Cambodia has enacted the eagerly-awaited new Law on Taxation, which aims to improve the national tax regime’s compliance with present and future international standards and economic conditions; encourage accountability, effectiveness and transparency in the collection process; and promote investment in the Kingdom.
King Norodom Sihamoni signed a Royal Code on May 22 promulgating the new law, which replaces earlier editions thereof. The endorsement comes after the draft of the law was approved by the Cabinet on March 31, the National Assembly (NA) on April 19 and then by the Senate on May 2.
Comprising 20 chapters and 255 articles, the law went thorough discussion based on input provided by experts of various levels at several state institutions.
Minister of Economy and Finance Aun Pornmoniroth on April 19 defended the proposed law in front of the NA, arguing that it offers comprehensive legal provisions designed to support government’s reforms.
“On top of that, the law will ensure the sustainability of economic growth, state revenue, equal and just competition and social protection, while increasing the development of industry and the small- and medium-sized enterprise [SME] sector and attracting investment, in order to enable Cambodia to achieve upper-middle income status by 2030 and join the high income group by 2050,” he said.
General Department of Taxation (GDT) chief Kong Vibol could not be reached by The Post on May 23.
However, Vibol told an event in late September that his department’s legal staff drew up the law over many years, based on economic development and trends as well as feedback from the business community, particularly via the Government-Private Sector Working Group D on Law, Tax and Governance (GPSWG-D).
“I believe that the investment law also provides a clear picture of the industries that will receive incentives, therefore, we also need to tailor our tax law to the investment law, to ensure that they are consistent.
“We need to ensure there are clear regulations to provide clarity to lure new investments. The new tax law will provide clarity to potential investors to invest in Cambodia, which is why we are working hard to finalise the draft,” he said.
Cambodia Investment Management group CEO Anthony Galliano commented to The Post on May 23 that the previous edition of the law encompassed seven chapters and 155 articles.
The new version “achieves the amalgamation of the 15 tax categories into a singular law and uniformity with the Kingdom’s other key laws such as the Law on Investment, Law of Commercial Enterprises, and Labour Law.
“The new law also seeks to disqualify certain loopholes that exist under the previous law, in line with international standards, to improve and increase tax revenue collection and administration.
“Alignment with international standards, consolidation and clarification with various relevant laws, and closing of loopholes are very positive developments and will create a more attractive platform for investment and position Cambodia better in ease of doing business.
“I commend the Royal Government, and in particular the GDT and Ministry of Justice for [a] job well done,” he said.
The GDT said that it collected $3.45511 billion in revenues last year, exceeding the $2.81955 billion annual target by 22.54 per cent and marking a 24.20 per cent jump over the total that it had reported for 2021. The 2023 target has been increased by 26.68 per cent to $3.57170 billion, which is just 3.37 per cent more than the amount collected in 2022.
The department reported $1.59075 billion in revenues for the January-April period, or equivalent to 44.54 per cent of the 2023 target. This figure marks a 5.94 per cent increase from the $1.50156 billion earlier posted for January-April 2022.