Logo of Phnom Penh Post newspaper Phnom Penh Post - A company’s plea to postpone capital gains tax



A company’s plea to postpone capital gains tax

Content image - Phnom Penh Post
Prakas No 346 will go into effect on January 1 and will require taxpayers to pay a 20 per cent capital gains tax rate on calculated profits. Hong Menea

A company’s plea to postpone capital gains tax

A local investment advisory firm has submitted a letter to the Ministry of Economy and Finance requesting the government to postpone the implementation of capital gains tax until the current Covid-19 situation eases.

The Housing Development Association of Cambodia (HDAC) said in the letter that the Kingdom’s real estate sector continues to struggle under the weight of the pandemic.

The ministry has said the tax will be levied on taxpayers’ gains from the sale, transfer or establishment of property rights, or the registration of ownership or possession rights.

It said its Prakas No 346 is set to be enforced from January 1, next year by its General Department of Taxation (GDT) and will require individuals to pay a 20 per cent capital gains tax rate on calculated profits.

HDAC secretary-general Huy Vanna told The Post on Sunday that the letter was sent to the ministry through the GDT following a company meeting on tax law held on Friday.

He said the tax will only add to the burden on the real estate industry.

“We have requested the Ministry of Economy [and Finance] to postpone the collection of capital gains tax payments until a more suitable time or when the Covid-19 and economic situations improve. Today’s real estate market is in the doldrums,” Vanna said.

Ministry spokesman Meas Soksensan told The Post: “The ministry will consider the association’s proposal, but it is up to the senior government leadership to decide.”

Anthony Galliano, the CEO of financial services firm Cambodia Investment Management Co Ltd, told The Post recently that the taxpayer can choose to deduct expenditures from the sale/transfer value based on two methods – the Determination Based Expense Deduction or the Actual Expense Based Deduction.

“Based on the Actual Expense Based Deduction, the taxpayer can deduct the cost of acquisition and expenses holding and transferring the immovable property which qualify as deductible expenses.

“On this basis, if the costs are higher than the sale proceeds, there is no tax . . . The GDT has been very generous to investors in regards to the calculation of the capital gains tax.

“If an investor has made a substantial capital gain from holding an asset that cost a fraction of the sale proceeds, they can choose the Determination Based Expense Deduction option.

“The investor can deduct 80 per cent of sales proceeds as the cost and just pay the tax on only 20 per cent of the gain, rather than a true larger gain.

“On the other hand, the Actual Expense Bases Method is favourable in cases where the investor has a small gain or suffers an overall loss when considering the cost of the asset acquisition cost and inclusion of additional expenses, such as consulting, legal, registration, advertising and commission fees.

“This is more favourable for developers who can include most costs of the property development,” he said.

MOST VIEWED

  • Hong Kong firm done buying Coke Cambodia

    Swire Coca-Cola Ltd, a wholly-owned subsidiary of Hong Kong-listed Swire Pacific Ltd, on November 25 announced that it had completed the acquisition of The Coca-Cola Co’s bottling business in Cambodia, as part of its ambitions to expand into the Southeast Asian market. Swire Coca-Cola affirmed

  • Cambodia's Bokator now officially in World Heritage List

    UNESCO has officially inscribed Cambodia’s “Kun Lbokator”, commonly known as Bokator, on the World Heritage List, according to Minister of Culture and Fine Arts Phoeurng Sackona in her brief report to Prime Minister Hun Sen on the night of November 29. Her report, which was

  • NagaWorld union leader arrested at airport after Australia trip

    Chhim Sithar, head of the Labour Rights Supported Union of Khmer Employees at NagaWorld integrated casino resort, was arrested on November 26 at Phnom Penh International Airport and placed in pre-trial detention after returning from a 12-day trip to Australia. Phnom Penh Municipal Court Investigating Judge

  • Sub-Decree approves $30M for mine clearance

    The Cambodian government established the ‘Mine-Free Cambodia 2025 Foundation’, and released an initial budget of $30 million. Based on the progress of the foundation in 2023, 2024 and 2025, more funds will be added from the national budget and other sources. In a sub-decree signed by Prime Minister Hun Sen

  • Two senior GDP officials defect to CPP

    Two senior officials of the Grassroots Democratic Party (GDP) have asked to join the Cambodian People’s Party (CPP), after apparently failing to forge a political alliance in the run-up to the 2023 general election. Yang Saing Koma, chairman of the GDP board, and Lek Sothear,

  • 11th Chaktomuk Short Film Festival draws to close

    Cambodia's 11th Chaktomuk Short Film Festival wrapped up successfully on November 28 after a four-day run, with the film “Voice of the Night” awarded top prize for 2022. Sum Sithen, the organiser of the short film festival, told The Post that the number of attendees to the