The double tax avoidance (DTA) agreement with Hong Kong has come into force after the Ministry of Economy and Finance released a prakas on the matter earlier this month.
The prakas, signed by Minister of Economy and Finance Aun Pornmoniroth on February 7 and released on Monday, said the DTA with Hong Kong became effective on January 1.
Cambodia Investment Management group CEO Anthony Galliano told The Post that DTAs abolish and discourage incidents of double taxation, promote bilateral investment, clarity and transparency, stimulate global trade, and, most importantly for Cambodia, attract foreign investment.
DTAs also provide a mechanism to exchange information between tax authorities and help prevent tax avoidance and evasion.
“DTA agreements generally benefit developing countries like Cambodia as these agreements normally result in increased capital flight from developed to developing countries.
“Capital goes to developing countries while developed countries see their ability to attract foreign investment reduced.
“Countries such as India have taken advantage of DTAs and executed over 80 of them. Cambodia, with 10 so far, has an excellent start, but there is room for significant expansion.”
On November 3, the National Assembly ratified the agreement on avoidance of double taxation and prevention of fiscal evasion signed with Hong Kong.
During the ratification, Pornmoniroth pointed out that Cambodia has similar agreements with Singapore, China, Brunei, Thailand, Vietnam and Indonesia.
He said the agreement will help attract and facilitate international investment and trade and prevent fiscal evasion concerning taxes on income.