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.