New Tax License Law To Come Into Effect In January

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Kong Vibol, the director-general of the GDT, says the new rules will help increase government revenue from tax collection.

As part of the country’s efforts to revamp its tax administration, the General Department of Taxation (GDT) has established a new system to govern the provision of tax-related services, banning informal agents and forcing companies who wish to provide these services to secure a license.

While the system was originally introduced as part of a Prakas released in 2013, the GDT announced recently, via Notification No. 17509, that it will be coming into effect at the start of next year.

According to the notification, the GDT has issued tax service licenses to 34 companies. From January 2017, those who have not obtained the license will be prohibited from performing tax-related services for third parties. Anyone wishing to apply to become a tax agent must now pass a course, and then apply for a license.

Anthony Galliano, chairman at Cambodian Investment Management, believes the new system is an improvement, but has the potential to confuse some taxpayers. “This is an extremely positive step to remove amateur practitioners and gravitate the market towards professionals, who have qualified through passing the GDT test. However, it may give taxpayers a false sense of confidence, as passing a test doesn’t certify quality or competence.”

Galliano also points out that the new legislation basically eliminates foreigners from directly practicing tax, which he says may challenge international trade agreements. “As the test is in Khmer and the course is in Khmer, foreigners are basically ineligible, no matter how qualified they are,” he said.

“The GDT should consider alternate qualifications like a CamEd Tax Diploma, which is extraordinarily difficult to qualify for,” he added.

The notification also stipulates that those who break the law and provide tax services for others without a tax license will be committing obstruction, which can be penalised with a fine of between 5 million and 10 million riel (approximately $1,250-$2,500).

Earlier in the year, Kong Vibol, the director-general of the GDT, explained that the new rules were intended to increase the public’s understanding of their tax requirements and lead to a boost in tax payments, and therefore government revenue.

“The tax agents play the main role in helping the General Department of Taxation get tax declarations of taxpayers accurately,” Mr. Vibol said.

From January to September, the GDT collected $1.19 billion in tax revenue, up nearly 20 percent compared to the same period last year, according to official figures.