The government is considering a range of tax incentives to encourage companies to list on a stock exchange planned for the country as well as set up in a financial district being developed
The government is mulling tax incentives to encourage companies to list and trade shares on its planned stock exchange, a top official said last week.
Mey Vann, director of the Department of Industry and Finance at the Ministry of Economy and Finance, said tax breaks could also be directed at other companies that set up operations in a new financial district planned for the area surrounding the planned exchange.
“This is one of the ways we can attract investors – to make Cambodia more attractive than other countries so they will come to our country,” he said.
The stock exchange, which is being developed in partnership with the Korea Exchange, Asia’s fourth-largest bourse operator, will be housed in Camko City, a satellite city being developed by South Korea’s World City Co in a suburb north of central Phnom Penh.
The developer hopes part of the development will be set aside for a financial district for the capital, along the lines of the Pudong New Area in Shanghai, which has emerged as China’s financial and commercial hub.
Mey Vann said the possible incentives included reduced taxes on profits, reduced or scrapped excise and customs taxes for imports and exports, and reduced taxes on gains from buying and selling shares.
“The main types of businesses that will be granted incentives are financial service companies such as banks, insurance firms, stock brokerages and fund managers, as well as real estate investment firms and development companies,” he said.
Any tax exemptions offered would not exceed a period of nine years, Mey Vann said, adding that the loss of tax revenues in the long-term would be more than offset by benefits from the development of a financial centre for the country.
“Over the short-term, we will not gain tax revenues from participating companies, but we will encourage macroeconomic stability, create employment and establish transparency in corporate governance,” he said.
Over the long-term, the development of a transparent corporate culture would help the government collect tax revenues, Mey Vann added.
Cambodia’s stock market will be launched one year behind schedule in late 2010, Aun Porn Moniroth, secretary of state for the Ministry of Economy and Finance, said last week.
He blamed the delay on the impact of the global financial crisis and the amount of work required to prepare the exchange.