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

  • Wing Bank opens new branch in front of Orkide The Royal along Street 2004

    Wing Bank celebrates first anniversary as commercial bank with launch of brand-new branch. One year since officially launching with a commercial banking licence, Wing Bank on March 14 launched a new branch in front of Orkide The Royal along Street 2004. The launch was presided over by

  • Girl from Stung Meanchey dump now college grad living in Australia

    After finishing her foundational studies at Trinity College and earning a Bachelor’s degree from the University of Melbourne in 2022, Ron Sophy, a girl who once lived at the Stung Meanchey garbage dump and scavenged for things to sell, is now working at a private

  • Ministry using ChatGPT AI to ‘ease workload’; Khmer version planned

    The Digital Government Committee is planning to make a Khmer language version of popular artificial intelligence (AI) technology ChatGPT available to the public in the near future, following extensive testing. On March 9, the Ministry of Post and Telecommunications revealed that it has been using the

  • Rare plant fetches high prices from Thai, Chinese

    Many types of plants found in Cambodia are used as traditional herbs to treat various diseases, such as giloy or guduchi (Tinospora cordifolia) or aromatic/sand ginger (Kaempferia galangal) or rough cocklebur (Xanthium Strumartium). There is also a plant called coral, which is rarely grown

  • Cambodia returns 15M Covid jabs to China

    Prime Minister Hun Sen said Cambodia will return 15 million doses of Covid-19 vaccines to China for donation to other countries. The vaccines in question were ordered but had not yet arrived in Cambodia. While presiding over the Ministry of Health’s annual meeting held on

  • Wat Phnom hornbills attract tourists, locals

    Thanks to the arrival of a friendly flock of great hornbills, Hour Rithy, a former aviculturist – or raiser of birds – in Kratie province turned Phnom Penh tuk tuk driver, has seen a partial return to his former profession. He has become something of a guide