Logo of Phnom Penh Post newspaper Phnom Penh Post - Tax rate cut for tobacco, alcohol distributors

Tax rate cut for tobacco, alcohol distributors

Tax rate cut for tobacco, alcohol distributors

The government has offered local distributors of cigarettes and alcohol some slack by reducing the tax obligation on secondary distribution of their products.

A prakas issued late on Tuesday by the General Department of Taxation (GDT) revises the application of the public lighting tax (PLT), a 3 percent tax that is applied to the invoices of both imported and locally produced tobacco and alcohol products and levied at the time of each in-country sale. Under the revision, primary distributors of these products will continue to pay PLT on the full value of these products, while the tax base for calculating the PLT on secondary distribution will be reduced from 100 percent to 20 percent of the selling price exclusive of VAT and PLT.

The prakas applies to beer, wine and certain alcoholic spirits, as well as cigarettes and all types of electronic cigarettes – or e-cigarettes – which have been banned by the government since 2014.

Clint O’Connell, head of tax practice for DFDL Cambodia, explained that while importers and manufacturers will not see their tax obligations reduced, the prakas will provide a “little downstream tax relief” for distributors.

“The obvious benefit to the distributors is that the amount of tax that they were paying will decrease,” he said. “This saving will either be kept by the distributor or passed on to the end consumer. If the savings are passed onto the consumer it is good for producers as it may make their products more competitive and increase sales.”

He added that the Cambodia Chamber of Commerce has been lobbying the GDT to reduce the PLT applied to distributors since June, and the government response appears to have taken in private sector concerns.

Alan Yeo, vice president of Cambrew, which is half-owned by brewing giant Carlsberg and operates a brewery in Sihanoukville, said that as a manufacturer and primary distributor the reduction would have little effect on the company. However, he said supply chains could see some benefits in reducing the costs passed on to consumers.

“While we always pay the 3 percent public lighting tax, we are not clear on how secondary distributors invoice their sales,” he said. “However, with such a competitive beer market in the country, any changes that lower taxation will have large impacts across the market and benefit consumers.”

MOST VIEWED

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Kingdom accepts Chinese vaccine, PM first to get jab

    Prime Minister Hun Sen said China would offer Cambodia an immediate donation of one million doses of the Covid-19 vaccine produced by the Sinopharm company. In an audio message addressing the public on the night of January 15, he said Cambodia has accepted the offer and

  • Reeling in Cambodia’s real estate sector

    A new norm sets the scene but risks continue to play out in the background A cold wind sweeps through the streets of Boeung Trabek on an early January morning as buyers and traders engage in commerce under bright blue skies. From a distance, the

  • Hun Sen: Lakes filled in for national developments

    Prime Minister Hun Sen has announced continued operations to fill some lakes in Phnom Penh to create land for developments, though he is against the unrelated practice of damming rivers or blocking waterways. Speaking at the inauguration of the Ministry of Public Works and Transport

  • Local media loses a giant, and The Post a great friend

    Cheang Sokha, a gifted and streetwise reporter who rose to the highest ranks of Cambodian media and was beloved for his sharp intelligence, world-class humour and endless generosity, died on Friday in his hometown of Phnom Penh. He was 42. His wife, Sok Sophorn, said he

  • Koh Preus upgrades 70% complete

    Initial construction of a nearly $30 million tourism infrastructure project on Preah Sihanouk province’s Koh Preus Island is “about 70 per cent complete”, according to an official with the developer. Heng Thou, construction site manager of Angela Real Estate Co Ltd (ARE), told The Post that