Cambodia Investment Review

Cambodia’s Taxation Department and Private Sector Collaborate to Announce New Tax Regulations in Q1 2024 Meeting

Cambodia’s Taxation Department and Private Sector Collaborate to Announce New Tax Regulations in Q1 2024 Meeting

Cambodia Investment Review

In the first quarterly meeting of 2024 on January 24, the General Department of Taxation (GDT) and representatives from the private sector convened to address and negotiate solutions to pressing tax-related issues affecting the business community. This series of meetings, designed to foster open dialogue and cooperation between the government and the private sector, has once again proven instrumental in bridging differences and aligning interests for Cambodia’s economic and regulatory environment.

Among the primary topics discussed was the implementation of Sub-Decree No. 286, dated September 20, 2023, concerning the taxation of public lighting. The original proposal to levy a 5% tax exclusively on importers or producers had been met with opposition from the private sector, citing a potential increase from a previously universal 3% rate across all supply chain stages.

Pricing Strategies For Sensitive Goods Like Alcohol & Tobacco

Concerns were raised regarding the impact on pricing strategies for sensitive goods like alcohol and tobacco. In response, the GDT acknowledged these issues, emphasizing the broader challenge of combating counterfeit products and tax evasion. A consensus was reached to initiate the new tax framework on April 1, 2024, accompanied by a commitment to more aggressively address illicit trade practices.

Read more: European Investors Confront Taxation, Transparency & Global Image Hurdles in Cambodia 2024, Survey Reveals

The tourism sector’s plea for tax status certificates for audit-exempt periods was another agenda point. The GDT agreed to assess a provided list of enterprises eligible for exemptions in targeted provinces for specific periods between 2020 and 2023, underlining the specificity of incentives to those approved by the Royal Government.

Vibol Kong. Director General of General Department of Taxation, Cambodia.

Clarification on the additional 25% tax imposition led to the GDT reiterating the legal procedures for tax collection and the established grace periods, aiming to dispel confusion and ensure compliance with the new Law on Taxation.

Significant strides were made regarding the private sector’s request for the amendment of tax declarations, with the GDT underlining its approach to facilitate voluntary compliance through online corrections. However, adjustments during audit procedures would require Ministry of Economy and Finance approval, ensuring a balance between regulatory oversight and taxpayer convenience.

Clarity & Accessibility Of Tax Benefits For The Private Sector

The effectiveness of benefits under the Double Taxation Agreement (DTA) for 2023, previously agreed upon, was affirmed, enhancing the clarity and accessibility of tax benefits for the private sector.

Issues regarding the dating of tax validation letters and postponed discussions on VAT for goods in Areas under Customs Control, along with fringe benefits tax and withholding tax considerations, were slated for in-depth technical discussions, highlighting the meeting’s role in ongoing policy refinement.

The next meeting, scheduled for March 7, 2024, is eagerly anticipated by both parties, as these quarterly gatherings continue to serve as a vital forum for addressing the dynamic challenges and opportunities within Cambodia’s tax landscape.

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