The government will offer new and larger tax exemptions for firms listing on Cambodia Securities Exchange (CSX) as well as ‘special incentives’ for green, sustainable and governments bonds this year.
In a document seen by Cambodia Investment Review the non-banking regulator, the Securities Exchange Regulator of Cambodia, outlined that firms listing either shares or bonds on the exchange will receive large tax benefits aimed to drive more listings with higher assets on the exchange.
The tax incentive will be a 50% reduction on the income tax for firms that issues debt in the amount of more than 20% of total assets and for stocks, firm will get 50% reduction on income tax if they list their share more than 20% of voting share.
However there is caps with for bond issuers, the incentives shall not higher than 8 billions riels ($2 million) and for equity issuers, the incentive shall not higher than 20 billions riels ($5 million).
In addition, there is also ‘special incentives’ for the planned green and sustainable bonds as well as government bonds under the Ministry of Economy and Finance.
Tax incentives can offset listing costs
Sok Hour, CEO of CSX told Cambodia Investment Review that tax incentives are essential for potential companies willing to show off their high level of regulatory compliance by listing on Cambodia securities Exchange, as this listing incurs costs related to the IPO process itself, as well as costs and burdens related to tax and other compliances and public exposure.
Before everything else, a developed stock market should bring about improved corporate governance and improved tax culture among businesses in Cambodia, he added.
Kim Sophanita commented: This is a very good news that the government decided to renew tax incentives. The incentives remains important to motivate companies and investors to participate in the market and especially in this more challenging situation.
I believe that listing candidates who have been waiting for this renewal will resume the listing process soon, she added.
In the CSX 2022 annual outlook the exchange were forecasting five stocks and three bonds will be added to the current six bonds and eight stocks listed.
10 year anniversary for CSX
The CSX will celebrate its 10th anniversary this year as still one of the smallest market caps in the world.
The exchange has struggled to attract listings and is hampered by low liquidity levels. However, increasing awareness by local and international investor’s as well generous tax incentives is making the exchange more attractive.
This month the CSX also launched an upgraded the version of current mobile trading system (Mobile Trading System – MTS) tightening security features, offering a better design and higher system capacity.
Cambodia Investment Review previously reported total trading on Cambodia’s stock market hit $23.9 million during the fourth quarter of 2021 – a 609% increase year-on-year as the exchange hit a total market capitalization of $1.75 billion down 26% over the same period.