The Ministry of Economy and Finance on November 20 issued Prakas No 962 SHV BrK on Tax Debt Management.
The new prakas sets forth rules and procedures relating to tax debt management and aims to ensure a more efficient, effective and transparent collection process.
Comprising five chapters and 16 articles, the Prakas was signed by minister Aun Pornmoniroth and became effective on the same day.
Article 4, for example, notes deferred tax liability can arise from carelessness, gross negligence, tax evasion or obstruction of taxpayers’ performance of tax provisions.
This includes delays in filing tax returns and erroneous payments or adjustments as identified by audit processes or tax investigations, it said.
The prakas said: “Taxpayers can pay tax debts in a number of ways, such as a one-time lump sum or in instalments . . . [with express] permission from the General Department of Taxation [GDT].
“Taxpayers can pay tax liabilities only on the types of tax, surcharges or late-payment interest that they agree to, and dispute . . . [those that] they do not.
“They can also pay their tax debt according to the shares held by any natural person that is a shareholder responsible for the proportion of shares in relation to a company.
“[This is] in case the majority of shareholders intend to pay tax liabilities only on their share of tax liabilities at the request of the company owner and after obtaining permission from the General Department of Taxation.
“Natural persons who own companies and have paid the debt owed under this condition may be exempted from the implementation of the tax collection measures and more stringent enforcement to collect tax debt from the fiscal administration, as stated in articles 9 and 10 of the prakas.
“But natural persons who own companies must be responsible for their companies’ joint tax liabilities.”
Hong Vanak, director of International Economics, Royal Academy of Cambodia, noted the government’s tax revenue collection has improved year by year.
“I have witnessed a significant increase in the tax collection budget over the past decade or so, which means that the tax collection process is getting better and better, but I do not think it is yet fully accurate – the government needs to do more to make people happy to pay taxes to the state,” he said.
According to this prakas, tax liabilities are classified into two categories – collectible tax liabilities, which are a priority in the collection process, and non-collectible tax debts that the taxpayer cannot actually afford to pay.
To be deemed non-collectible, either the GDT’s 10 year statute on collection must have passed, or both the taxpayer must be deemed insolvent and the liability must have remained unpaid for at least three years.
The status has the effect of exempting the liability from the application of additional tax, interest or other penalties that would otherwise be incurred. However, being considered a non-collectible tax debt does not cancel the taxpayer’s tax debt.