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Tourism sector asking for tax break extension through end of this year

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Tourists visit beach in Preah Sihanouk province. Heng Chivoan

Tourism sector asking for tax break extension through end of this year

Tourism players have asked the finance ministry to extend the tax exemptions currently enjoyed by the industry from June 30 to December 31, citing instability in business.

Cambodian Hotel Association president Din Somethearith said his organisation had initiated the proposal, which was presented at the Government-Private Sector Forum on June 11.

“The ministry understands our problems and is still waiting for a decision from [finance minister Aun Pornmoniroth],” Somethearith said, adding that he had discussed the proposal with Luu Meng, co-chair of the government-private sector working group on tourism, and Thalias Hospitality Group CEO Arnaud Darc.

Although the number of international visitors to Cambodia year-to-date has increased over the same period in 2021, the figure is but a tenth of pre-Covid-19 levels, which spells disaster for the hotel industry, with some establishments reporting just 20 per cent occupancy rates, he said.

Thourn Sinan, chairman of IMCT Co Ltd and Pacific Asia Travel Association Cambodia chapter (PATACC), told The Post that although the economy has recovered from the worst of the Covid days, stability has eluded the tourism sector, as major destinations such as Phnom Penh and Siem Reap receive a mere trickle of overseas travellers.

He underscored that the end of the tax exemption at the end of this month would severely weigh on private tourism-related businesses.

Sinan suggested the government extend the tax breaks until end-2022 or mid-2023, citing the tourism sector’s significant contribution to gross domestic product (GDT), and positing that businesses would be sustainable by the end of the new period.

He said that a possible extension would be in line with other government initiatives to safeguard the tourism industry, highlighting a co-financing scheme for low-interest loans administered by the state-owned Small and Medium Enterprise Bank of Cambodia Plc (SME Bank).

Cambodia Association of Travel Agents president Chhay Sivlin said that an extension until December 31 would be a lifeline for the hotels, guesthouses, restaurants and travel agencies and that most tourism businesses in the capital and Siem Reap and Preah Sihanouk provinces have tried to start back up, but that incomes are still inadequate to cover past expenses and losses.

“Let the Ministry of Economy [and Finance] as well as the Royal Government consider [extending] these tax exemptions for the sake of our tourism sector by the end of 2022, so that all businesses can make an effort, recover, and open doors to show tourists that Cambodia has truly safely resumed to its former bustling self,” Sivlin said.

While tax relief matters are not under the purview of the Ministry of Tourism, spokesman Top Sopheak said his ministry has made renewals of any tourism licences free-of-charge this year, to help assuage the industry’s economic hardships to some extent.

Finance ministry spokesman Meas Soksensan told The Post on June 13 that the government is currently brainstorming new ways to shore up the tourism sector, after recently launching a $150 million loan package meant to help restore the industry.

The finance and tourism ministries on February 9 issued a proclamation authorising the implementation of key policies for tourism in 2022, primarily the extension of tax exemptions through to June 30 for hotels, guesthouses, restaurants and travel agencies registered with the General Department of Taxation (GDT).

The tax exemptions apply only for businesses operating in the capital, Banteay Meanchey province’s Poipet town and Svay Rieng province’s Bavet town, as well as the coastal provinces of Preah Sihanouk, Kep and Kampot, according to the inter-ministerial decision signed by the finance and tourism ministers.

Additionally, audits will be postponed for 2021, for tourism operators with pre-Covid outstanding debt based in other localities, it said, noting that these businesses are still required to file tax declarations and use the electronic value-added tax (E-VAT) management system each month during the exemption period.

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