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Unconscious tax evasion by some property owners

Sok Lak makes sure he pays the annual tax for his parents' property, pictured above.
Sok Lak makes sure he pays the annual tax for his parents' property, pictured above. Sreng Meng Srun

Unconscious tax evasion by some property owners

There are only a few months left for property owners to pay their 2017 taxes. Despite the law to pay the taxman being in place for more than five years, it seems some homeowners remain unaware of their financial obligation.

Kong Vibol, general-director of the General Department of Taxation (GDT), told Post Property this week that property tax on home ownership has been in place since 2011.

According to him, 90 percent of tax payers nationwide are aware of the obligation to declare property tax.

“The purpose of tax on property is to rationalise the use of land and to benefit the sub-national administrative budget which was decided by the government,” he said.

Despite the fine for not stumping up the tax being double that of the stipulated tax rate, Vibol said there was still about 10 percent of home and landowners who do not abide by the property tax requirements.

Property tax, which in this case refers to tax on land, houses and other buildings, is an annual obligation for owners of immovable property in Cambodia, applying to both owners of hard and soft titles.

Vibol said property tax is imposed on immovable properties located in all municipalities and provinces that are valued in excess of about one million riel, or $25,000. He explained that the tax collected annually stands at a rate of 0.1 percent of the value of the property.

However, agricultural land, land owned by the state and industrial facilities located in special economic zones are exempt from the tax.

Vibol encouraged all land and home owners to update their current information with the tax department prior to the online tax system process kicking in later this year.

Anthony Galliano, CEO of Cambodian Investment Management, said property tax was a fundamental tariff for the country, highlighting that the tax was beneficial for Cambodia’s national budget.

“Usually, the property tax is quite high, and it can be from three to five percent in most countries but I think the Cambodian government is tolerant and has made the tax low in the beginning to encourage people to pay,” he said.

“The property tax is pretty straightforward and not expensive. The law doesn’t discriminate between local and foreign property ownership in terms of property tax, both are treated the same.”

Galliano said the government was notifying property owners through a variety of media to enhance people’s awareness of the tax.

The distribution of direct letters from the taxation department was one way to inform property owners of their obligation to register and pay tax, Galliano noted.

For Sok Lak, he has to ensure the property taxes are paid for his parent’s house each year.

“My parents’ house has three floors in Tuol Svay Prey commune and I pay around $150 (per year).”

Lok said he didn’t have an issue with paying the tax, but suggested the documentation process for the payments was made easier, adding that the current process could perhaps be a deterrent for people paying the property tax.

According to the GDT, annual property taxes for all property owners are due to by paid by the end of September.

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