The draft Law on Taxation is designed in line with the context of Cambodian, regional and global economies to effectively lure potential new investors to the Kingdom, and is expected to be approved by the National Assembly by the end of the sixth legislative term, next year, according to the General Department of Taxation (GDT) chief.
Kong Vibol, director-general of the GDT, which is under the Ministry of Economy and Finance, was speaking at the “Tax Updates and Audits” forum hosted by the American Chamber of Commerce in Cambodia (AmCham) in Phnom Penh on September 28.
He commented that the incentives provided by the current taxation law pale in comparison to the new Law on Investment promulgated nearly a year ago, resulting in calls for an overhaul of the former to better cater to investors and ensure clarity.
“The draft tax law is currently with the Ministry of Economy and Finance, while the Ministry of Justice also examines the provisions in the draft law relating to criminal offences” he said.
Speaking at the event, AmCham president Anthony Galliano underscored that the GDT has been reforming the tax system and modernising the underlying technology to make things easier for taxpayers.
“I would like to take this opportunity to reflect on the superb progress that has been achieved by the GDT and congratulate them on a great job. I started in the tax business almost a decade ago and I can attest that the tax department and system [did] not resemble anything close to what it is today,” he said.
Vibol went on to say that the GDT legal team developed the draft law over several years, based on economic development and trends, as well as with input from the business community via the Government-Private Sector Working Group D on Law, Tax and Governance (GPSWG-D).
“We have drafted this law to make it easier for taxpayers and to be in line with the new investment law. I hope that by the end of this year or at the end of this mandate, our new tax law will be approved by our government and our National Assembly. Currently, the draft law is in the hands of the Ministry of Economy and Finance.
“I believe that the investment law also provides a clear picture of the industries that will receive incentives, therefore, we also need to tailor our tax law to the investment law, to ensure that they are consistent.
“We need to ensure there are clear regulations to provide clarity to lure new investments. The new tax law will provide clarity to potential investors to invest in Cambodia, which is why we are working hard to finalise the draft,” he said.
Galliano told The Post on September 28 that AmCham encourages foreign investment in the Kingdom and has coined the mantra: “Invest Cambodia, the Asian Tiger of the 21st Century”.
“It was encouraging to hear [Vibol’s] intention to synchronise the Law of Taxation with the Law of Investment which will provide certainty and transparency for foreign investors determining the most attractive investment destinations.
“There also needs to be recourse at the GDT’s disposal for those that not only evade tax, but may be involved in criminal activities. Having laws on the books to deter criminal enterprises strengthens compliance and allows the GDT to take punitive measures as appropriate,” he said.
The GDT reported that it collected 8.951 trillion riel, or $2.210 billion, in the first seven months of 2022, up by 1.990 trillion riel year-on-year – equivalent to $491.29 million or 28.6 per cent. This represents 78.39 per cent of the annual target set by the Law on Financial Management for 2022, at 11.419 trillion riel or $2.820 billion.