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Tax Inspectors Without Borders program ‘proving to be valuable’ for Cambodia’s tax department

The UN Development Programme (UNDP) and Organisation for Economic Co-operation and Development (OECD) have reported its Tax Inspectors Without Borders (TIWB) initiative has raised over $1 billion in added tax revenue for developing nations.

The two-year trial launched in Cambodia in November 2020 comprised of two international tax experts from Her Majesty’s Revenue & Customs of the United Kingdom who have since begun their work with Cambodia’s General Department of Taxation (GDT). Due to the COVID-19 pandemic, their support is currently provided remotely.

UNDP Acting Resident Representative, Sonali Dayaratne told Cambodia Investment Review that the TIWB assistance spans across Africa, Asia, Eastern Europe, Latin America and the Caribbean. Adding, the program adopts a unique approach to capacity building, by providing hands-on technical assistance on ongoing tax audits and international tax issues.

“UNDP facilitates the TIWB program by connecting the General Department of Taxation to experts and providing support to enable them to work together in a secure virtual platform,” Dayaratne said.

“Additional areas that may be supported in the future include raising awareness of the transfer pricing requirements within Cambodia in order to improve voluntary compliance, providing feedback on how businesses and advisory firms perceive transfer pricing compliance, and tax morale in Cambodia, as well as exploring the possibility of taxation in the fields of environment and health,” Dayaratne added.

While no specific estimation of increased tax revenue has been determined for Cambodia yet, the UNDP says the GDT had requested support in undertaking transfer pricing audits of multinational enterprises. Adding, since the Cambodian transfer pricing legislation was only introduced in 2017, support from tax experts in operationalizing transfer pricing audits is “proving to be valuable”.

OECD Secretary-General, Angel Gurría, and UNDP’s Administrator, Achim Steiner, said participants of the program celebrated the mobilization of more than $1 billion in additional tax revenues, with nearly three times that amount in total tax assessments.

Achim Steiner remarked that “in this challenging moment in time, recreating a robust fiscal space and ensuring public debt sustainability is both vital to build forward better and ensure progress towards the achievement of the Sustainable Development Goals. Tax Inspectors Without Borders has a unique and important role to play in strengthening countries’ domestic resource mobilization.”

The TIWB initiative now counts 42 completed and 45 ongoing programs worldwide. Demand remains strong for TIWB audit assistance, in addition to pilot programs focused on criminal tax investigations and the effective use of automatically exchanged financial account information.

Cambodia’s Ministry of Economy and Finance’s General Department of Taxation collected $1.51 billion in taxes in the first half of 2021, down 10.6% from the same period last year. This represents 67.5% of the $2.24 billion target set by the Law on Financial Management for 2021, the GDT said in a press release.

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