EMPLOYEES in Cambodia may soon be paying income tax for the first time. Finance
Minister Sam Rainsy says a bill introducing taxes of up to 30 percent will go
for approval by the National Assembly this month. But taxpayers may have the
bitter pill slightly sweetened with the news that import tariffs on some goods
will be slightly lowered.
The Finance Minister said the current proposed
tax bands are 5 percent on monthly salaries of between $300 and $400, 15 percent
for salaries between $400 to $4,000, 20 percent on $4,000 - $8,000 and 30 for
monthly salaries over $8,000.
Rainsy also scotched reports that tariffs
on a wide range of goods, including alcohol and tobacco, would be increasing by
up to 50 percent. He said: "The duties mentioned in the reports were introduced
a year ago."
In an interview with the Post, Rainsy also said there are
continuing differences between the Finance Ministry and the National Investment
Council (NIC) with writing competing drafts of a new investment law. Rainsy said
he hoped the conflict was nearing an end.
Rainsy said he had given his
draft to Co-Prime Minister Prince Norodom Ranariddh, and a meeting of the
Cambodian Development Council would take place shortly to make a final draft
acceptable to all parties.
The Finance Minister said: "The NIC draft
needs assessment and amendment, they need to take into account the constructive
criticism I have offered."
A report by the International Monetary Fund on
the NIC draft obtained by the Post also voiced concerns. The report said the
Government had indicated that its investment law would "place no restrictions on
investment by private Cambodian or foreign entities, except where expressly
prohibited by law."
The report said this approach implied automatic
investor approval in most instances - apart from cases involving incentives -
giving the Cambodian Investment Board an advisory role. However, the NIC draft
was a "clear departure from these principles". The report detailed four main
areas where the NIC draft does not accord with the government's
indications.
In summary these are: firstly, no public agency should
analyze or evaluate privately funded projects and publicly funded projects which
come under the Planning Ministry's jurisdiction. Secondly, there was no need for
private investors to provide profitability and feasibility studies.
Thirdly, the Cambodian Investment Board should not make socio-economic
assessments when granting investor approval as this was covered by the
Government's national budget, especially the public investment program.
Fourthly, possible fiscal incentives for private investment should not
be included in the law.
Meanwhile, a Finance Ministry official denied
reports of a widening trade gap though Cambodia's lack of a manufacturing base
was an "obvious problem".
The official said the closure of the Poipet
border crossing in March had some economic effect but this year's expected
growth figure of 7.5 percent was still valid, although subject to mid-term
review.
Customs Director Uy Sambath also denied reports of tariff rises
of up to 50 percent, saying for most goods they are set to drop. He said he
expected the rate on cigarettes, alcohol and cars to remain the same.
Uy
Sambath said: "On other goods import tariff rates will be lowered by about five
percent and the consumption tax rate will remain the same at four
percent."
The new tariff rates will not come into effect for a few months
as the Customs Department is spending two more months finishing its proposal
before it is sent to the Council of Ministers and the National Assembly.
