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Tax Department reaches out to NGOs

Motorists travel past the General Department of Taxation headquarters at the corner of Russian and Mao Tse-Tung boulevards in Phnom Penh in 2014.
Motorists travel past the General Department of Taxation headquarters at the corner of Russian and Mao Tse-Tung boulevards in Phnom Penh in 2014. Pha Lina

Tax Department reaches out to NGOs

At least three local NGOs have been called for questioning by the Ministry of Economy and Finance’s Taxation Department to clarify their tax payments, amid an aggressive tax collection campaign that has recently gone after media outlets the Cambodia Daily, Voice of America and Radio Free Asia.

While the government has long sought to improve its tax collection, many of those to receive calls from the Tax Department in recent days have also drawn the ire of the government in the past.

Rights NGOs Adhoc and Licadho and elections monitor Comfrel were each asked last Wednesday to appear before the department two days later. Licadho and Adhoc both asked to postpone the meeting while representatives from Comfrel did meet last week with the government. All three maintain they pay their required taxes and that this was the first time they had received such a request.

Earlier this month, Prime Minister Hun Sen instructed an investigation into whether or not NGOs in Cambodia were paying income tax for their personnel. Since the June commune elections, he has also been accusing the election monitoring coalition called the “Situation Room” – of which all three organisations are members – of operating illegally.

“It is strange [that the request came] after the Prime Minister’s speech and the recent situation with the Situation Room . . . I think this is a related issue,” said Yoeung Sotheara, Comfrel’s legal officer. “But we comply with the law, so we are not afraid.”

Just hours after Hun Sen’s speech demanding a closer look at NGO finances, a tax department letter was leaked on government-aligned media outlet Fresh News requesting the Daily pay $6.3 million in back taxes. An anonymous letter, also published on Fresh News that day, attacked Licadho, Adhoc and Comfrel, claiming they too owed taxes.

Meanwhile, US-backed radio outlets Voice of America and Radio Free Asia – long accused by the government of harbouring pro-opposition bias – also entered the spotlight this week after a Finance Ministry request to the Ministry of Information to push the media outlets to pay their taxes.

Comfrel’s Sotheara said the meeting this week seemed superfluous as it centred on questions regarding the taxes they pay for rent, which he said were not registered in the department’s system. “But it’s a mistake from the Tax Department … We pay rent and salary [taxes] together,” he said.

After the meeting, the organisation was asked to submit an audit report, an annual financial report, their bank statement, employment contracts and rental contracts. “But some reports may not be available, because they want us to go back to 2007,” when the body started paying taxes, he said.

Vann Puthipol, spokesperson of the department, defended the meetings as in line with normal tax collection. “Their duty is to pay taxes, because [everyone] is required to pay taxes,” he said, declining to comment further as he worked in a different part of the department than the one that had sent the letters.

Naly Pilorge, deputy advocacy director at Licadho, said she suspected the letters were politically motivated. “This letter comes after the Fresh News article named three local NGOs in relation to Situation Room and taxes,” she said.

She speculated that this could be a new tactic to curb NGO activities, with tax issues being used as a way “to burden and paralyse [civil society organisations] with meetings, requests for documents and other bureaucracy”.

Sami Shearman, a technical assistant to Adhoc, said her organisation would meet the department on August 22, but would likely do so without knowledge of why they were asked to appear.

Adhoc’s Ny Sokha said the organisation began paying taxes in 2015 after being granted an exemption from fines for back taxes in 2014. “The chief of the general department agreed to exempt us from being fined … so the case is clear,” he said.

He said the letter was signed by the head of the Tax Department, Kong Vibol, who could not be reached for comment.

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