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SMEs bemoan government tax exemption requirements

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A worker prepares snacks at the Ly Ly Food Industry Company factory in Phnom Penh. Fasmec president Te Taingpor says most SMEs cannot meet the government’s requirements for tax exemptions. Post Staff

SMEs bemoan government tax exemption requirements

Small and medium enterprises (SMEs) are finding it difficult to meet the requirements to apply for tax exemption from the General Department of Taxation ’s (GDT) said Federation of Association for Small and Medium Enterprises of Cambodia (Fasmec) president Te Taingpor.

Speaking to The Post on Wednesday, he said most SMEs could not meet the requirements as they were still too high.

“I don’t think our SME members will apply for it. It is difficult and complicated, and the capacity of our SMEs is too limited to meet the required criteria,” he said.

The GDT announced in December that all SMEs must have legal certification demonstrating their business statuses and must submit business, financial and employee plans as well as commercial and labour agreements and their business locations to apply for tax exemption.

Taingpor said even submitting business and financial plans are difficult for SMEs, and hence, Fasmec is now working on a project to ask the government to facilitate the procedures for the SMEs.

“We are trying to find a better way for all our SME members and will submit our proposal to the government to encourage them to apply for tax exemption,” he said.

A sub-decree on SME signed by Prime Minister Hun Sen in October offers income tax exemption from three to five year to six priority sectors, including agro-industries and food production and processing.

The new sub-decree said SMEs intending to receive a five-year tax exemption must use at least 60 per cent domestic raw materials, increase the number of employees by at least 20 per cent or be located in SME districts.

Cambodia Women Entrepreneurs Association president Eng Lykuong said the requirements would be beneficial in the long term despite how strenuous they may currently be for SMEs.

“It is hard and puts a lot of pressure on SMEs to meet the criteria, but if we overcome this, it would be fruitful in the long run for both SMEs and the government,” she said.

“We need time to educate SMEs to understand the benefits. The government should provide short courses to promote awareness of the procedures.”

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