Cambodian Auditors Given Sharper Tools To Fight Tax Cheats

The General Department of Taxation now has a legal mandate to compare bank debits and credits in an account, as well as reported expenses and potentially understated profit, to prevent taxpayers from misreporting or underpaying.

Government auditors have been given a clearer authority to access individual and corporate financial data thanks to an amendment in the tax code, which went into effect on January 1.

The language of a provision of Article 99 of the 2017 Law on Financial Management was updated to allow the General Department of Taxation (GDT) to request financial data from various financial institutions during the audit process instead of relying on documentation submitted by the taxpayer.

The updated legislation gives GDT auditors more defined jurisdiction to investigate discrepancies between bank statements and tax returns, according to Cambodian Investment Management CEO Anthony Galliano. “In essence, all revenue invoices and expense entries should not only be listed on tax filings, but also traceable on a bank statement, in order to avoid unilateral assumptions by an auditor,” he said.

“While multiple bank accounts were a classic mechanism of segregating reportable and non-reportable tax activity by deceptive taxpayers, that loophole has effectively been aborted,” added Galliano. “This is not only due to Article 99, but through the enforcement of tax licensing and the obligations placed upon the taxpayers for honest and accurate filing.”

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