The government introduced a package of measures to stabilise the construction and borey real estate sectors of the economy. The measures aim to foster inclusive economic growth, maintain the sustainability of jobs for workers and improve the livelihoods of low and medium-income people, enabling them to purchase affordable housing.
The measures were introduced in response to increased uncertainty surrounding the global economic and financial situation. These concerns include the risk of a slower post-pandemic recovery than predicted, the escalation of tensions between Russia and Ukraine, the longer-than-expected tightening of monetary policy in developing countries, the continued disruption of global supply chains and other rising global financial tensions.
In an April 17 press release, the Economic and Financial Policy Committee of the Ministry of Economy and Finance said that the government continued to postpone the implementation of phased tax payments until the end of 2024 for licensed Borey housing developers.
It added that developers who have not yet registered for real estate licences should do so as soon as possible, in order to take advantage of an advantageous tax package.
“The government has increased the period of tax payments from 12 months to 18 months for developers who pay less than $1 million and from 24 months to 36 months for developers who are liable for over that amount,” it said.
All development companies are expected to maintain fastidious accounting records.
The government also postponed the implementation of a capital gains tax for the real estate sector until the end of 2024 and continued to exempt stamp duty on the transfer of ownership of all types of borey housing at a price lower than or equivalent to $70,000, until the end of 2024.
The release added that the government encouraged banking and financial institutions to re-arrange their credit accordingly.
“The institutions and developers should do so in compliance with a December 2017 prakas on Credit Risk Grading and Impairment,” it continued.
Provided that housing developers fulfill their obligations in line with a prakas on real estate business management and postponement of implementation until the end of 2023, they will be exempted from fines.
“The Economic and Financial Policy Committee will set up working mechanisms to regularly monitor and assess the construction and real estate sectors to propose more concrete policy measures in addition to the ones currently taken by the government,” it added.
Royal Academy of Cambodia economics researcher Ky Sereyvath said the government had introduced the measures to support the construction and real estate sectors because they had been crippled by the global economic crises, and it was important to maintain their sustainability.
He added that the measures were intended to prevent the collapse of borey development projects, some of which could not be sold and could not pay taxes. Therefore, the government postponed the payments, and called for banks to re-arrange credit.
“If a large borey collapses like Borey Mondani did, it hurts the people who purchased homes there. The government paid close attention to this case. It wants to support people who purchase homes, and prop up the real estate market,” he concluded.