The B2B team sits down with Bretton Sciaroni, founder and partner at Sciaroni & Associates, to discuss new tax regulations, the government’s current drive for automatisation, and the controversial instruction 1127 on new invoicing requirements.
Sciaroni & Associates is one of Southeast Asia’s leading professional services and investment advisory firms. Based in Cambodia, with offices in Laos and Myanmar, the legal firm has been providing business counsel for over two decades.
B2B: Are tax regulations becoming more business-friendly in Cambodia? How so?
Sciaroni: The current drive of the General Department of Taxation to automate the tax collection system is a welcome development. By taking individual officials out of the equation—that is, by limiting personal contact with taxpayers—the system will become more transparent and accountable. Granted, there have been some problems in the implementation of this process, such as Prakas 1139 and Instruction 1127. But the GDT, lead by H.E. Kong Vibol, has engaged in dialogue with the private sector to rectify these problems. So even though the automatization is occurring with fits and starts, ultimately we will have a better tax collection process.
B2B: How else can the tax system be improved?
Sciaroni: There are a number of long standing issues which need to be resolved. The creation of a tax arbitration committee would be helpful in bringing closure to a number of tax disputes between GDT and taxpayers. Also, bringing more discipline to the limited tax audit vs. the comprehensive tax audit would solve a major headache for the taxpayers. Over time, the limited tax audit has expanded in scope so that it resembles a comprehensive tax audit, which increases the administrative burden on businesses.
B2B: What recent changes/developments should businesses be aware of?
Sciaroni: The fact that Prakas 1139 has just been replaced by Prakas 496 will make registration at GDT much easier and business-friendly. It is to GDT’s credit that it recognized that the previous regulation imposed a burden on taxpayers and, in fact, was deterring new foreign direct investment in Cambodia. The new prakas, issued on 4 April 2016, will address the issues and concerns of GDT but in a more sensible and transparent way. This new prakas was the result of many months of discussion between GDT and the Tax Working Group and the Working Group on Law, Tax and Governance, part of the system of public-private dialogue established by the Prime Minister’s Government-Private Sector Forum.
B2B: Can you comment on instruction 1127 on new invoicing requirements?
Sciaroni: On March 24, 2016 there was a consultation between the GDT and the two working groups on Instruction 1127, with some very positive outcomes. There were a number of aspects of the instruction that needed clarification. One important requirement was that all invoices be written in the Khmer language. While the business community does not have a problem with the requirement, as it is common in many countries to require documents be written in their own language, the burden was that it was to be implemented immediately. This is a problem as businesses will need to adopt a Khmer font and get accurate translations. But according to H.E. Kong Vibol, the private sector will have a 6 month grace period to create the new forms.