Cambodia Investment Review
In a collaborative effort the General Department of Taxation (GDT) and the American Chamber of Commerce in Cambodia (AmCham) hosted a workshop on June 21, attended by nearly 200 stakeholders including investors, business owners, and their representatives. One of the central highlights of this workshop was the ambitious tax revenue target set by the Ministry of Economy and Finance (MEF) for the year 2024.
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The MEF has projected the tax revenue target for 2024 to approximately $4,162 million. This projection indicates a significant increase compared to previous years. The 2023 tax revenue target was set at $3,571 million so in the first 5 months $1,826 (51%) has been collected. This leap in the target for 2024 reflects the Cambodian government’s confidence in the robustness and potential growth of its economy and widening tax base.
GDT’s Strategy
The GDT’s approach to achieving this ambitious target is multifaceted. One of the key focuses is improving governance, administration, and formalizing the informal sectors through tax registration mechanisms. GDT aims to build on the success of Revenue Mobilization Strategy 2019-2023 (RMS 2) by focusing on modernizing core operational functions.
Transparency and Technology
To ensure transparency, GDT is looking at technology as an enabler. One of the strategies is preparing tracking mechanisms using RFID and GPS technology. This will not only improve efficiency but also make it difficult for tax evaders to hide.
Further, GDT is conducting feasibility studies on QR Code Printing technology for cans and bottles of beer and beverages. This innovative move can help in easy tracking of products and ensuring that all due taxes are paid.
Moreover, GDT is studying the implementation of blockchain technology. This can revolutionize the way records are kept and make it almost impossible for anyone to alter the data. This can greatly improve the confidence of the taxpayers and stakeholders.
Broadening the Tax Base
One of the critical aspects of achieving the 2024 target is to broaden the tax base. This means bringing more sectors under the tax net. Sectors such as telecommunication, mining, and logistics have been identified as potential sectors where tax collection can be enhanced. This approach is in line with the global best practices where instead of increasing the tax rates, the base is broadened.
Modernization Updates
In addition to the strategies, there have been modernization updates aimed at increasing the efficiency of tax collection.
- E-Filing and E-Payment adoption have seen over 90% of taxpayers shifting from manual tax return filing.
- A comprehensive E-Administration System is in development to promote productivity.
- An Invoice Lucky Draw and VAT Cross-Check System have been implemented to ensure multiple uses of information collected, thus improving efficiency.
Encouraging Voluntary Compliance
GDT Director-General Kong Vibol emphasized the importance of voluntary compliance in achieving the 2024 tax revenue target. GDT is keen on building an environment where taxpayers find it easy and are motivated to comply with the tax regulations. This approach is not only cost-efficient but also builds taxpayers’ trust in the system.
Achieving the $4,162 Million tax revenue target in 2024 is indeed an ambitious goal. Through technological adoption, broadening the tax base, and focusing on voluntary compliance, GDT is moving in the right direction. The workshop has showcased GDT’s commitment and strategic approach towards realizing this objective, which will be instrumental in Cambodia’s economic growth and stability.
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