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

  • Ethnic group ‘disappointed’ to be denied French visas to attend court

    Eleven people at the centre of a case involving seven indigenous Bunong villages in Mondulkiri province pursuing legal action in France have expressed disappointment after the French embassy in Phnom Penh denied their visa applications to attend court. A press release said the 11 included a

  • Cambodia nabs 12th place in best retirement destinations

    Cambodia is an expatriate hotspot for those dreaming of living a more luxurious lifestyle at an affordable cost, according to International Living’s Annual Global Retirement Index 2019. For the fourth year in a row, Cambodia took the top spot in the Cost of Living category.

  • EU starts EBA withdrawal

    The EU on Monday announced that it has begun the 18-month process of withdrawing the Kingdom’s access to its preferential Everything But Arms (EBA) agreement over “a deterioration of democracy [and] respect for human rights”. However, the Garment Manufacturers Association of Cambodia (GMAC) said

  • PM: War result of foreign meddling

    Prime Minister Hun Sen said on Sunday that Cambodia’s recent history of conflict was caused by foreign interference. “The wars that happened were caused by provocation, incitement, support, smearing and interference from foreign powers, and the group of ignorant people who pushed Cambodia to