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Tax agency asks Japan to fast-track DTA talks

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GDT director-general Kong Vibol (right) and Japanese ambassador Atsushi Ueno at the meeting on May 29. GDT

Tax agency asks Japan to fast-track DTA talks

The Cambodian tax chief on May 29 asked Tokyo to speed up talks on a Double Taxation Agreement (DTA) between the Kingdom and Japan, as Customs (GDCE) reported that their bilateral goods trade closed 2022 just shy of $1.95 billion, achieving a nearly one-eighth surge on the previous year.

General Department of Taxation (GDT) head Kong Vibol made the request at a meeting with Japanese ambassador Atsushi Ueno at the department, according to a GDT statement.

Cambodia is negotiating DTAs with Japan, the Philippines, Laos and the UAE, the GDT noted, adding that the Kingdom had such deals with 11 jurisdictions as of end-February, namely Singapore, mainland China, Brunei, Thailand, Indonesia, Vietnam, Hong Kong, Malaysia, South Korea, Macau and Turkey.

At the meeting, Vibol briefed Ueno on the GDT’s “all-round” efforts to address the tax-related issues facing the Japanese Business Association of Cambodia (JBAC) and larger Japanese investment community, as well as the Royal Government’s initiatives to implement cutting-edge technological solutions to improve taxpayer services, in an effort to stabilise and accelerate economic growth.

“We request the Japanese side to move the negotiation process along quickly, so that the Kingdom of Cambodia and Japan can establish a DTA as soon as possible,” Vibol said.

He also praised the technical assistance provided to the GDT by the Japan International Cooperation Agency (JICA), Tokyo’s overseas development arm, in the areas of human resource and capacity development “since 2004” as an illustration of “good” government-to-government and people-to-people cooperation, according to the statement.

Speaking to The Post on June 1, Hong Vanak commented that countries with strong commercial ties tend to favour the creation of DTAs, which – as he pointed out – provide special conditions that encourage and accelerate trade and investment flows between signatories.

Given Japan’s prosperous economy and developed-country attributes, the proposed DTA with Cambodia would increase Japanese direct investment and introduce new technologies to the Kingdom, he contended.

“Cambodia and Japan not only enjoy good diplomatic ties, but they’re also members of the Regional Comprehensive Economic Partnership [RCEP]. Consequently, I believe that the volumes of Japanese trade with and direct investment in Cambodia will undoubtedly grow in the future, especially with a DTA between them,” Vanak said.

In addition to working to forge better relations with other nations, the Cambodian government has also implemented domestic reforms in areas such as investment law, capacity building and infrastructure, to serve as “pillars” for socio-economic development, he stated.

The National Bank of Cambodia (NBC) reported that Japan was the fifth largest investor in Cambodia for the period between the August 5, 1994 promulgation of the old Law on Investment and end-2021, with $2.4 billion, behind the Greater China region ($18.0B), South Korea ($4.9B), Singapore ($2.7B) and Vietnam ($2.5B). The Greater China region encompasses mainland China, Hong Kong, Macau and Taiwan.

Japanese investors in the Kingdom largely operate in industry, banking, hotels and tourism, construction and real estate, and especially supermarkets and retail, restaurants and services, the central bank said.

According to the GDCE, the volume of merchandise traded between Cambodia and Japan totalled $1.948 billion in 2022, up 12.33 per cent on 2021.

Cambodian goods exports to and imports from Japan amounted to $1.173 billion and $774.989 million, respectively, up 7.26 per cent and up 21.0 per cent year-on-year, narrowing the Kingdom’s trade surplus with the archipelago nation by more than 12.15 per cent to $398.041 million.

Things have take a turn for the worse in 2023, however, as bilateral trade slipped by 9.8 per cent on a yearly basis to $573.101 million in the January-April period.

In the first four months of 2023, Cambodia’s goods exports to and imports from Japan were to the tune of $371.595 million and $201.506 million, respectively, down nearly 4.55 per cent and down 18.19 per cent year-on-year, expanding the Kingdom’s trade surplus with the world’s third-largest economy by 18.96 per cent to $170.088 million.


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