard.

Lun Maneth, manager at Vathanak Phone Shop in Phnom Penh, said that after receiving the directive from the Customs Department on Monday, she checked with her distributor to see if all the phones she was selling were tax-compliant.

“I take phones from companies, such as Huawei, Samsung and Syntech, and they have given me stamps to put on the phones, proving that taxes were paid” she said.

However, Maneth said that some phones had not been declared and she was contacting her suppliers because she was worried they would be confiscated, especially in the case of iPhones.

“I do not dare to take any more iPhones to sell in the shop,” she said, “It’s difficult to sell these [grey-market] iPhones, despite the high demand from customers.”

Independent economist Srey Chanthy said the smuggling of mobile phones was not only robbing the government of tax revenue, but also resulting in buyers paying higher prices for phones compared to the international market.

“Selling [smuggled] phones causes a loss for both sides – the government and the users themselves, because the user is paying full price for a phone without paying the tax component,” he said.

Chanthy said this was illustrated by the sale of the new iPhone 6S and iPhone 6S Plus handsets, which have yet to be officially released in Cambodia, while many customers have paid more than twice the retail price to get their hands on the phone through grey-market sources.

Representatives for Chinese brand Huawei and iOne, a licensed distributor of iPhones in Cambodia, declined to comment.

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