The head of the General Department of Taxation yesterday said the Cambodia Daily would have its licence suspended and its accounts frozen if it failed to pay or to formally dispute a $6 million tax bill by early next month.
The comments by Kong Vibol, made to government-aligned local outlet Fresh News, were yesterday backed up by a spokesman from the department, who rejected any suggestion of an agenda other than enforcing the law.
A leaked letter from the Tax Department to the company that owns the Daily, released on Friday, said it owes $2.39 million in back tax, almost $1 million in “additional tax” and almost $3 million in interest.
The release of the document – initially uploaded by the Facebook account of an opposition lawmaker, which he said was hacked – followed orders by Prime Minister Hun Sen for several ministries to probe the tax compliance of NGOs.
“The Cambodia Daily has 30 days to respond by submitting a complaint letter. If the newspaper does not submit a complaint letter it means they accept the re-audit to pay tax,” Vibol told Fresh News.
“If the company does not pay the debt, we will take taxation action like suspending its licence, freezing the company’s account and suspending its exports and imports.”
Tax Department spokesman Ream Ratha said other companies and groups had also received audit letters, though he declined to name them. He said the $6 million figure was “based on documents” but declined to elaborate further.
“We only practise the law,” Ratha said.
Clint O’Connell, the head of tax practice for DFDL Cambodia, said not-for-profit entities and organisations generally have been required to register for taxation for at least the last decade.
“It’s a misconception that you can be a non-for-profit but not register for tax,” he said.
Though certain tax exemptions are provided for under the law, he said they were only granted after registering and through a formal application process to the Ministry of Economy and Finance.
These could include waiving taxes on profits and value added tax for those who qualify, he said.
The Daily’s owner, Deborah Krisher-Steele, said on Monday the paper was started as a “non-profit project” but was quoted by the newspaper yesterday saying that this did not mean that it was an NGO.
According to Krisher-Steele, it was registered as a business in April this year. She declined to discuss specifics yesterday until the matter was settled with the Tax Department.
“I intend to fully cooperate with their inquiries and plan to respond to them directly in a normal professional manner and channel,” she said.