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A VAT victim: the cost of compliance

A VAT victim: the cost of compliance

"VAT is putting me out of business," Roy Barram says grimly. "We've

lost 70 percent of our business [since VAT's implementation]. . . we're starving

to death."

After seven years of beating the odds by building a thriving business on the Kingdom's

shifting economic sands, Barram is about to call it quits.

After successfully navigating his Roymar Services through military coups, civil unrest

and the shockwaves of the Asian financial meltdown, Barran claims the kingdom's new

VAT is driving him toward bankruptcy.

"I couldn't agree more [with the VAT] if it was [applied] across the board,"

Barram explains. "But it's just not equitable."

A glance at Roymar Services account books offers stark evidence of how VAT can affect

those businesses which have been specially targeted by the government to implement

the tax. By early March of 1998, Barram had recorded a total of 231 service calls.

In contrast, from January 1, 1999 (the introduction of VAT) to the first week of

March 1999, the number of service calls Barram has made has plummeted to only 17.

"All the work we're [normally] contracted to do is going to guys who aren't

paying [VAT]," Barran fumes. "I've lost three jobs in just the past week."

According to Barram, the circumstances behind the most recent of those lost jobs

is painfully indicative of how VAT is effectively pricing his Roymar Services out

of the market.

"I worked on getting that contract for three months," Barram explains.

"But then I got told that we were 'too expensive'."

The company that apparently got the job instead of Barram is, in Barram's words,

"a no-name Khmer company that doesn't charge VAT".

Ironically, Barram points to Roymar Services' conscientious tax compliance in the

past for the company's present predicament. "The government grabbed hold of

2000 high profile or corporate [companies] and said 'We'll make these mugs the first

in line [to pay VAT]'."

To Barram, such treatment is a callous disregard of the contributions his company

has already made to the Cambodian economy.

"[The government] doesn't care that we've paid tax, paid good salaries, bought

cars and spent money in Cambodia," Barram says. "But it's not just us,

every company who's paying [VAT] is in the same boat."

Short of repealing the tax, Barram says the only way for the government to remedy

the situation and allow him to continue to operate in Cambodia is "to go to

the Department of Commerce and go from A to Z of all companies and apply the VAT

universally".

"(The VAT) wouldn't be bad if everyone was subject to it," Barram stresses,

"but as it's piecemeal only, only those who pay suffer."

Kao Kim Hourn at the Cambodian for Institute for Cooperation and Peace is moved by

Barram's plight and urges that he and any businesspeople in similar circumstances

take their cases to the Ministry of Economy and Finance.

"Those companies that are affected [by VAT] should approach the government and

tell them their problems...ask for minimum tax breaks," Kim Hourn advises. "To

close down and leave I don't think is a solution."

Meanwhile, Barram claims to be tapping into his personal savings just to keep Roymar

Services afloat and is preparing to sell off a large proportion of his operating

equipment.

"We're very close to closing up," he says grimly.

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