The Ministry of Economy and Finance is granting a tax holiday until the end of 2023 for properties located in four newly established towns in Kampong Speu, Kandal and Kampot provinces.
The ministry’s June 5 prakas covers properties located in Oudong Me Chey in Kampong Speu, Arey Ksat and Sampov Poun towns in Kandal, and Bokor town in Kampot. The prakas stipulates that there is no obligation to file returns and pay property tax until the end of the year.
“All property owners in the specified towns are required to register their property with the relevant provincial tax branch, or at the Department of Property and Real Estate of the General Department of Taxation,” the ministry indicated.
They assured owners that if property tax has already been paid, the amount may be used as a credit towards the following year’s tax.
Property owners who have already paid tax should apply for a tax credit at their provincial tax branch, or the General Department of Taxation. The ministry stressed the importance of all relevant units under its supervision implementing this process as smoothly as possible.
Yang Kim Eng, president of the People’s Centre for Development and Peace, proposed three reasons for the tax freeze.
Firstly, he suggested the newly established towns might not yet be ready for tax collection. He implied this could be due to an underdeveloped system or lack of tax officials.
His second theory is that it is the government’s intention to attract real estate investors to these areas. Offering a tax break, he proposed, might make these locations more appealing to those wishing to invest.
Lastly, he opined that the government may be trying to stimulate the local real estate market, to pique public interest in buying, selling, and living in these areas.
“Real estate investment is a crucial element in the development of the newly created towns. This tax exemption will attract both investors and the public to engage in real estate transactions,” he added.
Despite the tax freeze, Kim Eng believed the state’s tax revenue will remain unaffected, because as properties in the newly established towns become more attractive to investors and the public, the state will receive increased tax revenue from subsequent transactions.
Corroborating this view, Ky Sereyvath, a researcher at the Royal Academy of Cambodia, suggested that the tax holiday could provide a stimulus to the real estate sector. The exemptions would not impact state revenue.
“There are currently no real estate transactions taking place there. Therefore, whether the state levies a tax or not, there is no revenue,” he added.