F OREIGN companies plan to appeal to the government to reconsider new accounting
and taxation regulations, and issue a statement calling for an open dialogue
between the Ministry of Finance and the business community.
The tax
regulations require companies to pay a monthly turnover tax based on profit
forecasts, and set up a multi-tiered sales tax system which passes the financial
burden to the consumer.
One member of the foreign business community
said: "The consumer will end up paying three, four, or even five-fold what the
cost should be."
Manufacturers will pay one percent tax on sales,
distributors two percent, and retailers two percent. And, unlike in most other
countries, companies will be required to pay an upfront monthly 0.5 percent tax
based on profit forecasts.
A foreign advisor met with a group of
representatives from about ten businesses last week to try to smooth over the
confusion, but was unable to do so.
The businessmen asked for the
government to consider a few major points: "We'd like a dialogue. We want
sufficient, accurate, and authentic information, we'd like them to rethink the
process and timing of implementation of the regulations, and we want to know
what sort of assistance we can expect from the government in implementation."
Foreign companies said they discovered the new regulations in February
after one businessman noticed a French accounting booklet during a visit to the
Ministry. The new laws went into effect on Jan 1.
Another leading
businessman, who declined to be named said: "We are aware of the government's
objective to better assess companies' incomes in order to tax them. We have no
objection to that, because there are no existing rules about accounting in
Cambodia.
"But if all they want is a standard form of reporting revenue,
perhaps this can be achieved in another fashion. Many companies follow standard
international procedures which they cannot change."
He explained that his
company will have to create a second accounting department, one which records
daily transactions in the form used by the French.
Another businessman
asked, "In this region, what is the relevance of the French now? Why must we be
subjected to a system based on theirs, when most of the world follows either the
British or the American systems?"
The new system, a derivation of the
French accounting system, requires companies to submit their accounting in Khmer
and in riels, on a software program which has not yet been developed in French
or English.
Another businessman, who also requested annonymity said:
"Contributions to national revenue in the long run will be big businesses, which
are essentially foreign in nature. Foreign investment should be encouraged, not
discouraged."
Cham Prasidh, Secretary of State of the Ministry of
Finance, said at accounting seminars on March 25-26 the new system would
counting might even eventually become standard in the region or
worldwide.
Cham referred to it as the European system, but, as one
businessman quipped, "What European system? I've never heard of it."
Agnes Albert, a World Bank consultant to the Ministry of Finance, said
that the Cambodian system is only "similar" to that of the French.
She
said, "Cambodia needs an accounting system, and the French system is very well
defined. It is also similar to the American one. The British form is too free."
Albert promised the ministry will conduct individual teach-ins for all
businessmen confused by the changes.
Albert met informally last week with
a group of concerned businessmen to attempt to clarify the new reguulations. She
said that booklets explaining the accounting laws are available in Khmer and
French, and the taxation laws are available in Khmer. The English versions will
be prepared next month.
A businessman said:"We need English translations
of the new laws before we can draft a list of points and problems to discuss
with the minister. We need translations so that we can comply with the present
laws."
The confusion within the business community also seems to exist
between the ministry and its representatives. Yinn Taychhoan, Deputy Manager of
the Department of Accounting, had informed the group that the regulations were
prepared recently and were signed into law on Dec 7 last year.
Albert,
however, said that the regulations were passed on Jan 1, 1993, and went into
effect Jan 1, 1994, and full compliance was expected by all businesses in
Cambodia March 31, 1995, retroactive to the first of the year 1994.
When
asked why none of the businesses at the gathering had been personally informed
of the changes, Albert did not know. Perhaps the Ministry's directory is out of
date, she said.
Albert asked if the businesses represented had attended
the recent seminars on the new tax laws.
She was surprised to learn that
none of them had. The seminars were announced on Khmer radio, she said. Yinn
said that only Khmer businessmen had attended.
